“2024 is about continuing our sustainability efforts at an internal, external, and community level. Externally, we set a target of 78 million euros to be allocated to green projects this year, for which we also plan to track portfolio emissions and to be able to start analyzing potential decarbonization scenarios. Within the organization, we continue to use our resources responsibly, including the consumption of green electricity and waste management,” Luca Rogojanu, Deputy CEO and Coordinator of the Lending & Risk Administration Division, OTP Bank Romania told Sustainability Today.
“2024 will bring a unique set of opportunities and challenges for us. We plan to respond to several trends with a big focus on integrating environmental and social issues in prudential developments and evolving mandatory disclosures. A big challenge we face here is the accurate data collection and processing for the bank, asset management, and leasing.”
How is OTP Bank Romania supporting the transition to a green economy?
We have taken decisive steps to support the transition to a green economy through our Sustainability Strategy, initiated in 2022. We have a firm commitment to environmental protection and climate action, thus integrating environmental considerations into every facet of our operations. There are two main areas we are focusing our efforts on.
Firstly, we are actively managing our financed portfolio, which constitutes most of our carbon footprint. We are incorporating ESG risk factors into our credit policies, plan on tracking Greenhouse Gas emissions of our financed portfolio and set de-carbonization scenarios by 2025. Furthermore, we are exploiting environmental opportunities by setting targets for a green financing portfolio, supported by an internal methodology for assessment of green exposures, defined in 2023.
Then, on our own operations level, we are addressing the integration of ESG factors in the operational risk management and business continuity plan. Our efforts are centered around improving energy efficiency, increasing the usage of renewable energy sources, and minimizing waste production. These measures have yielded tangible results, so that in 2023 we achieved over 15% savings in electricity and gas consumption and bought 100% green electricity for own premises- these leading to a notable 44% reduction in our emissions versus 2022 (scope 1 and 2).
What are the most important achievements for 2023?
The results we obtained in 2023 for ESG initiatives can be categorized depending on their strategic goals. One of these goals is to be a responsible service provider, which includes objectives such as defining a plan for green products, finding solutions and creating products and investment services to facilitate a transition to a green economy, and having an active ESG risk management process. Looking at the results, we were happy to report that we managed to achieve our goals in 2022 and 2023. We defined a strategy that integrated ESG into credit, market, and the operational risk framework, we created the Green Loan Framework and implemented it locally, and finally, at the end of the year, our financing portfolio for clean energy production and green buildings reached 110 million euros.
Another strategic goal for us is to be a responsible employer. We focus on having active ESG practices in our corporate governance and strengthening employee well-being and development, diversity, and employee engagement. By the end of 2023, the level of employee engagement was 77 versus 79 in 2022- a very good value considering the announcement of OTP Group’s intention to sell OTP Bank Romania.
Finally, from a social perspective, we aim to strongly reduce emissions from our operation and make a significant contribution to SDGs. On this level, our long-term objectives included reaching net carbon neutrality for Scope 1 and 2 by the end of 2025, with interim targets. We also target reaching 10.000 beneficiaries/year via various educational programs for children and adults, and having a 10% yearly increase in the number of volunteer actions. In 2023, we managed to reach all intermediary targets set for the year.
What are your expectations regarding the evolution of green financing in 2024?
I expect green financing to certainly develop in 2024. Romania is following global sustainability trends and as an emerging market there are a lot of actors that understand the importance of sustainable projects and financing. So, there is a lot of potential to grow in volume.
Projects such as clean energy production and efficiency, rehabilitation of buildings, and real estate developments have the potential to shape the local market into a more sustainable and environmentally cautious one, thus influencing green financing trends in the years to come.
I believe green financing should also be supported by an enhanced social awareness regarding ESG requirements, as well as an increased clarity on regulatory standards and transparency obligations for companies.
What are the sustainability objectives of OTP Bank Romania for 2024?
2024 is about continuing our sustainability efforts at an internal, external, and community level.
Externally, we set a target of 78 million euros to be allocated to green projects this year, for which we also plan to track portfolio emissions and to be able to start analyzing potential decarbonization scenarios.
Within the organization, we continue to use our resources responsibly, including the consumption of green electricity and waste management.
On a social level, we are aware that our business has a significant impact on the lives of our employees, customers, and large communities. We consider customer satisfaction and employee well-being pivotal for OTP Bank’s future. Thus, we focus a lot of our efforts on measuring and maintaining customer satisfaction, maintaining the product and services with positive social impact, and consolidating digital services as a low-carbon alternative. For our employee’s well-being, we already implemented some measures in 2023, which included the increase of the minimum net salary, increase of meal ticket value, better health insurance conditions and lower costs for employee services, continued Body Awareness Bootcamps, free psychological support, and facilities for proper work-life balance.
In the communities we are active in, we plan to continue our engagement through added educational programs, awareness campaigns, sponsorships, and volunteering actions.
What are the challenges you are currently facing? What are the expectations for 2024?
2024 will bring a unique set of opportunities and challenges for us. We plan to respond to several trends with a big focus on integrating environmental and social issues in prudential developments and evolving mandatory disclosures. A big challenge we face here is the accurate data collection and processing for the bank, asset management, and leasing.
We will also grow our Green Portfolio, thus supporting the transition to a low-carbon economy. For our Green Portfolio, we will maintain a focus on renewable energy production, green buildings, and ecological mobility. A potential challenge we could face going further is the customer’s readiness to perform extra due-diligence and provide data required for green alignment methodologies.
Internally, we remain committed to proactively addressing environmental concerns by implementing eco-friendly practices in our operations and exploring green initiatives to reduce our carbon footprint.
On a social level, we plan on staying attuned to evolving social issues, such as financial inclusivity and community development. We’ll continue to play a role in society through responsible products and donations, thus supporting the realization of SDGs.
We also aim to increase ESG awareness through dedicated training programs and good practices.
