CCH Tagetik

ESG Expert Solution

for Banks
 ESG demand
During the last 12 months, there has been an exponential drive for ESG performance and reporting and a
growing request for companies to build a strong connection between financial and non-financial performance.
With growing pressures from regulators and investors, companies are to turn their ESG risks into opportunities to
facilitate sustainable business value creation.

The needs:

Meet the new Match the conditions to • Facilitate ESG decision making,
mandatory regulatory have access to capital thanks to converged financial
requirements and non-financial information

CCH Tagetik - ESG Expert Solution for Banks 2

 Overview & context
ACCESS TO CAPITAL
• Investors, banks and insurances rating based on current and planned ESG performance
Financial • Will condition access to capital (Investors' rating, Banks loans, Insurance prime conditions,…)

REGULATORY COMPLIANCE OBLIGATIONS

* New disclosures:
• Global - Internal Finance Reporting Standards (IFRS) global sustainability financial reporting standards
• EU - Corporate Sustainability Reporting Directive (CSRD) and European Union (EU) Taxonomy
• USA - Securities and Exchange Commission (SEC) issues new climate disclosures
• APAC - ESG disclosure by the Shanghai and Shenzhen SE, ESG mandatory to be listed in Hong Kong
Governance &
* New commitments sources of coming regulations:
Compliance

DATA MANAGEMENT COMPLEXITY

Digital • Data Collection, check, enrichment and processing – Multiple and heterogeneous ecosystems
• Data Convergence – Align non-financial and financial data
Transformation • Strategic Planning – Elaborate, disclose and execute on long-term sustainability strategy

MULTIPLE REGULATORY REPORTING REQUIREMENTS UPCOMING

• 2022: EU taxonomy 1st reporting ; SFDR transparency requirements for annual report ; European Commission first set of sustainability standards
• 2023: EU taxonomy 2nd reporting ; European Commission 2nd set of sustainability standards ; Reporting obligations under the EU CSRD (Corporate
Timing Sustainability Reporting Directive)

CCH Tagetik - ESG Expert Solution for Banks 3

 The challenges
Companies are expected to link financial performance and ESG performance based on auditable data,
in a shorter amount of time to have a full coverage of risk and opportunity management

EVOLUTION OF
COMPLEXITY OF DATA REPORTING & REACTIVITY IN DECISION CORPORATE
COLLECTION REGULATIONS MAKING RISK EXPOSURE

• Time & resource availability
across functions
(sustainability, finance, risk)
• Multiple and heterogenous
data sources
• Multiple standards &
frameworks (TCFD, SASB,
IFRS…)
• Increased frequency of
reporting
• Upcoming mandatory
regulations to align with
• Data is difficult to audit
• Difficulty to access the • Risk of negative rating from
right insights to enable investors
decision-making • Poor financial conditions from
• Converging financial and banks & insurance
non-financial data • Risk of reputation impact
• Data normalization • Risk of non-compliance
(converged reporting)

CCH Tagetik - ESG Expert Solution for Banks 4

 The CFO is the most impacted persona
SUSTAINABILITY
DIRECTOR
• Align functions around ESG strategy
• Collect and report sustainability
according to multiple frameworks
CFO
• Assess financial impacts of ESG risks and opportunities
• Increase investor attractiveness
• Integrate
• Multiple sustainability
standards & in strategic• decision making
Difficulty to access
frameworks (TCFD, the right insights to
SASB, IFRS…) enable decision-
• Increased frequency of making
reporting • Converging financial
• Upcoming mandatory and non-financial
RISK & COMPLIANCE data FINANCE & CONTROLLING
regulations to align
with DIRECTOR • Data normalization DIRECTOR
• Data is difficult to audit (converged reporting)
• Manage converged non-financial and financial
• Manage impact of ESG risks and opportunities
data from multiple systems
data
• Comply with ESG regulations
• Perform advanced predictive analysis
CCH Tagetik - ESG Expert Solution for Banks 5
 We help CFO turning ESG into sustainable business value
CCH Tagetik ESG Solution focuses on converging financial & ESG performance, reducing risks and providing
the CFO and other key actors with strategic information

COMPLIANT LONG-TERM VALUE

END TO END
• Proven technology
• Win time to collect and
• Comply with regulations on
process reliable non-financial
global markets and align to
& financial ESG data
the main reporting
• Facilitate convergence
framework
between non-financial and
• Consistent: produce
financial data based on market
uniform, comparable and
expectations
reliable disclosure results
• Fully auditable
STRATEGIC
• Establish targets and KPIs
aligned with the relevant
Sustainability Development
Goals, having a long-term
impact
• Measure progress and plan
action for business
transformation
• Improve ESG ratings
CREATION
• Leverage the link
between sustainability and
financial performance,
to drive strategic decisions
• Attract investors, facilitate
access to capital,
streamline operations
• Turn ESG strategy into
sustainable business value

CCH Tagetik - ESG Expert Solution for Banks 6

How does CCH Tagetik support ESG process?

CONSOLIDATION
The new ESG expert
solution will enrich our
portfolio.

It will leverage the power

of CCH Tagetik Finance
Transformation platform
ESG and it will leverage its
existing critical
capabilities, especially in
terms of Analytic
Information Hub.

CCH Tagetik - ESG Expert Solution for Banks 7

What does CCH Tagetik offer?
CCH Tagetik by leveraging its existing critical capabilities can cover the ESG process end to end, boosting the
implementations thanks to an Expert Solution that combines all the regulatory frameworks in a single application
CONSOLIDATION

Data preparation & Process

Data collection
collection
Process
monitoring Disclosure &
& normalization Monitoring & Reporting
Calculation

Enhance and automate data Improve sustainability Improve stakeholder's

collection monitoring the entire process perception

• High data source • Built in KPIs • EU Taxonomy

flexibility calculation • All main frameworks
• Built-in data preparation • 100% auditable (GRI,SASB,..)
• Data quality • Actual & forecast reporting

The ESG Expert Solution guarantees the compliance with regulatory updates

CCH Tagetik - ESG Expert Solution for Banks 8

CCH Tagetik ESG Solution – Target architecture
CCH Tagetik ESG Solution
Reporting & Disclosure
Financial Layer

REGULATORY CONVERGED STRATEGIC

Workflow Management
REPORTING REPORTING PLANNING

Analytical Layer Engine

EU Taxonomy KPIs Pillar 3 KPIs (GRI, SASB, ...)

Data collection Data Quality

Calculation and
Normalization
Simulation

Integration

HR Environmental Social Governance Operational Finance Asset Risk …

CCH Tagetik - ESG Expert Solution for Banks 9

 EU Taxonomy
The Taxonomy is a unified classification system that identifies if an economic activity is environmentally sustainable. To
qualify as green an investment would need to contribute to at least one of following six objectives

The Taxonomy Regulation applies to financial market participants that offer financial products, financial and non-financial
undertakings within the scope of Directive 2014/95/EU (NFRD)

CCH Tagetik - ESG Expert Solution for Banks 10

 EU Taxonomy timeline
CCH Tagetik ESG Expert Solution covers any KPI calculation and disclosure requirements in the scope of Article 8(1) of the
Taxonomy Regulation for undertakings that are required to publish non-financial information under the NFRD on how and
to what extent their activities are associated with environmentally sustainable economic activities.

2022 2023 2024 2025 2026

Year End 2021 Year End 2022 Year End 2023 Year End 2024 Year End 2025

Eligibility / Alignment Eligibility only Eligibility only Alignment Alignment Alignment

Taxonomy objectives 1 and 2 1 to 6 1 to 6 1 to 6 1 to 6

KPI / Disclosure • Taxonomy eligible assets / Total assets

• Climate Change Mitigation
• Climate Change Adaptation
• Taxonomy non-eligible assets / Total assets
• Exposures to central governments, central
banks and supernational issuers / Total
assets
• Derivatives / Total assets
• Exposures not subject to NFRD / Total
assets
• Qualitative information
• Total covered assets
• Green Asset Ratio (GAR) on stock
• GAR on flow
• KPI for off-balance sheet exposures
• KPI for fees and commissions (from 2026)
• KPI for trading portfolio (from 2026)
• Qualitative information

CCH Tagetik - ESG Expert Solution for Banks 11

 Pillar 3 disclosures on ESG risks
The European Banking Authority is consulting on disclosures for Environmental, Social and Governance (ESG) risks under
the Pillar 3 framework. The draft technical standards provide ESG disclosures to ensure stakeholders are informed about
ESG banks’ exposures and sustainable finance strategies and to promote market discipline
The ITS introduces quantitative disclosures covering transition risk, physical risk, and mitigating actions (included the GAR
for exposures that contribute to or enable climate change mitigation / adaptation, in common with disclosure for EU
Taxonomy). The ITS requires also qualitative information on Environmental, Social and Governance risks

CCH Tagetik - ESG Expert Solution for Banks 12

 Pillar 3 ESG risks timeline
CCH Tagetik ESG Expert Solution covers the data collection and the calculation of KPIs for qualitative and quantitative
disclosures on environmental, social and governance risks, including transitional and physical risk, under Article 449a CRR.

December 2022 June 2023 December 2023 June 2024

Qualitative disclosure Full qualitative disclosure on Environmental, Social and Governance risks

Full disclosure on CO2

Transition risk Phase in – Simplified version of templates
emissions

Full disclosure on chronic

Physical risk Phase in – Simplified version of templates
and acute climate events

GAR on Taxonomy-
Mitigating actions Phase in – Simplified version of templates
aligned activities

The disclosure will be produced and managed into CCH Tagetik Pillar 3 Expert Solution module

CCH Tagetik - ESG Expert Solution for Banks 13

 Reporting frameworks
CCH Tagetik ESG Expert Solution provides the calculation of KPIs, and the full disclosure required by the most common
reporting frameworks and standard-setting organizations for the preparation of a Sustainability Report

The Solution is widely flexible and offers the possibility to calculate managerial KPIs and to produce custom reporting,
disclosure and dashboarding

CC Tagetik constantly monitors the development of new regulatory frameworks to include them in the ESG Expert Solution
(e.g., EFRAG’s EU Sustainability Reporting Standards)

CCH Tagetik - ESG Expert Solution for Banks 14

 CCH Tagetik ESG Solution – It’s a Journey!
Horizon 1: by 12 2021
• Continue to assess regulations
• Cooperate with customers and partners to
define the details of the solution scope and
Approach validate market fit
• Start building a pre-package solution for
standard cases, cooperating with
customers
Horizon 2: by Q2 2022
• Embed the ESG in the CFO strategy stream
• Standard Integrated reporting offer,
converging sustainability, risk and financial
view
• Introduce modern concept like AI and Data
catalog in this domain

• Focus on compliance to EU taxonomy • Taxonomy (phase2) enlarge the coverage to

Expert solution (phase1) and investor requirements (e.g., the global market
ESG indicators) • Cover all relevant frameworks
on top of
• Focus on GRI • Risk KPIs
existing critical
• Disclosure • Converged reporting & strategic planning
capabilities

CCH Tagetik - ESG Expert Solution for Banks 15