EU Taxonomy

In accordance with the EU Taxonomy (Regulation EU 2020/852), PZU SA provides information on how and to what extent our activities are associated with economic activities that qualify as sustainable. In particular, we disclose what portion of our non-life insurance business is related to climate change adaptation.

Percentage share of non-life insurance business qualifying under the taxonomy<./strong>

	2023	2024
PZU	29.76%	29.63%
PZU Group	31.15%	30.54%

Percentage share of non-life insurance business not qualifying under the taxonomy.

	2023	2024
PZU	70.24%	70.37%
PZU Group	68.85%	69.46%

To determine the percentage of taxonomy-eligible activities and calculate the indicators in a way that ensures full transparency, the PZU Group reviewed all non-life insurance products (Group II) to classify them and identify those that provide coverage for climate-related risks.

Products were considered taxonomy-eligible if they belonged to one of eight business lines and covered at least one of 28 chronic or acute climate risks related to temperature, wind, water, or earth. Products offering all-risk coverage were also deemed eligible.

A similar analytical process was conducted for active reinsurance revenues, focusing on insurance products subject to reinsurance. If a product met the criteria and qualified under the taxonomy, the associated reinsurance revenues were also considered eligible.

Indicators are presented both individually for PZU SA and on a consolidated basis for all PZU Group companies engaged in non-life and other personal insurance: PZU, LINK4, TUW PZUW, TUW Polski Gaz (in liquidation), Lietuvos Draudimas, Lietuvos Draudimas – Estonia Branch, AAS BALTA, and PrJSC IC PZU Ukraine.

Details on the methodology can be found in the Annual Report, in the chapter dedicated to the PZU Group’s taxonomy disclosures.

Pursuant to the EU Taxonomy (Regulation EU 2020/852), PZU SA publishes information on how and to what extent its investment activities relate to economic activity that qualifies as environmentally sustainable.

The first four indicators pertain to PZU SA’s investment policy in terms of the accumulated assets originating from the insurance activity they conduct; these indicators should demonstrate the percentage share of assets invested in activities aligned with the taxonomy in all assets held.

1a. Percentage share of total assets of assets with exposure to economic activities eligible as taxonomy-aligned, KPI revenue	2,3%
1b. Percentage share of total assets of assets with exposure to economic activities eligible as taxonomy-aligned, KPI capital expenditure	3,0%
2a. Percentage share of total assets of assets with exposure to economic activities ineligible as taxonomy-aligned, KPI revenue	5,8%
2b. Percentage share of total assets of assets with exposure to economic activities ineligible as taxonomy-aligned, KPI capital expenditure	5,1%
3. Percentage share of total assets of assets with exposure to central governments, central banks and supernational issuers as well as derivatives	25,7%
4. Percentage share of total assets of assets with exposure to entities not subject to the obligation of publishing non-financial information	14,5%
Total assets	45,9

PZU Group is a mixed group (it consists of financial companies and non-financial companies) and conducts diversified activity, therefore its taxonomic disclosures have been construed from the vantage point of an insurance undertaking.

PZU Group - Investment policy indicators

1a. Percentage share of total assets of assets with exposure to economic activities eligible as taxonomy-aligned, KPI revenue	0,5%
1b. Percentage share of total assets of assets with exposure to economic activities eligible as taxonomy-aligned, KPI capital expenditure	0,9%
2a. Percentage share of total assets of assets with exposure to economic activities ineligible as taxonomy-aligned, KPI revenue	2,3%
2b. Percentage share of total assets of assets with exposure to economic activities ineligible as taxonomy-aligned, KPI capital expenditure	2,0%
3. Percentage share of total assets of assets with exposure to central governments, central banks and supernational issuers as well as derivatives	32,5%
4. Percentage share of total assets of assets with exposure to entities not subject to the obligation of publishing non-financial information	25,9%
Total assets	436,1

 

Methodology

In accordance with the guidelines of the European Commission, the indicators were calculated on the basis of the standards used in financial reporting, namely for the purposes of calculating the standalone indicators - the Polish Accounting Standards were applied, and for the purposes of calculating the consolidated indicators - the International Financial Reporting Standards were applied.

Consolidated indicators refer to the financial companies belonging to the PZU Group, whereby the scope of consolidation is identical to the one used in the consolidated financial statements in accordance with the guidelines cited above, except for banks, whose assets are consolidated on prudential basis, pursuant to the Capital Requirements Regulation.

Therefore, the term “exposure” for the purposes of the standalone indicator applicable to PZU is understood as the entirety of the funds originating from insurance activity. In a balance sheet sense, this is the sum total of investments, save for investments in subordinated entities. The “look through” approach has been used, i.e. for investments in collective investment undertakings the investments of the investment funds in which PZU holds participation units have been analyzed. The sum total of the investments for which the “look through” approach has been used is higher than the value of the participation units in these funds carried in the financial statements - the difference follows chiefly from the settlements of these collective investment undertakings.

The term “exposure” for the purposes of PZU’s consolidated indicator incorporates the distinct nature of the activity and business conducted as part of the PZU Group. In particular, this is significant in insurance activity related to investing money and for banking purposes related to lending activity. The following approach has been adopted for the purposes of calculating the consolidated indicators:

• for the PZU Group, net of banking activity, “exposure” is understood to mean investment financial assets at their net carrying amount, save for investments in life insurance where the risk is carried by the policyholder, as well as owned properties and properties held for investment purposes;
• for the PZU Group’s banking activity, “exposure” is understood to mean credit, lease, factoring receivables, corporate bonds and equity interests at their net carrying amount.

For both the respective standalone and consolidated indicators in respect of operations (save for the banking activities), the “look through” approach has been applied to the majority of exposures defined as above; however, it was not possible in the case for approximately 4% of the exposures and 2% of the assets in the case of the standalone indicator, and 2% of exposures and 0.2% of assets in the case of the consolidated indicator, respectively. These exposures have been qualified to indicator 4.

Based on the Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021*, PZU SA will consider requests from public authorities to share data from insurance and reinsurance activities related to claims and benefits associated with climate risks, in accordance with the Taxonomy guidelines. Requests will be considered to the extent that the shared data may help authorities achieve better climate change adaptation at regional, national, or international levels.

The scope of shared data will be limited by applicable laws binding on PZU SA. In particular, if there is a risk of breaching legally protected secrets, including insurance secrecy, trade secrets, or confidential stock exchange information, data will be provided in aggregated form at a higher level.

*Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 by establishing technical screening criteria to determine the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or adaptation, and to determine whether that activity causes significant harm to any of the other environmental objectives.

Minimum safeguards under EU Regulation 2020/852 (EU Taxonomy) are one of the key criteria determining whether an activity is environmentally sustainable. Meeting the minimum safeguards criterion means that the activity can be classified as environmentally sustainable, as it is conducted in accordance with:

• respect for human rights, including labor rights,
• implementation of anti-corruption practices,
• fair competition,
• compliance with tax regulations,
• no involvement in controversial weapons.

PZU and its subsidiaries conducting activities in line with the EU Taxonomy comply with the principle of minimum safeguards, as indicated by the Platform on Sustainable Finance and the relevant Commission notice. Within the PZU Group, minimum safeguards are assessed in both operational and investment activities.

In 2024, there were no:

• final court rulings against PZU or its subsidiaries for violations of labor or human rights,
• cases before the OECD National Contact Point (NCP) regarding human rights violations,
• allegations before the Business and Human Rights Resource Centre,
• corruption-related court cases (no final convictions of subsidiaries or their senior management),
• violations of competition law confirmed by final rulings of the Voivodeship Administrative Court or the Supreme Administrative Court regarding tax law breaches.

PZU and its subsidiaries are not involved in any activities related to controversial weapons (anti-personnel mines, cluster munitions, chemical and biological weapons).

Each type of controversial weapon is banned under international conventions and treaties to which Poland is a signatory. PZU and its subsidiaries operate in compliance with international law and do not engage in business activities involving controversial weapons.