Strategic ReportStrategic ReportStrategic Report Financial Additional Overview Strategy Performance Governance Statements Information The concept of sustainability lies at the heart of our business and reflects our contribution to sustainable development As a Group, we recognise that we owe a duty not only Environmental matters to our shareholders but to the wider society in which we operate. As a large employer in Georgia, it is incumbent The Group recognises that its operations have both upon us to play a leading role in minimising our impact an indirect and direct impact on the environment, and upon the environment, to be an employer of choice and to therefore seeks to establish management approaches drive positive change in society. We consider sustainability which will help it become a more environmentally-friendly to be integral to the growth of our business. Our institution. As a leading financial institution in Georgia, the sustainability agenda allows us to be profitable as well as Bank, through the projects it finances, produces significant environmentally and socially responsible. By implementing indirect impacts on the environment. As for the direct a sustainability approach in our activities, we foster long- environmental impact, we believe that the impact of term relationships with our main stakeholders, providing the Banking Business is not significant. high return on investment for shareholders, satisfying the financial needs of customers, developing employees Indirect environmental impact and contributing to the economic and social welfare through business operations of the local communities, while taking into account our The Group considers the interests of its main stakeholders environmental footprint. (customers, shareholders, employees, lenders and wider society) when developing the strategy and the In 2018, the Board of Directors adopted an Environmental processes to improve its operations. We continually strive and Social Policy for the Group (BGEO Group, the to positively contribute to society through the entire predecessor of the Group, had the policy in place since scope of our business activities by developing socially- 2012) in order to effectively manage the Group’s direct oriented products and services, implementing responsible and indirect impact on society and the environment. approaches to our business operations, carrying out This policy describes the Group’s strategy to develop solid sponsorship and charitable activities. management controls to conserve natural resources, minimise health and safety risks, and provide employees In order to efficiently manage its indirect environmental with equal development opportunities, fair compensation and social impact, the Bank has prioritised the integration and benefits. We are pioneering sustainability practices of sustainable finance principles into its credit risk in our operations and are constantly seeking new ways management procedures since 2012. The Bank ensures to improve our performance. it has a consistent approach to evaluating and managing the environmental, human health and safety risks of its The Group continues to be included in the global financed projects. In all that the Bank does, it strives to responsible investment index FTSE4Good. The index is find sustainable solutions that make business sense to designed to demonstrate strong Environmental, Social clients and minimise negative impacts on the social and and Governance (ESG) practices measured against natural environments. international standards. Environmental and Social Risk Management (ESRM) This report sets out the policies we have in place to meet procedures were further updated in 2017. The purpose of these responsibilities and the ways in which these policies the review was to ensure that the policy remains fit for have been implemented, and our achievements against purpose and reflects experience and changes in the relevant these over the course of 2018. legislation. In 2017, the Bank updated the assessment procedures of low, medium and high risk projects and This section of the strategic report constitutes the Group’s refined the monitoring procedures of the projects. Non-Financial Information Statement, in accordance with sections 414CA and 414CB of the Companies Act. The information to be disclosed under section 414CB has been included in the section below, with the exception of a description of the Group’s business model, and principal risks and uncertainties which can be found on pages 22 and 60, respectively. Annual Report 2018Bank of Georgia Group PLC 71