About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements Dilemma: Palm Oil In 2018 we felt pressure from NGOs on topics such as palm oil, animal welfare, and biodiversity loss. Our clients likely felt it too. We recognize the importance of these issues and have clear sustainability policies to ensure a transparent and consistent approach in our global activities. We are also proactively developing solutions and improvements through our partnerships with other stakeholders such as UN Environment and the World Wildlife Fund (WWF). Moreover, we participate in the innovative multi stakeholder initiative for a deltaplan aimed at restoring biodiversity in The Netherlands. Attention for Climate Change Climate change is rapidly becoming one ofthe most important global issues to impact society. It is also an important credit risk, the assessment of which is to be incorporated in risk modelling and risk management. Within our portfolio we will dedicate special attention to the Real Estate sector in the Netherlands and F&A globally because ofthe relatively large size of these asset categories on our balance sheet. We recognize the urgency of transitioning to a circular economy in these and other sectors. We support them through activities like our Circular Economy Challenge program to help entrepreneurs transition to circular entrepreneurs. Last year, in cooperation with other Dutch banks, we also introduced a set of circular economy financing guidelines. Contribution to Climate Goals Real estate is responsible for about 40% of global energy consumption. Reducing the energy usage ofthe properties in our real estate loan portfolio will make a valuable contribution to the current Dutch climate goals. The Dutch government has set ambitious targets for the energy efficiency of homes and office buildings. In 2018, Rabobank worked with the government and other stakeholders on the "Sector Table for the Built Environment" and the "SectorTable for Agriculture and Land Use" ofthe Dutch National Climate Agreement (which was presented in July and will tender a more detailed draft final agreement in December). Rabobank assisted in the conception of a workable road-map to achieving these goals. To make Rabobanks' real estate loan portfolio more sustainable, we offer the Green Mortgage. We also introduced the Green Construction Depot to incentivize retail clients to invest in energy-saving measures for their homes. In April, we launched a partnership with an energy broker to help our clients transition to local sustainable energy suppliers. We have seen the energy label ratings of our mortgage portfolio improve, as shown in the table below. Energy Labels in the Mortgage Portfolio of houses of houses funded funded Energy label by Rabobank by Rabobank (2018)' (2017f A 20% 18% B 15% 15% C 25% 26% D 15% 16% E 10% 10% F 7% 8% G 7% 7% Total 100% 100% 1 In 2018 approximately 17% ofthe mortgage portfolio has a confirmed energy label. 2 In 2017 approximately 16% ofthe mortgage portfolio has a confirmed energy label. Our real estate loan portfolio has also been analyzed by a specialized agency to ascertain the energy labels. The conclusion was that 55% of commercial real estate buildings have a "C" energy label or higher, the minimum requirement by 2023 according to Dutch legislation, or 30%, including rental property. We are working with our clients to ensure they can meet the 2023 requirements in time. All Rabobank offices in the Netherlands will have a "C" label by 2020 (including an "A" label for all central offices) and we aim for an "A" label by 2027. As of 2019, all our offices in the Netherlands purchase green gas from Suiker Unie and Wabico. Launch AGRI3 Fund Rabobank is chair of the World Business Council for Sustainable Development (WBCSD) Climate Smart Agriculture Finance working group. At the 2018 Annual WBCSD meeting in Singapore, we announced the first warehoused investment ofthe AGRI3 Fund, a joint initiative of the Rabobank-UN Environment partnership for Forest Protection and Sustainable Development with support from FMO and IDH. The AGRI3 Fund aims to ultimately unlock USD 1 billion in capital for the transition toward sustainable agriculture. Projects and transactions using blended finance solutions will be mostly sourced from Rabobank's Rural and Wholesale customer base, allowing us to strategically engage with our clients while having a positive environmental and social impact. Enhancing Sustainability Performance Rabobank uses its proprietary sustainability scan, the Client Photo, to gain insight into our customers' sustainability approaches and achievements. The Client Photo scan is integrated into our standard lending process. In 2018,87% of our Wholesale clients completed the annual Client Photo scan, an Annual Report 2018 - Management Report 33

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Annual Reports Rabobank | 2018 | | pagina 35