Climate change (ESRS E1)

Inclusion of sustainability-related performance in incentive systems (GOV-3)

The information on integrating sustainability-related performance in incentive systems can be found in chapter ESRS 2 GOV-3.

Transition plan for climate change (E1-1, SBM-3)

VP Bank is committed to the Paris Climate Agreement and thus to the ambition of keeping the rise in global average temperature below 2°C above pre-industrial levels and to making efforts to limit the temperature increase to 1.5°C. As the development of the transition plan is an ongoing and iterative process, it will be expanded and refined over time. The aim is to identify and analyse the risks and opportunities associated with climate change and to respond to them strategically.

Governance, strategy embedding and progress monitoring

This transition plan was approved by the Group Executive Management (GEM) and confirmed by the Strategy & Digitalisation Committee (SDC) of the Board of Directors. The plan is thus formally integrated into VP Bank's overall strategic management.

The detailed GHG reduction targets are disclosed in section E1-4, and the current GHG inventory in section E1-6. VP Bank prioritises absolute emission reductions. Climate compensation for residual emissions will only be considered after 2030.

VP Bank does not incur any direct capital expenditure (CapEx) for activities in the coal, oil or gas sectors. VP Bank's Green Asset Ratio (GAR) based on capital expenditure is 1.0 per cent in relation to total covered assets, with the GAR for investments in non-financial companies standing at 18.6 per cent based on capital expenditure. There are no targets for a Taxonomy-alignmnet of economic activities (green asset ratio). VP Bank's Responsible Investment Policy systematically excludes investments in thermal coal. This is described in more detail in section S4-1. For investments in the oil and gas sector, VP Bank applies a Sectoral Decarbonisation Approach (SDA) to its own investments, focusing on time-bound, sector-specific targets based on a 1.5-degree scenario. This means that reinvestments in carbon-intensive industries are directed specifically towards issuers that comply with sectoral decarbonisation pathways. This provides a key source of financial support for the Bank's transition. Section E1-4 provides more detail on the SDA methodology and decarbonisation targets.

The transition plan is anchored in the business strategy, as demonstrated by actions that were driven forward in 2025: strengthening ESG due diligence for corporate loans, using sector-specific climate pathways for proprietary investments, expanding the ESG data infrastructure and improving analysis and modelling capacities. In addition, ESG risks and climate-related financial risks are anchored in VP Bank's risk taxonomy and act as risk drivers in the classic risk categories and in reputation risks.

The implementation steps of the transition plan are reviewed internally once a year. The resulting progress and findings are disclosed in chapters E1–E6 of the sustainability report. In addition, progress is monitored on a quarterly basis via the ESG scorecard as part of the Quarterly Risk Report. This report is submitted to the Group Executive Management (GEM) and the Risk Committee (VRI) of the Board of Directors (BoD). Further information on the sustainability governance can be found in chapters ESRS 2 GOV-1 and ESRS 2 GOV-2. A description of the ESG scorecard can be found in chapter ESRS 2 MDR-M.

In accordance with Delegated Regulation (EU) 2020/1818, VP Bank is not exempt from the EU benchmarks within the meaning of the Paris Agreement.

Decarbonisation levers and measures in its own operations

VP Bank has defined a net-zero ambition by 2030 for direct Scope 1 emissions and energy-related Scope 2 emissions.

In the area of Scope 1 emissions, VP Bank is aiming for a 74 per cent reduction in GHG emissions, from 37.5 tonnes of CO₂ in 2024 to 9.9 tonnes of CO₂ in 2030. A material lever here is the conversion of the vehicle fleet. At the Luxembourg site, a policy has been introduced that restricts the purchase of company vehicles for employees to electric or hybrid vehicles with CO₂ emissions of no more than 60 g CO₂/km. In Liechtenstein, VP Bank is aiming to convert entirely to electric vehicles by 2030. At the BVI site, there are currently one combustion engine vehicle in its fleet, which cannot currently be replaced due to infrastructure constraints. There are currently no company vehicles at the sites in Switzerland and Singapore.

terms of Scope 2 emissions, VP Bank is aiming to reduce GHG emissions by 69 per cent, from 165.7 tonnes of CO₂ in 2024 to 51.7 tonnes CO₂ in 2030.

Where possible, VP Bank obtains energy from renewable sources in order to reduce its Scope 2 emissions.² VP Bank has already achieved complete procurement of electricity from renewable sources at its sites in Luxembourg, Switzerland and Liechtenstein. In addition, there is additional solar power generation in Liechtenstein and energy efficiency measures such as the introduction of LED lighting, optimised lighting and ventilation plans, and district heating plans. The Singapore site is equipped with LED lighting and the building is certified to the BCA Green Mark Standard Platinum. A further expansion of the use of renewable energies is being examined in the British Virgin Islands. In addition to internal decarbonisation measures, national energy strategies and sectoral changes, such as the decarbonisation of the electricity grid, the introduction of electric vehicles and the expansion of sustainable air transport, are contributing to emissions reductions along our entire value chain. The national energy strategies in Singapore, Luxembourg, Switzerland and Liechtenstein are aligned with net-zero targets by 2050 and are driving the decarbonisation of electricity grids. These developments directly support our Scope 2 emission reductions.

In the area of Scope 3, Category 15 emissions, VP Bank has set itself a net zero ambition for its own investments by 2050. For Scope 3 emissions, VP Bank distinguishes between operational emissions resulting from categories 1-14 and financed emissions, which are classified under category 15.

The double materiality analysis has shown that the climate issue is essential in the downstream value chain of VP Bank, specifically in the lending and investment business. Regarding greenhouse gas emissions, chapter E1-6 provides a detailed overview of VP Bank’s greenhouse gas inventory and shows that these are mainly in the form of financed emissions in Scope 3, category 15.

Decarbonisation levers and actions for own facilities

The operational implementation to achieve the sector-specific targets described in more detail in chapter E1-4 for our proprietary investments is based on the Transition Pathway Initiative (TPI). Accordingly, two criteria have been introduced into the investment decision-making process for proprietary investments, which must be met if a company belongs to one of the above-mentioned emission-intensive sectors: (i) The company must have publicly committed to a net-zero target by 2050 or earlier, and (ii) it must have a TPI Management Score (version 5.0) of 4 or higher. In this way, on-balance sheet investments are to be gradually aligned with the net-zero target.

VP Bank relies on physical intensity metrics and focuses on efficiency improvements. This is in line with our target of financing the transition to a low-carbon economy. In addition, key operating indicators for materiality enable better internal progress monitoring and comparability across industries with similar product mixes. This reduces the impacts of economic cycles and the associated growth or decline in business. At the same time, the key operating indicators for physical intensity remain unaffected by an expansion of the business units included and an increase or decrease in assets under management per business unit.

In the area of proprietary investments, bonds are held to maturity in accordance with VP Bank's business model for investing financial assets and are recognised in the balance sheet at amortised cost. Early sale is therefore only possible in exceptional cases. This leads to long-term locked-in financed emissions and a transition phase with regard to the operational adjustments described below to take climate-related criteria into account in investment decisions in the area of own investments. Assuming an average investment horizon of seven years, the last securities that were not purchased in accordance with the criteria established in 2023 will mature in approximately 2030.

Decarbonisation levers and actions in the lending business

In the lending business, the effects of climate change can be seen primarily in the mortgage business, which accounts for a high proportion of the loan portfolio. In the context of real estate, the topics of greenhouse gas emissions, energy efficiency and the lifespan of a property are important. By financing energy-intensive buildings, particularly those with low energy efficiency and heating systems based on fossil fuels, VP Bank has an indirect impact on climate change.

Raising client awareness of more sustainable construction methods and energy-efficient renovations can help reduce the climate impacts of the mortgage business. In addition to well-informed dialogue between our advisors and clients, a solid data basis is crucial for developing targeted actions and effective management. Accordingly, VP Bank has taken measures to improve data quality and expand the catalogue of building-specific characteristics. In addition, natural hazards have been systematically recorded and evaluated internally. The findings from future analyses will help to define targeted steps to reduce locked-in financed emissions in the financing of residential property over time.

In the area of corporate loans (unsecured receivables), particularly for SMEs, it is important to raise client awareness of climate issues and the challenge posed by an insufficient data basis due to environmental data that is not publicly available or does not exist. To improve data quality and granularity, VP Bank has created a questionnaire for commercial ESG due diligence. All commercial clients must complete this questionnaire. The aim is to raise client awareness of the issue through dialogue and to build up a data basis that enables more accurate CO₂ accounting and progress monitoring on the path to decarbonisation. The questionnaire also asks whether and within what timeframe companies have defined a net-zero target.

Decarbonisation levers and measures in the investment business

In the context of the transition plan, the investment business comprises investments for which VP Bank makes the investment decision on behalf of its clients and thus also bears investment responsibility. VP Bank considers it its fiduciary duty to identify financially material risks and opportunities in connection with the assets we manage on behalf of our clients and to take these into account when making investment decisions. The financial materiality of climate-related risks and opportunities in the investment business depends on a variety of factors, including the asset class, investment horizon, investment style and region. VP Bank consistently integrates sustainability criteria into its investment processes and takes them into account both in the portfolio composition for its discretionary mandates and in advising its clients.

The impact on climate change from the investment sector is indirect and results from VP Bank's investment decisions. For example, investments in carbon-intensive industries can have negative effects on the environment and increase the frequency and intensity of physical risks. Conversely, investments in technological advances and innovative companies can have a positive impact. However, the impact of investments is difficult to measure and quantify, and may lead to negative short-term financial effects in the portfolio context. However, the impact of investments is difficult to measure and quantify and can lead to adverse financial effects in a portfolio context.

The consideration of impact aspects in investment decisions in the investment business depends on whether the client explicitly requests this and informs us of their preferences. The investment business is not fundamentally geared towards the net zero target. VP Bank continuously reviews its product range, taking into account client demand and general market developments. Detailed information on the VP Bank Sustainability Score (VPSS) and the integration of sustainability criteria into the investment and advisory process is provided in section S4-1.

Investments to implement the transition plan

As a financial institution, VP Bank does not report separate CapEx accruals for production-related investment activities in its financial reporting. Due to its business model, only limited investments in tangible assets are made that are not reported as CapEx in the financial report. To implement the transition plan, VP Bank therefore primarily provides financial resources for internal resources (FTE), the further development of data collection, quality and validation processes, and the acquisition of solutions for quantitative climate scenario analyses, stress tests and resilience analyses. In addition, the bank is investing in energy efficiency measures in its buildings, including LED conversion, optimisation of heating and ventilation systems, and expansion of photovoltaic systems.

Climate scenario analyses

VP Bank uses the scenarios developed by the Network for Greening the Financial System (NGFS) for its future quantitative climate scenario analyses. Several credible scenarios were examined. In 2025, the Group Executive Management (GEM) selected the following three climate scenarios for implementation, which were confirmed by the Board of Directors: Net Zero 2025 (orderly), Delayed Transition (disorderly), and Current Policies (Hot House World). The Delayed Transition scenario forms the baseline scenario for VP Bank and will be used for future strategic considerations. In line with this, VP Bank has adopted the following climate narrative through GEM, which can be adjusted over time:

"VP Bank expects to operate in a financial system in which climate protection measures are delayed. This is likely to lead to abrupt policy changes, increased market volatility, and heightened physical risks in the future. After 2030, the regulatory framework will be significantly tightened due to the increasing impacts of climate change and public pressure. We currently expect a disorderly transition with inconsistent adjustments in different sectors and regions."

VP Bank has conducted a qualitative climate scenario analysis based on VP Bank's baseline scenario and the worst-case scenario: "disorderly transition" and "hot house world." In the case of a disorderly transition, high transition risks and low physical risks are assumed, as political responses will be delayed but still sufficient to achieve climate targets. In this scenario, VP Bank’s qualitative analysis focuses on the potential transition risks. In the Hot House World scenario, the necessary policy response comes too late or not at all, leading to a sharp increase in physical risks while transition risks scarcely come into play. Accordingly, the qualitative analysis in this scenario concentrates on the physical climate risks aspect. The scenarios were evaluated in the context of short-, medium- and long-term horizons as defined in ESRS 2 BP-1.

The following analyses the potential impact of climate change on the lending and investment business, which is essential for VP Bank.

Scenario: disorderly transition

The table below shows examples of transition risks and opportunities for VP Bank in the areas of policy and law, technology, market and reputation. As a general rule, transition risks can be detrimental to the value of loan collateral. An example of this is the ban on fossil fuels for heating systems, which can lead to a loss in the value of real estate in the medium to long term. The purchase of an alternative heating system would involve additional financing costs and could affect affordability. In addition, a medium-term increase in national CO₂ levies could increase operating costs and weigh on home owners’ ability to pay their mortgage. VP Bank strives continuously to identify transformation risks in the mortgage portfolio, to price them into valuations and, where appropriate, to take action.

In the area of investment business, transition risks can be reflected in market risks over the medium term via the revaluation of financial investments. VP Bank must identify these effects, risks and opportunities. Transition risks arise continuously from the transition to a low-carbon economy. This entails various uncertainties, such as those of a political or technological nature, which can appear as financial risks in the short to medium term, but also represent interesting investment opportunities. Here too, there is a tendency to focus in the medium to long term on certain regions and sectors, such as carbon-intensive industries that are more exposed to transition risks. Likewise, policy measures at national level, such as the introduction of a CO₂ levy, have a direct impact on certain business locations. We aim to use the climate scenario analysis to better understand where these risks are concentrated and what the financial implications might be, and incorporate these insights in the transition plan for climate change.

Scenario: Hot House World

The following table shows examples of acute and chronic physical risks that might arise for VP Bank from different natural hazards. In the area of credit risk, in the medium to long term physical risks can reduce the value of loan collateral or the real estate financed by VP Bank. Restructuring and protection measures against environmental events might affect financing costs and thus what borrowers can afford in the medium term. To determine possible physical climate risks attached to its mortgages, VP Bank carried out an initial survey of the exposure of its mortgage portfolio to natural hazards. Avalanches, earthquakes, floods, landslides and rockfall were identified as potential risks from the natural world. Exposure potential is generally low, with individual properties exposed to increased flood risk that might pose a financial burden in the short term. As a general rule, the financial implications of these risks for VP Bank are classified as minor. In addition to Switzerland, Liechtenstein is one of the few countries in which buildings and home contents are insured against fire and natural disasters.

In the investment business, the revaluation of financial investments means that physical risks can also affect market risks for VP Bank. In terms of own investments and in the client business, VP Bank takes into account a number of criteria to ensure a broadly diversified portfolio of high quality. The relevance of the physical risks of companies and countries in which VP Bank invests depends, in particular, on region and sector. The medium- to long-term financial effects are therefore fairly low since portfolio risk can be reduced in the short term by divesting from high-risk assets. In the long term, chronic physical risks can become more relevant to investments in cases where the expected impairments on investments in the portfolio can no longer be diversified away. The climate scenario analysis that VP Bank conducts in the future will provide additional quantitative insights and, based on this, will feed continually into the transition plan for climate change.

Description of the process to identify and assess material impacts, risks and opportunities (IRO-1)

IRO were identified and assessed along the entire VP Bank value chain. Given the sector in which we operate, climate-related impacts, risks and opportunities arise primarily from investment exposure in other companies. Both the upstream value chain and our own operations account for a minor share of the emissions caused and attributable to VP Bank (see chapter E1-6). More information on assessing the material IROs, taking into account the value chain, can be found in chapter ESRS 2 IRO-1.

Material climate-related effects in the lending and investment business were identified for VP Bank. In the lending business, the focus is on mortgages and the emissions of the buildings they finance. In assessing the buildings, estimates were used to factor in the impacts of Scope 1 emissions (greenhouse gas [GHG] emissions caused directly, such as heating) and Scope 2 emissions (purchased GHG emissions, such as electricity generation). Scope 3 emissions (GHG emissions from residential construction) were not included. In the area of investments, the assessment was based on industry affiliation and region, because the financed emissions in the area of investments result disproportionately from exposure to GHG-intensive industries. Thus, even proportionally small volumes in GHG-intensive industries lead to a high share of the total financed emissions. In the area of proprietary investments, VP Bank has implemented a sectoral decarbonization approach (SDA) in order to steadily reduce financed emissions (see section E1-4).

Policies related to climate change mitigation and adaptation (E1-2)

VP Bank sets out its expectations of its employees in its Code of Conduct. Employees are required to use natural resources as sparingly as possible. Social and environmental aspects are taken into account in business decisions. VP Bank strives to keep its environmental footprint as small as possible.

The Supplier Code of Conduct describes VP Bank's expectations of its suppliers with regard to ethical behavior, compliance with laws, sustainable business practices, and adherence to human rights principles. Specifically, VP Bank expects its suppliers to comply with the UN Global Compact principles, ILO labor standards, OECD guidelines for multinational enterprises, and UN guiding principles for business and human rights.

ESG criteria have been incorporated into the architecture of the New Product Process (NPP) and the Product Review Process (PRP) in order to strengthen ESG risk management across VP Bank's entire product universe. The results of the initial analysis are used in the PRP and continuously adjusted. The assessment in the NPP is carried out by the Head Group Sustainability or, alternatively, by the CIO as representative in the Product and Pricing Committee (PCC). As part of the PRP, ESG criteria are anchored in the scoring model as an additional risk type, "Sustainability".

VP Bank's Responsible Investment Policy stipulates that sustainability criteria must be taken into account in all investments where VP Bank makes the investment decision. VP Bank integrates sustainability criteria into all discretionary asset management mandates, VP Bank investment funds, and proprietary investments. The directive also applies to the list of recommendations for advisory mandates, although the investment decision lies with the client and deviations may therefore occur. Further information on the consideration of sustainability criteria in investment decisions is provided in section S4-1.

In its Group Credit Standard, VP Bank has specified its ESG-related guidelines and developed an approach for monitoring and internal reporting of ESG risks in order to manage ESG-related credit risks. Before entering into a business relationship, an ESG due diligence review must be carried out for corporate loans . This includes questions about critical business activities and practices that could lead to the exclusion of the business relationship, as well as company-specific information in order to obtain the necessary data for CO₂ reporting and future climate scenario analysis.

VP Bank is continually developing its risk framework and at the same time seeks to identify and manage opportunities arising from climate change mitigation and adaptation. In the short term, it is focusing on transition risks resulting from regulatory changes, and aligning with client needs and preferences. Physical risks are primarily considered long-term risks. To better understand the potential adverse effects and economic consequences of natural hazards, work has begun to assess the exposure of the mortgage portfolio to natural hazards.

To classify climate risks, i.e. physical and transition risks, VP Bank has adopted the risk terminology of the TCFD framework. Qualitative information as defined in the Task Force on Climate-related Financial Disclosures (TCFD) guidelines is included in this report. It is identified as TCFD content by references to the relevant chapters of the report set out in Annex SN.5.

Where financial materiality is concerned, VP Bank refers to ESG risks and climate-related financial risks. These risks arise primarily from the Bank's exposure to its clients and counterparties, as well as from invested assets. They may manifest themselves as both financial and non-financial risks. When considering ESG risks, VP Bank focuses on financial materiality (the outside-in perspective). Accordingly, ESG risks and climate-related financial risks are integrated into VP Bank’s risk management systems.

The above figure illustrates risk types, with the impact of ESG risks and climate-related financial risks as a driver in risk categories, and reputational risks as consequential risks.

Our risk management process includes comprehensive risk monitoring, which is functionally and organisationally independent of the risk-bearing units. Risk monitoring consists of risk controlling and risk reporting. VP Bank identifies and assesses ESG and climate-related financial risks using bottom-up and top-down analyses as part of the risk inventory. This forms the basis of risk identification and risk strategy. The results of the risk assessments form the basis of controlling and reporting.

The risks associated with climate change are considered financial risks to be integrated into the existing risk management framework. Risk management includes measures at all organisational levels to actively influence the bank risks classified as material. The risk appetite statement and other bank frameworks have been expanded to include ESG risks and climate-related financial risks. VP Bank is in the process of developing first-line of defence guidelines for ESG and climate-related financial risk KPIs. At the same time, the corresponding second-line of defence monitoring processes and risk reporting are being enhanced further.

Following the general risk management approach of VP Bank, based on the lines of defence framework, the same principles are applied to climate-related financial risks, with defence lines, as shown in the table below, have different roles and functions.

Actions and resources in relation to climate change policies (E1-3)

The following table provides a selected overview of action that has already been completed, or is planned or being implemented. Information on the resources and funding used to take this action will not be published for reasons of business confidentiality. VP Bank takes a wide range of operational measures to raise employee awareness and to reduce energy, water and paper consumption, as well as to prevent waste. It also has a system of environmental and mobility management. In addition, employees are encouraged to keep their travel as low-emission as possible.

Targets related to climate change mitigation and adaptation (E1-4)

VP Bank focuses on the areas of the value chain with the greatest relevance to the climate. Drawing on our dual materiality assessment and in line with general industry practice, VP Bank’s main climate-relevant IROs originate from our downstream activities. The focus is on activities further along the value chain on which VP Bank has the greatest direct impact. Building on the overarching objectives in chapter ESRS 2 MDR-T, the specific climate-related goals are described below.

The following table provides an overview of VP Bank's overarching climate targets. Additional information can be found in the transition plan in chapter E1-1. VP Bank focuses primarily on actions to reduce emissions in order to achieve its targets. All figures relating to greenhouse gas emissions in the current reporting year are gross figures. The metrics are calculated internally.¹ The climate-related targets are not currently based on scientific findings and have not been validated externally.

Financed emissions are recorded as part of the downstream value chain under Scope 3, Category 15. VP Bank has developed sector-specific intensity targets and action to decarbonise its own investments. VP Bank applies a sectoral decarbonisation approach (SDA) based on the Transition Pathways Initiative (TPI) methodology. The SDA adopts a sector-specific method that compares companies within a sector with each other and sector-specific benchmarks. This comparison results in the performance of an average company in terms of international emissions targets.

VP Bank applies time-based and sector-specific targets as indicated at the time of the last industry TPI assessment for the “1.5°C scenario”. This scenario is consistent with the overarching goal of the Paris Climate Agreement to limit global average temperature rise to well below 2 degrees above pre-industrial levels, and make further efforts to limit temperature rise to 1.5 degrees from those levels. This corresponds to a carbon budget that limits the increase in the global average temperature to 1.5 degrees, with a probability of 50 per cent.

Operational action to achieve the goals described above for our own investments is based on the TPI. Accordingly, two criteria have been introduced into the investment decision-making process for the bank’s own investments. These must be met if a company belongs to one of the aforementioned emissions-intensive sectors: (i) The company must commit publicly to a net zero target by 2050 or earlier, and (ii) it must have a TPI management score of three or higher. In this way, reportable investments will gradually be aligned to the net zero target.

Where own investments are concerned, debentures are held up to maturity in accordance with the VP Bank business model for financial investments and are thus recognised at amortised cost. Early sale is therefore only possible in exceptional cases. This leads to time-bound emissions and a transitional phase with regard to the operational adjustments described below to take climate-relevant criteria into account when making own investments. Assuming an average seven-year investment horizon, the last securities that were not bought according to the criteria set in 2023 will fall due around 2030.

In view of the continuing lack of data in some areas, intensity-based metrics may vary from year to year until data collection improves. Future reporting years will likely include recalibrated year-on-year figures to ensure better data availability and consistent progress monitoring. If no company-specific emissions and/or productivity data is available, a sector-specific average method is used. The industry average is based on information provided by the TPI for each industry and year.

Gross Scopes 1, 2 and 3 and total GHG emissions (E1-6)

VP Bank reports on Scope 1, Scope 2, and Scope 3 emissions in accordance with the guidelines of the Greenhouse Gas Protocol and applies the operational control approach required under the CSRD, i.e., reporting focuses on operational activities, relationships, and assets that the bank can directly control. VP Bank's Scope 3 emissions inventory covers categories 1, 2, 5, 6, 7, and 15. Although Scope 3 categories 1, 2, 5, 6, and 7 have been classified as non-material, VP Bank discloses them in order to provide as complete a picture as possible of its greenhouse gas inventory. The basis for calculating greenhouse gas emissions corresponds to the scope of consolidation defined in chapter ESRS 1. There are no emissions that are regulated under emissions trading systems.

Operational activity data and emission factors

Primary data is used where possible for activity data for GHG emissions under Scope 1, 2 and 3 (categories 1, 2, 5, 6, 7). This is location-specific data drawn directly from the supplier or from internal processes. 94 per cent of our emissions disclosures during the reporting period are based on primary activity data. In the few cases in which no primary data was available, VP Bank used either secondary data (less than one per cent) or a mixture of primary and secondary data (6 per cent). Secondary data refers to assumptions based on national data or average values from other VP Bank sites when no other primary data was available. For example, VP Bank Switzerland did not have any data on commuting, so national statistics from the Swiss Federal Statistical Office were used.

Where possible, the total emissions and emission factors for an activity for Scope 1, 2, and 3 emissions (categories 1, 2, 5, 6, 7) come directly from suppliers. In the reporting period, 4 per cent of our total greenhouse gas emissions were calculated using our suppliers' emission factors. In cases where this data was not available, the ecoinvent 3.10 database was used with the Global Warming Potential 100 (GWP 100) values from the Intergovernmental Panel on Climate Change (IPCC) from 2021, which accounted for 26 per cent of emissions. The expenditure-based emission factors for categories 1 and 2 are sourced from EXIOBASE 3.8 via the Climatiq public database and account for the remainder of our total operational emissions.

Emissions from Scope 3, Category 1 are reported for the first time in the current reporting year. To collect this data, VP Bank applies an expenditure-based approach, in which emissions are estimated based on expenditure incurred by linking this to industry-wide emission factors. However, this method is subject to estimation errors as it is based on broad economic averages and does not take actual activities or supplier-specific data into account. In order to maintain consistency between the two procurement-related categories, Category 2 was also converted to an expenditure-based calculation, which resulted in higher reported emissions.  The emissions data for 2024 has been adjusted retroactively to ensure comparability with the data for 2025.

The 29 per cent reduction in Scope 1 emissions is due to stricter fleet regulations in the form of adjusted internal emission limits of 60 g CO₂/km. In addition, the vehicle fleet at the Luxembourg site was increasingly equipped with fully electric vehicles, reducing GHG emissions from 23 tonnes CO₂e in 2024 to 11 tonnes CO₂e in 2025. The 54 per cent reduction in emissions from business travel (category 6) is largely due to the application of updated emission factors. The emission values are based on the latest DESNZ coefficients for air travel, which are significantly lower for 2025.¹ In addition, 7 per cent fewer kilometers were flown in the reporting period than in the previous year.

GHG Protocol indicators are used to assess data quality. These address the representative nature of data in terms of technology, time and geography, as well as the completeness and reliability of data collection. In cases where no primary data is available, assumptions and estimates are made on the basis of secondary data sources. These limitations can affect the accuracy of the greenhouse gas emissions reported. Efforts are being made to improve the accuracy and completeness of this data. To detect transcription errors and inconsistencies, all data is automatically marked if it deviates by more than five per cent from the previous year’s data. To improve data quality there are plans continuously to improve data collection and emission factor data. In addition, each location must perform data plausibility checks.

Financed GHG emissions

The emissions financed by VP Bank are classified as Scope 3, category 15: “Investments” are recorded and are material to financial institutions. VP Bank reports on GHG emissions from the lending and investment business, with the latter including VP Bank’s own investments, as well as client assets for which investment decisions are made by VP Bank. The methodological implementation of VP Bank is based on the guidelines of the Partnership for Carbon Accounting Financials (PCAF). In the lending business, VP Bank records financed emissions from commercial real estate and mortgages, as well as corporate loans.¹ The following asset classes are included when calculating financed emissions from direct investments and funds in the investment business: exchange-listed equities, corporate bonds and government bonds. VP Bank does not offer project or vehicle financing. Cash holdings and derivatives are not relevant to the calculation of financed emissions, and reduce the coverage ratio accordingly.

A hybrid approach is being used for the first time to determine the GHG emissions of mortgage receivables. This is due to the fact that the database from internal systems regarding building characteristics for existing properties in Switzerland was improved in 2025.¹ Where possible, building-specific characteristics are therefore used to calculate emissions. In all other cases, as in previous years, the calculation is based on proxies from the PCAF database for European building emission factors.² The emission factors used are country-specific and distinguish between residential and commercial properties.

To determine the financed emissions in the investment business, data from a third-party provider on actual reported GHG emissions by companies is used. These are manually checked on a random basis against the companies' annual reports to ensure the highest possible data quality.

Anticipated financial effects from material physical and transition risks and potential climate-related opportunities (E1-9)

For the current financial year, we are making use of the option to rely on a qualitative analysis based on two climate scenarios. Detailed information on this can be found in Chapter E1-1.