Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 75

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 75
---
 Risk Management Policy sets out the criteria for providing financial products to customers involved in several of the sectors within the scope of our financed emissions targets (i.e., power, oil & gas, metals & mining and soft commodities). For all sectors with alignment targets, customer climate tiering and engagement considerations are being incorporated into annual credit risk reviews. For one-off transactions (e.g., project finance transactions), we assess a transaction’s impact on the relevant sector’s portfolio financed emissions targets.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     | Contributing to integrity in transition finance |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| We continue to contribute to furthering knowledge of transition finance as a key enabler towards net zero. As part of our long-standing support for education, employability and entrepreneurship, we are collaborating with the University of Oxford to fund the development of a Transition Finance Centre of Excellence. This centre aims to play a prominent role in defining aspects of transition finance, such as best practice sectoral transition plans and new tools and insight for practitioners. 
 Initial research has focused on developing a deeper understanding of assessing companies’ transition plans                                                                                                                                                                                                                                                                                                                                                                                                    |     |                                                 |     | in emission-intensive sectors. Follow up work has explored external dependencies in corporate transition plans and assessing transition plans with more granular asset-based approaches. Research has also included corporate net zero transition plan implications for loan pricing, the development of tools to assess sustainability-linked bond pricing (given the dynamic nature of sustainability performance indicators), and other topics. 
 For more details about this collaboration and published research, visit smithschool.ox.ac.uk.                                                                                                                                                                                                                                                                                                                                                      |

#### Sectorial considerations

#### Power generation
Sector boundaries: For the power generation sector, we assess the upstream/generation business in the value chain. Our portfolio includes both corporate customers and project finance transactions.

Industry dynamics: The industry is reducing carbon intensity by building renewable power plants, switching off coal power plants and using combined cycle power plants as transition technology. Some countries also invest in nuclear power as a low-carbon electricity source. The IEA estimates that to meet the Paris objectives, investment in clean energy will need to almost triple from current levels to around 4.5 trillion USD a year by the early 2030s.

Portfolio composition: The exposure to project finance (both in operation and under construction) outweighs the exposure to corporate customers. Within the corporate portfolio, around 80% of the portfolio is classified as tier 1 and 2 customers, typically leading power companies with existing or strong objectives to renewables. We observe clear