Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 68

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 68
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 falls short in certain sectors and regions. And, where available, it might not be the most suitable or accurate. In many cases, data is only available with a significant time lag. If no emissions data exist, we estimate them based on a proxy (average emissions by industry, country, etc.). Once we obtain our customers' total emissions, we apply our attribution factor in line with the PCAF approach to determine Santander’s financed emissions. 2.4.1 Alignment targets As part of our climate ambition, we prioritize the high-emitting sectors (which also bear high and very high transition risk according to our climate materiality) to which we have material exposure and must support the transition to a low-carbon economy. In 2021 and 2022 we set targets for the wholesale segment in the power generation, thermal coal, oil & gas, aviation, and steel portfolios. In 2023, we focused on the automotive sector from two

perspectives: auto manufacturing (wholesale segment) and auto lending (consumer loans for the purchase of passenger cars in Europe). Within the sectorial climate approach described above, cement, shipping and aluminium are deemed not material given their low level of exposure. Agriculture, mortgages and commercial real estate (CRE) are considered material in the retail segment. We are monitoring the materiality of the capital markets emissions (facilitated emissions) for the bank, and for the moment we consider them not material. The climate performance dynamics of all these sectors are heavily dependent on their regulatory and policy framework, technology changes and customers behaviours. For example, the International Energy Agency (IEA) estimates that one third of the reductions needed to meet the Paris objectives need to come from technologies that are currently at the demonstration or prototype phase. In sectors where corporate clients are making progress, we have set targets while acknowledging these external dependencies. For the sectors that are heavily dependent on further regulation to align, and where most of the customers are retail, we are monitoring their alignment; but we will refrain from setting targets until the regulatory and policy framework is clear, consistent and supportive of consumer behaviour changes. We have been sharing our understanding and experience of these policy gaps with authorities and other sectors, and plan to keep doing so. Given our footprint, we see markedly different regulatory frameworks in the regions where we operate. Governments' approach to the transition should reflect several, simple points. First, economic growth is essential to finance the transition - and to ensure it is affordable and fair in both developed and developing economies. Policies to support the transition