The Bank has a group-wide regulation on the system of internal lines of defence for internal governance and internal control functions, which, in accordance with local authority and Group requirements, defines the roles and responsibilities of internal
governance and internal control functions.
Business lines and departments have primary responsibility for managing risk and therefore play a key role in achieving ESG objectives and promoting sustainable finance. The general principles pertaining to the first line of defence are defined by the Bank’s regulation.
As the second line of defence, the risk management and compliance functions are responsible for the appropriate risk management of ESG risks. The second line of defence also supervises and supports the activities of the first line of defence. As a third line of defence, the independent internal audit will conduct an independent review of ESG factors.
The OTP Bank launched the ESG Programme in November 2020 with the approval of the Bank’s Management Committee. The Programme also had a steering committee and an operating committee. The steering committee comprised the Bank’s deputy CEOs, the heads of the compliance, HR, legal and marketing/communication areas, as well as the head of the Green Programme Directorate. The steering committee reported to the Bank’s management on the activity of the Programme.
Following the decision of the Board of Directors, the OTP Bank’s ESG organization was established in December 2021. The organisation is multi-level: the main decision-maker is the Board of Directors, assisted and reported to by the ESG Committee as a standing committee. The ESG Sub-Committee is the operational preparatory forum of the ESG Committee, and a separate control function has been established, as set out in the MNB Green Recommendation. As part of setting up the ESG organisation, the tasks (workflows), responsibilities, and reporting obligations of the organisational units concerned were also determined in the organisational and operational rules.
The ESG Committee is responsible for identifying ESG risks, formulating strategy, plans and policies, setting targets and performance objectives and evaluating them, together with the relevant organisations, in order to define and manage climate change and environmental risks, as well as social and governance risks, assess their consequences and, on this basis, support the
Bank’s management bodies in fulfilling their ESG responsibilities. The Risk Management Division plays a key and primary role in ESG risk management activities, managing the Bank’s specific risk-taking activities, including ESG risks, and is primarily responsible for the operation of the framework for managing climate change and environmental risks, as well as social and governance risks. The Bank’s relevant departments manage ESG risks in accordance with their existing processes, with sub-tasks being performed by the departments that are otherwise responsible. As departments are present in the ESG Committee and its sub-committees; in the former, informing the Committee of their activities, and in the
latter, participating in daily work. With this solution, the work done is transparent,
controlled and practical.