1 Classification and strategy of sustainability at SZKB

Schwyzer Kantonalbank (SZKB) is an independent institution under Cantonal public law and wholly owned by the Canton of Schwyz. Founded in 1890, SZKB conducts the business of a universal bank. The central pillars of its existence are defined in the Cantonal Law on the Schwyzer Kantonalbank (current version as of 17 February 2010). Article 3 Purpose, Section 2 states: «It (SZKB) contributes to balanced and sustainable development of the Canton, taking particular account of the needs of the people living in the Canton, the economy and the public sector.» Article 9 of the law also defines SZKB’s geographical business area: Paragraph 1: «The geographical scope of business primarily includes the Canton of Schwyz.»; Paragraph 2: «Business in the rest of Switzerland and abroad is permissible if the Bank does not incur any disproportionate risks and the satisfaction of the money and credit needs within the Canton is not impaired by this activity.» and Paragraph 3: «As a rule, the Bank’s foreign assets may not exceed 5% of the total balance sheet.»

SZKB’s head office and all of its branches are located in the Canton of Schwyz.

The Annual Report also includes the SZKB Annual Financial Statements. The Annual Report presents the economic situation of the Bank. The Annual Financial Statements include, in particular, the Balance Sheet, the Income Statement, the Cash Flow Statement and the Statement of Changes in Equity. The Annual Report also provides information on the Bank’s corporate structure (organisational chart), business activities, corporate governance, risk management and the remuneration of the Bank Council and the Executive Board.

The Sustainability Report covers SZKB’s non-financial matters. Together with the Annual Report, it provides a comprehensive picture of the financial, social and environmental dimensions of SZKB’s business activities.

Like the Annual Report, the Sustainability Report provides information about SZKB. One exception is the carbon footprint, which also includes the emissions of the Innovation Foundation and the Pension Fund of the Canton of Schwyz, as SZKB provides services to these organisations.

Unless specified otherwise, all information in this Sustainability Report pertains to the 2023 financial year, which spanned from 1 January to 31 December 2023. One exception is the operational ecology key figures, which are based on 2022 due to business-related delays in reporting from primarily external data suppliers. The period covered by the Sustainability Report thus largely corresponds to that of SZKB’s consolidated financial reporting (Annual Report).

The Sustainability Report 2023 was approved by the Executive Board on 13 February 2024 and adopted by the Bank Council on 20 February 2024 for the attention of the Cantonal Council of Schwyz.

SZKB’s Sustainability Report was not subjected to an external audit. It was published on 22 March 2024.

This report contains forward-looking statements based on expectations and assumptions. Various influencing factors may cause the actual results to differ from the estimates provided here.

Contact in case of questions about sustainability reporting:

Schwyz Cantonal Bank
Michelle Nietlispach
Sustainability Expert
+41 58 800 2546
michelle.nietlispach@szkb.ch

In 2021, SZKB established the role of «Sustainability Officer». This position reported directly to the Chief Executive Officer until August 2023. Starting from 1 October 2023, it became part of the Project & Portfolio Management department, whose head reports to the member of the Executive Board responsible for Finance and Risk Management.

In 2023, the Executive Board, the Strategy Committee and the Bank Council approved a sustainability strategy, verified the key topics and defined sustainability goals.

SZKB integrates the reporting of material risks and their impact into its risk management process. This information is then submitted to the Executive Board and, via the Risk Committee, to the Bank Council.

The ESG Programme 2025 was launched in 2023 with the goal of firmly embedding sustainability in the operations of the Bank. The ESG Programme is a Bank-wide, interdisciplinary project that encompasses sustainability-related work in the areas of strategy & governance, risk management, control framework, compliance, investment business, lending business, ESG data & IT and ESG disclosure. The aim of the project is to ensure Bank-wide ESG transformation (e.g. development of ESG governance) as well as integration and implementation of the increasing regulatory requirements. This project has a project committee made up of the Chief Executive Officer and the members of the Executive Board responsible for finance and risk management as well as private and corporate client business.

The specific management approach for managing the key topics and their impacts is presented in the individual «Management approach» sections.

In 2023, an evaluation was conducted to determine how the topic of sustainability could be more firmly embedded in the organisation. Implementation is planned for 2024.

SZKB’s sustainability strategy, as defined by the Bank Council in 2023, comprises the following components:

The SZKB sustainability house
The SZKB sustainability vision
The SZKB sustainability ambitions
The key topics

The SZKB sustainability house

The sustainability house is the graphic representation of the sustainability strategy as a whole. The Sustainability Report is organised along the lines of the strategic thrusts.

The SZKB sustainability vision

SZKB defined the following sustainability vision for 2023: «We are aware that the decisions we make today will have an impact on future generations. We are therefore dedicated to ensuring a sustainable future. We foster environmentally conscious behaviour and assist our clients in developing their assets and businesses in a sustainable manner. We strive to use resources efficiently, seek environmentally friendly solutions and make a positive social impact. By taking sustainability into account in all our activities, we are contributing to the preservation of a liveable world for future generations.»

The SZKB sustainability ambitions

SZKB defined the following sustainability ambitions in 2023:

Responsible business conduct: «We stand for a conscientious company that acts in accordance with the best of its knowledge and beliefs. As a bank, we acknowledge our responsibility to our stakeholders. We strive to enhance overall trust in the financial sector and ensure the satisfaction of our clients and employees through our responsible operating practices, which reflect the results of specific measures taken. It is also important for us to recognise and reduce our negative impacts on the environment. Ultimately, we want to support local projects in making a positive contribution to society.»
Responsible financing: «We promote sustainable financing. As a bank, we recognise our role within society as an enabler of the development of sustainable activities. We are committed to expanding access to sustainable financial services for private and professional clients while integrating environmental and social criteria into our financing solutions. We also would like to reduce the greenhouse gas emissions of our financing portfolios and achieve net zero emissions by 2050.»
Responsible investing: «We promote sustainable investments. As a bank, we recognise our duty to manage our clients’ assets responsibly with a long-term focus. We are committed to systematically incorporating sustainability aspects into the development of all our portfolios in order to manage sustainability risks. At the same time, we want to offer our clients sustainable products that align with their ESG preferences and expectations. Ultimately, we see ourselves as representatives of our clients in regard to all investment recipients and seek to work towards more sustainable business development on their behalf.»

Key topics

The key topics are the focus of SZKB’s sustainability reporting. These were determined according to the principle of dual materiality, meaning they are those topics where the Bank has the greatest impact on society, the environment and the economy, as well as those topics that have a (financial) impact on the Bank.

The key topics were identified in the following manner: As a starting point, SZKB drew upon industry analyses, sustainability ratings, stakeholder input and media reports to compile possible topics specific to the industry, Bank, and Canton and then have the effects assessed and analysed by internal Bank experts. The assessment of the key sustainability issues was updated in 2023 by technical experts with the involvement of representatives of the stakeholder groups clients, employees, Executive Board, Bank Council and Canton (Cantonal Supervisory Commission) and discussed with and approved by the Executive Board and the Bank Council.

Key topics from the three strategic thrusts:

Key topics	Addressed in the chapter
«Client satisfaction» «Data protection/client data/privacy» «Diversity and integration» «Commercial traffic/commuter traffic» «Remuneration of the highest governance bodies» «Generations and local commitment» «Fostering the local community and economy» «Energy consumption and efficiency (greenhouse gas emissions)» «Regulatory compliance» «Reputation» «Healthy growth»	Responsible business conduct
«Financing a sustainable property» «Access to sustainable financial services» «Climate change»	Responsible financing
«Sustainable products and services» «Climate change»	Responsible investing

The list of key topics included in the 2023 Sustainability Report differs from those published in the 2022 report as follows:

«Sustainability in the financing sector» was broken down into «Financing a sustainable property», «Access to sustainable financial services» and «Climate change».
«Sustainability in the investment sector» was broken down into «Sustainable products and services» and «Climate change».
«Sustainability in the area of social affairs» was broken down into «Diversity and integration», «Commercial traffic/commuter traffic» and «Remuneration of the highest governance bodies».
«Sustainability in operations and procurement» was renamed «Energy consumption and efficiency (greenhouse gas emissions)».
«Good corporate governance» was broken down into «Regulatory compliance», «Reputation» and «Healthy growth».
«Confidentiality of client data, data security and data protection» was renamed «Data protection/client data/privacy» and integrated into the Chapter «Responsible business conduct towards clients».
«Local commitment, sponsorship and partnerships» was broken down into «Generations and local commitment» and «Fostering the local community and economy».

The materiality analysis identified additional topics beyond the key topics. However, these were categorised as non-key individual topics and integrated into overarching key topics.

Other topics from the materiality analysis

Allocation

Innovation
Equal pay
Gender equality
Equal opportunities
Work-life balance
Employee development
Financial literacy informational event for the community
Volunteering
Sponsorship
Fairness towards competitors and suppliers
Sustainable procurement/supply chains
Protection of human rights
Independence of governance bodies
Political influence
Separation of powers
Responsible business conduct
Diversity and composition of the highest governance bodies
Combating corruption
Biodiversity
Recycling and waste management
Water consumption

Responsible investing Business conduct

The SZKB defined sustainability targets for 2023.

Focus	Goal
Responsible business conduct	In the client satisfaction survey conducted every two years, 95% of clients express satisfaction or high satisfaction with SZKB. In the client satisfaction survey conducted every two years, from 2030 onwards at least 70% of clients will say that they perceive SZKB as a sustainable or very sustainable bank. By 2030, all branches will be accessible to clients with reduced mobility. All SZKB full-time and part-time employees, as well as all authorised representatives with access to SZKB’s IT systems, are required to complete annual online training courses on data and information security to ensure the security of client data. SZKB fulfils its role as a training company by providing a number of apprenticeship and internship positions equivalent to a minimum of 5% of the workforce. SZKB acts as a socially responsible employer by providing job opportunities for individuals with disabilities, such as through reintegration programmes or through the continued employment of employees with limited capacity, with at least 1% of its employees taking advantage of such opportunities. By 2030, reduction in greenhouse gas emissions from transportation (Scope 3) in accordance with Swiss climate strategy (reduction of 21% compared to reference year 2021). The number of sickness-related absence days per employee (FTE) is less than 5.0 days per year (with long-term absences not taken into account). The (unexplained) pay gap between the genders is no more than 2.5%. By 2030, there will be a minimum of 25% representation of both genders among employees at all levels, including the Executive Board. Local commitment (sponsorship) of at least CHF 0.8 million per year. Increase the number of financial literacy events hosted. By 2027, SZKB will reduce its operational CO2 emissions by 15.8%, or 145.0 tonnes (base year 2021), to 770.0 tonnes.. Raising employee awareness of resource consumption (e.g. paper, heating, light and electricity). By 2030, all bank buildings (solely) owned by SZKB will cease using oil or gas heating systems, provided that it is economically feasible and technically viable to do so.¹ By 2030, SZKB will have installed photovoltaic systems on all bank buildings (solely) owned by SZKB, provided that it is economically feasible and technically viable to do so.
Responsible financing	By 2030, the emissions intensity of financed mortgages² will be reduced by a minimum of 42% compared to the 2022 base year. By 2030, the emissions intensity of financed commercial real estates³ will be reduced by a minimum of 40% compared to the 2022 base year. Development of financing products that foster and support sustainable behaviour. Raising awareness among clients. Raising awareness among employees. Creation of incentives (e.g. favourable interest rates) for a reduction in emissions intensity. Support with the generational transfer of a property.
Responsible investments	Consideration of controversial and/or environmentally harmful sectors in the investment decision-making process. By the end of 2025, at least 20% of all asset management mandates should have client preferences that are conscious, focused or effective, and by the end of 2030, this should increase to at least 50%. The share of SZKB investment funds with a conscious or focussed alignment with client preference is at least 20% of the total of all SZKB investment funds at the end of 2025 and at least 50% at the end of 2030.⁴ Development of further financing products that foster sustainable behaviour and thus correspond to various ESG preferences. Development of an engagement policy by 2025.

¹ The deadline for reaching this goal has been pushed back from 2027 to 2030.
² Financed mortgages include single-family houses and condominiums.
³ Including apartment buildings.
⁴ This is a volume figure (AuM).

United Nations Sustainable Development Goals

SZKB’s approach to sustainability is based on the 17 United Nations Sustainable Development Goals (SDGs). SZKB is committed to all 17 SDGs but focusses its activities on six of them in particular in order to achieve the greatest possible impact.

In mid-2021, a broad dialogue was conducted with employees from various hierarchical levels from different departments. In the presence of the Chief Executive Officer and other members of the Executive Board at a full-day workshop, the participants discussed and evaluated the 17 SDGs and how they relate to SZKB’s business activities. On the basis of this dialogue, SZKB decided to focus its activities on seven SDGs in order to make the greatest possible impact. The Executive Board and the Bank Council verified the prioritisation in 2023, based on the defined sustainability strategy, the key topics and the determined objectives. SZKB is now focussing its activities on six SDGs. The following changes were made to the initial assessment:

SDG 3 «Ensure healthy lives and promote well-being for all at all ages» and SDG 5 «Achieve gender equality and empower all women and girls» are no longer the main focus of SZKB, as SZKB only has limited scope for influence here.
SDG 16 "Promote peaceful and inclusive societies for sustainable development» is a new focus SDG.

In 2023, SZKB made significant progress in addressing the issue of sustainability. This progress is presented in the individual chapters of this sustainability report. The most significant progress includes:

The Bank Council adopted an independent sustainability strategy.
In 2022/23, SZKB made use of external assistance to draw up a roadmap regarding the regulatory requirements in the area of sustainability and initiated the necessary actions to implement it.
In 2023, SZKB expanded its risk management with regard to the financial impact of climate change and other key sustainability issues. This also includes adapting and reviewing the risk framework and integrating ESG risk factors into the company’s overall risk management.
In 2023, SZKB established the necessary conditions to comply with regulatory requirements and self-regulation specifications effective from 1 January 2024.

In 2024 and 2025, SZKB will continue to focus on sustainability and the implementation of the sustainability strategy defined in 2023. In 2024, the focus will be on adapting the sustainability governance, establishing a sustainability commission and rolling out Bank-wide ESG training courses. SZKB will also prioritise the continued development and implementation of the sustainability strategy, including the definition of additional measures to reduce CO₂ emissions related to mobility.

2 Responsible business conduct