principles for responsible banking - produbanco

P rinciples for Responsible Banking

Extract from the Produbanco’s Sustainability Report 2019 Extract from the Produbanco’s Sustainability Report 2019

P rinciples for Responsible BankingOur first report

Table ofContents

3| Principles for Responsible Banking - Our First Report

Geographical Presence - Branches

Guatemala

El Salvador

Honduras

Costa Rica

Ecuador

Nicaragua Cayman Islands

Panama

Dominican Republic

9Countries

24 13Active

Customers Employees

$15 US Dollars

- AUM850

Agencies

M M

bn

Figures as of December 2020


Institutional Presence - Banco de la Producción S.A. Produbanco

Active Customers

1.1

24$444

$5,069$5,513

2,337M

millionsUS DollarsAssets

117Agencies

Employees

millionsUS DollarsEquity

millionsUSD Dollars Liabilities

Provinces

Figures as of December 2020


Legal Structure of Produbanco and its Subsidiaries[GRI: 102-1, 102-2, 102-3, 102-4, 102-5, 102-9, 102-10, 102-45]

Banco de la Producción S.A. Produbanco Its purpose is to carry out a myriad of operations and services permitted by the Organic Monetary and Financial Code, geared at promoting the development of productive activities in the country. Its main office is located in Quito, Ecuador.

Investment in Share (thousand dollars)

Externalización de Servicios Exsersa S.A. Network of offices and service points that Produbanco Clients and third parties have at their disposal to carry out their collection and payment transactions.

Protramites Trámites Profesionales S.A. Subsidiary in charge of financial management support services in

credit risk management.

Vis

CARRYINGVALUE

USD 7,995

Visa33.75%

USD 2,698

Empresa deTitularización

Hipotecaria21.81%

USD 1,743

Medianet S.A.12.28%USD 981

Banred S.A.12.20%USD 975

Mastercard3.62%USD 289

Credimatic S.A.16.35%

USD 1,307

[GRI: 102-46][GRI: 102-46]

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2019-2023 Strategic Plan[GRI: 102-16]

Vision

To be the best of the best in order to transcend in people’s lives.

MissionTo accompany people and companies everyday in order to overcome their limits, share best experiences, and consolidate long-term relationships.

Vision

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2019-2023 Strategic Plan: Sustainability and CRS as a Key Driver

Cultural transformation to ensure success

of the digital transformation.

Data-driven organization.

Strategic segmentation

based on Client behavior to o�er

memorable experiences.

De-concentrated growth in all segments

and geographies.

Responsibly manage assets

and risks.

Commitment with corporate social sustainability and

responsibility.

We make the di�erence.

A culture of passion, agility, and excellence.

Our essence is the Client. A culture of the best

experience and added value for the Client.

Our ideas build. A culture of innovation,

change, renovation, and creativity.

We are a single team. A culture of

attracting and retaining the best and most

diverse talents in the market.

We honor our commitments.

A culture of growth, with e�ciency, and profitability.

Strategic Pillars Corporate Values


Our Commitment to Sustainability and Social Responsibility

«Sustainability is a strategic commitment and as such, it is an integral part of our Strategic Plan, being a pillar that goes beyond a statement, as we seek that it be incorporated naturally in the operations of all areas as part of our business model, with a transversal strategy.»

Ricardo Cuesta, CEO Produbanco

We have established as our pur-pose to maintain sustainability in our DNA to generate value for each of our stakeholders: Employ-ees, Clients, Shareholders, Ven-dors, and the Community, and in this way, to be Agents of Change in Sustainable Development.

Deepen corporate social responsibility with communities

nationwide through the participation of our

Employees.

Deepen corporate social responsibility with communities

nationwide through the participation of our

Employees.

Implement a system of anticorruption

practices and consolidate its administration around ethical

principles.

Implement a system of anticorruption

practices and consolidate its administration around ethical

principles.Instill the concepts of

Sustainability and ethics into our stakeholders

and permanently implement the best local and

international practices.

Instill the concepts of

Sustainability and ethics into our stakeholders

and permanently implement the best local and

international practices.

Value and socialize the

positive impacts in Sustainability and

social responsibility.

Value and socialize the

positive impacts in Sustainability and

social responsibility.

Manage the Financial Education

Program.

Manage the Financial Education

Program.

Strategic Goals


To maintain sustainability in our

DNA to generate value for each of our stakeholders:

Employees, Clients, Shareholders, Vendors, and the Community, and in this way, to

be Agents of Change in Sustainable

Development..

To maintain sustainability in our

DNA to generate value for each of our stakeholders:

Employees, Clients, Shareholders, Vendors, and the Community, and in this way, to

be Agents of Change in Sustainable

Development..

SUST

AIN

AB

LE C

LIE

NT

S

Acco

mpa

ny C

lient

s in

thei

r

jour

ney

tow

ard

sust

aina

bilit

y.

SUSTAINABLE CULTURE

Com

mitm

ent of being

responsible and sustainable.

AGENT OF C

HANGE.

GREEN PRODUCTS

Value generation through sustainable financial products.

SOCIAL MANAGMENT

Inclusion of new

segments and geographies.

FIN

AN

CIA

L U

SER

Use

rs w

ith fi

nanc

ial s

kills

for s

usta

inab

le g

row

th.

In best practices with our value chain.

Our essence is our Client.

Ethical and responsible practices.

AprendeFinancial Education

Programme.

Our essence is our Client.

Ethical and responsible practices.

AprendeFinancial Education

Programme.

User centered Products and

Services.

ServiPagos and PagoÁgil.

External financing.

Green Lines.

Green Account.

External financing.

Green Lines.

Green Account.

Sustainable vendors.

Social Responsibility Programs.

Preserving our water sources: the

Moorlands of Ecuador.

Sustainable vendors.

Social Responsibility Programs.

Preserving our water sources: the

Moorlands of Ecuador.

Corporate Government.

Best practices with Employees.

Environmental culture.

Environmental and social risk

management.

Corporate Government.

Best practices with Employees.

Environmental culture.

Environmental and social risk

management.

Environmental and Social Risk Analysis

System – ESRA.

Stewardship and technical consultancy.

Environmental and Social Risk Analysis

System – ESRA.

Stewardship and technical consultancy.

Activities through which the axes are processed



User centered Products and

Services.

ServiPagos and PagoÁgil.

Our Commitment to Sustainability and Social Responsibility

Action Axes


Our management is aligned with the ten ethical principles of the United Nations Global Compact, which focuses on the fields of Human Rights, Environment, Labor Standards, and Anti-corruption.

Human rights

Companies must support and respect the protection of fundamental human rights, recognized internationally,

within its sphere of influence.

Human rights

Companies must ensure that they are not complicit in

human rights violations.

Labor Standards

Companies should uphold the freedom of association

and the effective recognition of the right to collective

bargaining.

Labor Standards

Companies should support the elimination of all forms of forced or compulsory labor.

Labor Standards

Companies should support the eradication of child labor.

Labor Standards

Businesses should support the abolition of discriminatory practices in employment and

occupation.

Environment

Companies must maintain a preventive approach that

favors the environment.

Environment

Businesses should encourage initiatives that foster greater environmental responsibility.

Environment

Companies must promote the development and

socialization of technologies that respect the environment.

Anti-corruption

Businesses should work against corruption in all

its forms, including extortion and bribery.

P rinciple 1 P rinciple 5

P rinciple 9

P rinciple 2

P rinciple 6 P rinciple 10

P rinciple 3

P rinciple 7

P rinciple 4

P rinciple 8

We are Signatories of the Global Compact[GRI: 102-12]

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Sustainable Development Goals

We work so that our activities contribute to the achievement of the Sustainable Development Goals and implement the necessary measures to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity.


Ecuador’s Sustainable Finance Protocol

We promote the Sustainable Finance Protocol of Ecuador in conjunction with the Association of Banks of Ecuador and other national banks.

«The Sustainable Finance Protocol aims to facilitate and promote the implementation of best practices and international policies that promote a balance among the economic, social, and environmental aspects, in order to move towards Sustainable Development.» Excerpt from the Sustainable Finance Protocol

of Ecuador signed in November 2016


We are Signatories of the Principles for Responsible Banking and the Collective Commitment for Climate Action (CCCA) of UNEP FI

«In accordance with the Paris Agreement, we are committed to aligning our portfolios to reflect and finance the low-carbon, climate-resilient econo-my needed to limit global warming to below 2 degrees Celsius, striving to reach 1.5 degrees Cel-sius. By implementing our commitments under the Principles for Responsible Banking and build-ing on the Katowice Commitment, we are com-mitted to mobilizing our products, services, and relationships to help facilitate the economic tran-sition necessary to achieve climate neutrality.» Extract of the official document of accession

September 2019


AlignmentImpact and Goal Setting Clients Stakeholders

Governance and Culture

Transparency and Accountability

The entities undertake to align

their respective business

strategies with the objectives

expressed in the Sustainable

Development Objectives and in

the Paris Agreement..

Efforts will be made to

continuously increase the

positive impacts by reducing the negative ones, concentrating efforts on the

areas where they will have the most significant impact.

Organizations are willing to work

responsibly with their Clients to

develop sustainable practices and

generate shared prosperity for both

the current and future generations.

The signatories of these principles

undertake to proactively

consult, involve, and collaborate with the relevant

stakeholders to achieve the objectives of

society.

The agencies will set public objectives and

implement them through effective

governance systems and a culture of

responsibility.

The implementation

of these principles will be reviewed

periodically, vying for transparency and assuming

full responsibility given positive and negative impacts.

P R I N C I P L E S

Principles for Responsible Banking


Agencies with Which We Interact

AGENCIESWITH WHICH

WEINTERACT

Association of Private Banks of Ecuador

(Asobanca)

National Association of Entrepreneurs

(ANDE)

Chamber of Commerce

and Industries of Azogues

Cuenca Chamber of Commerce

Machala Chamber of Commerce

Portoviejo Chamber of Commerce

Ecuadorian-Colombian Chamber of Commerce

and Industries (CAMECOL)

Ecuadorian American

Chamber of Commerce -

Quito

Ecuadorian Peruvian

Chamber of Commerce

Ecuadorian China

Chamber of Commerce

Official Spanish

Chamber of Commerce

and Industry of Quito

Guayaquil Chamber of Commercel

Ecuadorian American


Guayaquil

BankersClub de

Guayaquil

Manta Chamber of Commerce

Guayaquil Philanthropy

Board (Junta de

Beneficencia de Guayaquil)

Quito Stock

Exchange

Guayaquil Stock

Exchange

[GRI: 102-13]

Chamber of Industries and

Production (CIP)

Chamber of Industries and

Production (CIP)

Guayaquil Stock

Exchange

Association of Private Banks of Ecuador

(Asobanca) Ecuadorian American


Guayaquil

Official Spanish

Chamber of Commerce

and Industry of Quito

Guayaquil Chamber of Commercel

Ecuadorian American


Quito

Chamber of Commerce

and Industries of Azogues

Machala Chamber of Commerce

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Relationship with Our Stakeholders

All areas of Produbanco and its Subsidiaries manage the relationship with various interest groups or stakeholders from their roles, functions, and competencies. This implies knowing their motivations, needs, etc., in order to create value for them.

Through active dialogue and the application of specialized studies, we establish opportunities for improvement in terms of services, risks, and even in the management of possible conflicts of interest in said relationships.

[GRI: 102-21]

Every two years, we execute a stakeholder mapping and a materiality study with the support of external consultants in order to guarantee objectivity and impartiality in the results obtained. In 2018, this activity was carried out by Mónica Torresano, MBA., professor at the IDE University of the Hemispheres.

The participation of a third party in this exercise facilitates the flow of information since the stakeholders feel total freedom to express their opinion on the matters that are of relevance and maintain a successful and satisfactory relationship with the Institution.

The mapping exercise is active. The review and update carried out in 2018 yielded 16 large interest groups and 90 stakeholders (State agencies, the business sector, and civil society) with which Produbanco interacts. Stakeholders were categorized by proximity, value chain, and internal.

To manage the relationship and dialogue with stakeholders, the Bank maintains mechanisms such as:

• Specialized studies on stakeholders, which address the issues of services, customer satisfaction, and work environments, among others.

• Visits to Clients, especially at the corporate level, to maintain a closer relationship and to identify the appropriate way to structure a value proposition according to their needs.

• Participation in business associations, especially in Asobanca, an entity in which we are part of the Sustainable Finance Committee. This allows us to maintain dialogue with entities of the Financial Sector and the Government, among others.

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Relationship with Our Stakeholders

S T A K E H O L D E R S B Y C A T E G O R Y

CATEGORY

NEARBYCATEGORY

VALUE CHAIN AND MARKET (GOODS, SERVICES, AND CAPITAL)

COMMUNITY

GOVERNMENT

SHAREHOLDERS

EMPLOYEES AND THEIR FAMILIES

CLIENTS

RELATED COMPANIES

FUNDERS

MULTILATERALS

SUPPORT ENTITIES FOR FINANCIAL EDUCATION

VENDORS

COMPETITORS

TRADE ASSOCIATIONS

ORGANIZATIONS WE BELONG TO

SPONSORED FOUNDATIONS AND ENTITIES

EDUCATIONAL INSTITUTIONS

COMMUNICATION MEDIA

ST

AK

EH

OL

DE

RS

ST

AK

EH

OL

DE

RS

ST

AK

EH

OL

DE

RS

ST

AK

EH

OL

DE

RS

CATEGORY

NEARBYCATEGORY

VALUE CHAIN AND MARKET (GOODS, SERVICES, AND CAPITAL)

COMMUNITY

GOVERNMENT

SHAREHOLDERS

EMPLOYEES AND THEIR FAMILIES

CLIENTS

RELATED COMPANIES

FUNDERS

MULTILATERALS

SUPPORT ENTITIES FOR FINANCIAL EDUCATION

VENDORS

COMPETITORS

TRADE ASSOCIATIONS

ORGANIZATIONS WE BELONG TO

SPONSORED FOUNDATIONS AND ENTITIES

EDUCATIONAL INSTITUTIONS

COMMUNICATION MEDIA

ST

AK

EH

OL

DE

RS

ST

AK

EH

OL

DE

RS

ST

AK

EH

OL

DE

RS

ST

AK

EH

OL

DE

RS

CATEGORY

INTERNAL

The mapping exercise is active. The review and update carried out in 2018 resulted in 16 large interest groups and 90 stakeholders (State entities, the business sector, and civil society) with which Produbanco interacts.

Stakeholders were categorized by proximity, value chain, and internal.

Categorization of Stakeholders[GRI: 102-40, 102-42][GRI: 102-40, 102-42]

[GRI: 102-40, 102-42]


Report Profile: Information Criteria and Standards

Basic References and International Standards[GRI: 101, 102-32, 102-50, 102-51, 102-52, 102-46, 102-49]

The information in our Sustainability Report has an annual periodicity and covers the management of Produbanco and its Subsidiaries during 2019, as well as comparative data with the 2018 period (most recent report). In the cases of exception regarding the scope of the information, the respective clarification is included.

In the chapters on Corporate Governance, Business Management, and Financial Management, data as of June 2020 have been incorporated in order to present the most recent information on the structure of the Board of Directors and economic management.

This report has been prepared in accordance with the Comprehensive option of the GRI Standards through which we gather basic, general, and specific topics, and of the financial supplement. If there is any modification to the historical data due to changes in the contents, the corresponding explanation is included.

The material topics have been defined with the help of the tools for listening and dialogue with stakeholders, the Materiality Study, and the GRI Standards.

Based on these studies, the relevant issues were established, both because of the importance they have for our stakeholders, and because of the impact on institutional management.

This allows us to focus efforts on defining strategies that contribute to the application of good Social Responsibility practices in Produbanco and its Subsidiaries.

The CEO, Ricardo Cuesta, has approved this report.

[GRI: 102-46, 102-54]

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Principles for Ensuring the Quality of Information

Balance:We disclose the positives and negatives of our overall performance in order to facilitate an informed evaluation.

Reliability:Our information has been collected, recorded, compiled, analyzed, and presented in such a way that it has been able to be subjected to verification by any interested party.

Completeness:We address the material aspects and their coverage in such a way that they reflect their significant economic, environmental, and social effects. In the same way, we present the information so that our stakeholders can analyze the performance of the Institution during the analyzed period.

Clarity:We present the information in such a way that the stakeholders we address, can access and understand it properly.

Materiality:We address the organizational aspects that reflect the significant economic, environmental, and social effects that have an impact on the evaluations and decisions of our stakeholders.

Punctuality:We endeavor to present our report on a regular basis, so that stakeholders can have the information at the expected time, and have the basis for decision-making.

Sustainability Context:We report on the performance of Produbanco and its Subsidiaries in the broader context of sustainability considering the information available.

Accuracy:We strive for our information to be sufficiently accurate and detailed so that stakeholders can analyze institutional performance.

Stakeholder participation: We present our stakeholders and the way in which we respond to their needs and expectations.

Comparability:We present the information consistently in a way that allows stakeholders to analyze our performance.

The principles for the preparation of our Report have

been adjusted to the GRI Standards, both for the definition of the content and for

the quality of the information.


Materiality[GRI: 102-29]

The Materiality Study allows identifying the material or fundamental issues that must be part of the organization’s management and that must be communicated in the Sustainability Report. These issues are relevant due to the level of incidence or impact they have on the management and decision-making process (economic, social, environmental, and corporate governance) of the organization and stakeholders. The Materiality Study contributes to the strengthening and alignment between the strategic focus of the business and that of Sustainability and Social Responsibility.

MA

TER

IALIT

Y ST

UD

Y P

RO

CESSM

AT

ERIA

LIT

Y S

TU

DY

PR

OC

ESS


BENCHMARKINGTo ascertain sector trends.

1.

4.

3.

2. MAPPING AND PRIORITIZATIONOF STAKEHOLDERS

Interviews to unit leaders.

STRUCTURED DIALOGUE WITH STAKEHOLDERS

Interviews, surveys, and focal groups.

MATERIALITY STRATEGIC ANALYSIS

For topic or material aspect identification.

15 MATERIAL TOPICS47% Social Environment

33% Economic Environment13% Governance

7% Sustainable Finances

BENCHMARKINGTo ascertain sector trends.

1.

4.

3.

2. MAPPING AND PRIORITIZATIONOF STAKEHOLDERS

Interviews to unit leaders.

STRUCTURED DIALOGUE WITH STAKEHOLDERS

Interviews, surveys, and focal groups.

MATERIALITY STRATEGIC ANALYSIS

For topic or material aspect identification.

15 MATERIAL TOPICS47% Social Environment

33% Economic Environment13% Governance

7% Sustainable Finances

[GRI: 102-21][GRI: 102-43, 102-49]

MA

TER

IALI

TY

ST

UD

Y P

RO

CES

S MA

TER

IALIT

Y ST

UD

Y P

RO

CESS

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80%

75%

70%

65%

60%

55%

50%

60% 65% 70% 75% 80% 85%

Economic Performance

Services marketing

Diversity and equal opportunities

Procurement or hiring practices

Sustainable Finances

Health & Safety at Work

Non-discrimination

Training & Education

Environmental compliance

Employment

Local Communities

Client health & Safety

Anti-corruption practices

Client PrivacyMarket Share

EconómicoÁmbitos de Gestión: Gobierno Corporativo Finanzas Sostenibles Social

TOP

IC R

ELEV

AN

CE

FOR

IN

TER

NA

L ST

AK

EHO

LDER

S

TOPIC RELEVANCE FOR EXTERNAL STAKEHOLDERS

Material Topics for Stakeholders

- +

+


Material Topics for Stakeholders

Management Environments

Economic Corporate Government Sustainable Finances Social


Scope Management Material Issues External Internal

Economic Economic performance 68% 71%

Economic Market share 65% 73%

Economic Customer Privacy 68% 74%

Economic Marketing of services 64% 58%

Economic Procurement or hiring practices 68% 55%

Sustainable Finances Sustainable finances 77% 69%

Corporate Governance Anti-corruption practices 71% 52%

Corporate Governance Environmental compliance 82% 55%

Social Local communities 72% 72%

Social Customer Health and Safety 77% 58%

Social Training and education 73% 70%

Social Health and Safety at Work 76% 75%

Social Non-discrimination 62% 60%

Social Diversity and equal opportunities 65% 65%

Social Employment 82% 55%


Material Issues According to the Scope of Management

[GRI: 102-47]

According to the analysis, measurement, and consideration of the seven matters of social responsibility contained in ISO 26000, our stakeholders perceive that we are a Bank with a very high level of implementation in its various corporate practices.

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According to the analysis, measurement, and consideration of the seven matters of social responsibility contained in ISO 26000, our stakeholders perceive that we are a Bank with a very high level of implementation in its various corporate practices..

Perception of the Level of Implementation of Produbanco’s Corporate Practices

7.5 7.6 7.7 7.8 7.9 8.0 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 9.0 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 10

9.2 9.3

9.6

8.3 8.7

8.88.5

8.77.8

7.5 9.0

9.0

9.2

9.8

7.5

9.8

Corporate government

Values, transparency, and ethics

Consumer a�airs

Comprehensive consumer development

Fair value chain relations and development

Community Relations

Environment

Human rights

Stakeholders

Shareholders Clients Executives Vendors

[GRI: 102-44]


Our Corporate Governance Practices: Responsibility, Quality, and Transparency[GRI: 102-25]

Quality of the information

For Produbanco and its Subsid-iaries, information is an essential strategic element, and therefore, an institutional priority. As it is the basis for decision-making, it must be truthful, complete, accurate, timely, reliable, and su�cient.

E�ciency in the performance of all processes

We work with the approach of obtaining the best results with the appropriate resources and in minimal time. This practice is reflected in continuous improvement and cost reductions.

Responsibility in the processing and supply of information

All Produbanco Employees and its Sub-sidiaries have the obligation to provide the required information (internally or by third parties) in a correct, fluid and consis-tent manner. Deviations from this prac-tice of communication and transparency are not admissible.

Continuous development of new products and services

We form processes among the areas involved and we use the change control methodology to correctly assess those that conform to institution-al priorities, to mitigate the risk inherent in any change and to keep a historical record of the di�erent initiatives and modifications. In this way, developments do not depend on specific people, but on institutional priorities.

Transparency and elimination of conflicts of interest

Through our Contracting and Purchasing Policy, we establish limits and controls for the relation-ship between the people in charge of procure-ment processes and Vendors.

Compliance with established standards

Produbanco and its Subsidiaries faithfully comply with the Organic Monetary and Financial Code, Resolutions of the Monetary Policy and Regulation Board, Regula-tions of the Board of the Central Bank of Ecuador, Organic Law of Prevention, Detection and Eradication of the Crime of Money Laundering and Financing of Crimes, and other related regulations. For the preven-tion of illicit activities or contraventions, several con-trols are carried out at the national level, among which those for the prevention of money laundering are highlighted through the Compliance Unit, as well as the monitoring and recording of events related to cor-ruption and the follow-up to the prohibition of grant-ing related-party transactions, through the Monitoring and Valuation Control Unit - Risks.

Planning

The activities to achieve our strategic objectives are based on planning. We don't leave things to chance: we work in an organized and methodical way.

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Corporate Governance


Quality of the information

For Produbanco and its Subsid-iaries, information is an essential strategic element, and therefore, an institutional priority. As it is the basis for decision-making, it must be truthful, complete, accurate, timely, reliable, and su�cient.

E�ciency in the performance of all processes

We work with the approach of obtaining the best results with the appropriate resources and in minimal time. This practice is reflected in continuous improvement and cost reductions.

Responsibility in the processing and supply of information

All Produbanco Employees and its Sub-sidiaries have the obligation to provide the required information (internally or by third parties) in a correct, fluid and consis-tent manner. Deviations from this prac-tice of communication and transparency are not admissible.

Continuous development of new products and services

We form processes among the areas involved and we use the change control methodology to correctly assess those that conform to institution-al priorities, to mitigate the risk inherent in any change and to keep a historical record of the di�erent initiatives and modifications. In this way, developments do not depend on specific people, but on institutional priorities.

Transparency and elimination of conflicts of interest

Through our Contracting and Purchasing Policy, we establish limits and controls for the relation-ship between the people in charge of procure-ment processes and Vendors.

Compliance with established standards

Produbanco and its Subsidiaries faithfully comply with the Organic Monetary and Financial Code, Resolutions of the Monetary Policy and Regulation Board, Regula-tions of the Board of the Central Bank of Ecuador, Organic Law of Prevention, Detection and Eradication of the Crime of Money Laundering and Financing of Crimes, and other related regulations. For the preven-tion of illicit activities or contraventions, several con-trols are carried out at the national level, among which those for the prevention of money laundering are highlighted through the Compliance Unit, as well as the monitoring and recording of events related to cor-ruption and the follow-up to the prohibition of grant-ing related-party transactions, through the Monitoring and Valuation Control Unit - Risks.

Planning

The activities to achieve our strategic objectives are based on planning. We don't leave things to chance: we work in an organized and methodical way.

Our Corporate Governance Practices: Responsibility, Quality, and Transparency



Transparent, objective and committed conduct

Good financial management; compliance with legal and contractual obligations; balance of the interests of investors, administrators, shareholders, owners, and third parties, and the irreproachable procedure in the allocation and administration of resources must be characteristic of all members of the institution.

Knowledge and application of policies and procedures to prevent money laundering in order to minimize the risk that the Bank and its Subsidiaries are used as a channel for illegal acts

Establishment of standards of behavior

In our Code of Ethics and Conduct are the rules for the actions of Employees, both internally and for third parties.

Contribution to the development of the professional association

Produbanco participates in the meetings of the Association of Private Banks of Ecuador and expresses its opinions in them

Implementation of preventive and corrective measures to address any sensitive issue

In addition to the training provided by the Compliance Unit to all personnel from their incorporation to the Bank or its Subsidiaries, it also executes and implements controls framed around the best international and local ‘Know Your Client’ practices to mitigate the risk of money laundering and the financing of terrorism. In this way, we detect, analyze, control, monitor, and e�ciently and timely report unusual, unjustified, and suspicious transactions to the competent authorities, which makes the Institution increasingly secure and not used as a means for crimes. Additionally, in coordination with Service Quality, we maintain the management and mon-itoring of requirements and claims, which continuously generates opportunities for improvement.

Periodic monitoring of the information of Employees

Every year, we update the data of all the mem-bers of Produbanco and its Subsidiaries through the People and Culture portal. The process includes the signature of the Employee and his/her immediate leadership, as a mechanism to reinforce compliance with the ‘Know Your Em-ployee Policy’, and at the same time, by being alert, to avoid conflicts of interest that may arise due to their personal, family, professional, patri-monial relationships, or for any other justified cause.

Institutional policies and procedures, the Code of Ethics and Conduct, and the Internal Work Regulations, address this issue. All Employees receive training in this regard, a copy of the Money Laundering Prevention Manual, and also sign their commitment of acceptance and knowledge of the policy.




They define the guidelines, establish the strategies, and monitor the management to achieve the objectives

General Meeting of Shareholders

Board of Directors

Management

CORPORATE GOVERNANCE BODIES

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Government Model[GRI: 102-18, 102-22]


It is the highest instance of Corporate Governance. The Chairman of the Board, who does not perform executive functions in the Bank and its Subsidiaries, leads it.

Structure

It is comprised of the Bank’s Shareholders.

Functioning

The General Shareholders’ Meeting holds an ordinary session, on a mandato-ry basis, 90 days after the close of each annual finan-cial year, and extraordinary sessions as necessary.

Its decisions are determined by majority vote of the paid-in capital attending the meeting and are binding on all Shareholders. Its Chairper-son communicates the defi-nitions adopted to the Board of Directors during the ordi-nary sessions.

The General Meeting of Shareholders has operating regulations; it has delegates on the Ethics and Corporate Social Responsibility Com-mittee and on the Remu-neration Committee, and it participates directly in the ap-proval of the Code of Ethics and Conduct of Produban-co and its Subsidiaries.

The General Meeting of Shareholders is in charge of appointing the members of the Board of Directors. For the election of the Principal and Alternate Directors, the right of minorities is guar-anteed through the elec-tion system called “factor”, which consists in that each Shareholder has a number of votes equivalent to the nominal value of the shares they own, multiplied by the number of Directors to be elected.

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General Meeting of Shareholders[GRI: 102-23, 102-24, 102-26, 102-31, 102-35]


Annual Management Reports Directed to the General Shareholders’ Meeting

This Corporate Governance body is in charge of analyzing economic, social, and environmental issues and measuring institutional risk management processes. As part of their information sources, they handle three corporate reports that are generated each year:

• Reports that are presented at the General Meeting.

• Financial Report (a summary of the most outstanding financial management events of the year, which, in line with our transparency policy, is also made available to the general public, in printed form for download at produbanco.com).

• Sustainability Report (report of the most relevant actions in sustainability matters, available to the public at produbanco.com).

Source: Organization Chart Approval and Update Policy

Informea losAccionistas

2018

Grupo Promerica: Ecuador | Costa Rica | El Salvador | Guatemala Honduras | Islas Caimán | Nicaragua | Panamá | República Dominicana

MemoriaAnual

2018

Grupo Promerica: Ecuador | Costa Rica | El Salvador | Guatemala Honduras | Islas Caimán | Nicaragua | Panamá | República Dominicana

MEMORIA2018

Responsabilidad Social Empresarial



Rights and Responsibilities of Board Members

• Directors have the right to receive timely information on the matters that will be submitted for their consideration and resolution, and to have the necessary advice on matters that are not their domain.

• The members of the Board of Directors have among their duties diligence, loyalty, communication, disclosure of conflicts of interest, non-competition, secrecy, and observance of the regulations for the use of Bank assets.

Functioning

The Board of Directors holds monthly meetings to evaluate the evolution of the Bank’s global results. The Directors receive an honorarium for their attendance at each session of the Board of Directors and Policy and Statutory Committees.

The Board of Directors appoints delegates to participate in the Policy and Statutory Committees, and is the body authorized to communicate the recommendations from the Committees to the General Shareholders’ Meeting.

The President, Secretary, or representative of each Committee, presents the management reports developed by the Bank’s officers to the Board of Directors.

The Board of Directors has regulations that include aspects of self-evaluation and review of relevant facts.

Board of Directors


Training[GRI: 102-27, 205-2]

In 2019, the Directors received talks and training on the following topics:

• Conference on the political scenario in the wake of sectional elections and the new configuration of the National Assembly.

• Scenario and economic prospects for 2020.• Asset Prevention Course.• Monthly macroeconomic talk. Personalities in the

various current scenarios.

The participation of Board members in the training processes was 90% on average per session.

Shareholders’ participation in the promoted training processes was 66.42%.

Source: Organization Chart Approval and Update Policy, Report of Good Corporate Governance Indicators.

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Board of Directors


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The Administration[GRI: 202-2]

Executive Presidency

Leads corporate strategy.

Its efficiency is measured by institutional results

Executive Committee

The Executive Com-mittee manages corporate strategies.

Its efficiency is measured by the results achieved

Business Units

They generate commercial activity at the segment or product level.

Their efficiency is measured by their contribution to institutional results.

Support Units

They provide support to business areas.

Their efficiency is measured by the quality with which they provide services.

Staff and Control Units

These units perform analyses and apply controls that facilitate the monitoring of the operation.

Their efficiency is measured by their quality of informa-tion generation and control capacity.


The Policy and Statutory Committees have responsibilities on various fronts; these include the evaluation and preparation of recommendations regarding the results of management in all areas of the business (economic, risk, social responsibility, and others).

Audit Committee

Function: To ensure compliance with audit objectives, internal controls, and execution of the institutional strategy and plans.

Origin of its memberss: 2 Board of Directors, 2 Administration, 1 External

Meeting frequency:Monthly

Compliance Committee

Function: To support the institutional operation and recommend policies and processes for the prevention of money laundering and financing of terrorism and other crimes, in order to maintain the relationship with Clients in the midst of a control and monitoring environment. In addition, to communicate to the Board of Directors the aspects and situations of which it should be aware.

Origin of its members:2 Board of Directors, 7 Administration


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Policy and Statutory Committees[GRI: 102-19, 102-20, 102-32, 102-37]


Comprehensive Risk Management Committee

Function: To design and propose policies, systems, methodologies, models, and pro-cedures for efficient and comprehensive risk management.

Origin of its members:2 Board of Directors, 12 Administration


Remuneration Committee

Function: To establish the guidelines to be adopted by the General Meeting of Share-holders in relation to compensation, bene-fits, and remuneration policies.

Origin of its members:2 General Meeting of Shareholders,2 Board of Directors, 3 Administration

Meeting frequency:Bi-annually

Policy and Statutory Committees


Ethics and Corporate Social Responsibility Committee

Function: To specify the institutional lines of action, to determine the instances that will re-solve the cases of non-compliance, as well as the regime to be followed for sanctions.

Promote and coordinate strategies related to the dissemination of the corporate cul-ture on social responsibility.

Origin of its members:2 General Meeting of Shareholders,1 Board of Directors, 6 Administration


Business Continuity Committee

Function: To plan, control and supervise the reaction system versus interruptions in business activities and actions to protect critical processes against major failures or disasters.

Origin of its members: 2 Board of Directors, 13 Administration

Meeting frequency:Bimonthly



Technology Committee

Function: To present the status and prog-ress of the projects in execution and of technological renewal of project develop-ment service lines, the refinement of prior-itized business needs, and the capacity of infrastructure.


Meeting frequency:On-demand

Information Security Committee

Function: Manage the security of the in-formation to meet the needs of the Bank and safeguard it against use, disclosure, unauthorized modifications, damage, and loss.


Meeting frequency:Bimonthly



Credit Committee

Function: To submit for discussion and ap-proval the decisions of accumulated coun-terparty risk by Client and economic group. Its management is carried out through the Large Risks Commission, the National Credit Commission, the Business Banking Credit Commission, the SME Credit Com-mission, the Retail Banking Commission, and the Regional Credit Commission.


Meeting frequency: 2 times per week

Special Commission for the Rating of Risk Assets

Function: To rate the Bank’s risk assets and submit the corresponding report for the Board of Directors’ knowledge and approv-al.

Procedencia de sus integrantes: 2 Board of Directors, 6 Administration

Meeting frequency:Quarterly



Occupational Health and Safety (OHS)

Function: To promote the prevention of occupational risks. To analyze and propose reforms in the internal regulations of OHS and to monitor their compliance. Fifty per-cent of the members in this Committee are elected by Employees.

Origin of its members: 6 Administration




[GRI: 102-16, 102-17, 406-1]

Rectitude, seriousness, transparency, responsibility, and respect for all the groups with which we interact on a daily basis (Shareholders, Clients, Vendors, Employees, and the Community), represent the essence of our corporate culture.

Ethical conduct is one of the values that we reinforce the most in the behavior of our Employees. We provide training for this reason; we implement tools; we structure policies, processes, procedures, and control systems, and we develop internal regulations that establish the context and limits within which the work must be performed.

Our body of internal rules is available to any member of Produbanco and its Subsidiaries on the Intranet:

• Code of Ethics and Conduct• Corporate Governance Code• Internal Work Regulations• Manual for the Prevention of Money and Asset Laundering• Hiring and Purchasing Policy (of which the Vendor is aware)• Hygiene and Safety Regulations

[GRI: 205-3]

All Employees, members of the Board and the main executives, also have a hard copy of the Code of Ethics and Conduct, which also includes institutional policies and procedures.

Throughout 2019, we registered 12 internal violations of the Code of Ethics and Conduct. After the respective analysis and investigation, we applied the necessary corrections and the people involved were separated from the Institution.

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Ethical and Conduct Standards


Governance: Sustainability as a Key Driver


Board of Directors

Management

GOVERNANCE

Our corporate governance body is structured by three

bodies aligned through sustainable concepts.

1. Code of conduct attached with so

cial resp

on

sibility.

3,D

eter

min

ate

team

s w

ithin

the

inst

itutio

n to

con

trol s

trategy d

evelopment.

2. Perform constant training about sustainable issu

es


Governance: Sustainability as a Key Driver

S US TA I N A B L E C O M M I T M E N T S S U S TA I N

AB

LE

CO

MM

I TM

EN

TS

S

US

TA

INA

BL

E C

OM

MITMENTS SUSTAINABLE COM

MIT

ME

NT

S

SU

ST

AIN

AB

LE

CO

MM

I TM

EN

TS

S

US TA I N A BLE

CO

MMITMENT

SCorporate

SocialResponsibility

and EthicsCommittee

Sustainability Working Group

SustainableCulture

Plan’s Execution

“Champions”Tactical team

Monthly follow up

CEO, Senior management

and 2 Board Directors


Sustainability Working Group - Sustainability “Champions”

ESRAEnvironmental and Social Risk

Analysis System

Sustainability

GreenLines

Retailbanking

Correspondentsand

Multilaterals

Sustainability“Champions”

Technical

Administrative

Peopleand

Culture

Purchasingand

Vendors

Social andEnvironmental

Risks

CorporateGovernance

InnovationandUX

Sustainability“Champions”

Support


Sustainability Diagnosis

SUSTAINABILITY DIAGNOSIS


Sustainable Banking Program

Our Sustainable Banking Program with the specific actions we must follow in the next four years and the teams that are responsible for.

We have defined the responsible area of the bank and the prioritized action, the estimated time to start and an estimated duration to implement that action are also indicated.

Strategy

ImpactMeasures Customers

andSustainable

Products

Stakeholders

CorporateGovernance

EmployeesLabor

ConditionsTransparency

Social &EnvironmentalResponsibility

Ecoefficiency SUSTAINABLE

BANKINGPROGRAM

Aligning process to the Principles of

Reponsible Banking.

Resources and responsibilities

distributed in the action team.


Culture - Creating a New Behavior

CommitteeStrategy – Control

The committee is conformed by several members of the board of directors, the C-Suit and senior VPs.

Learning

InternalSocial Network

The development of internal knowledge is critical to build a solid sustainable culture.

Communicate the development

of all initiatives within the entire

organization.

Strategy – Control

The committee is conformed by several members of the board of directors, the C-Suit and senior VPs.

The development of internal knowledge is critical to build a solid sustainable culture.

Communicate the development

of all initiatives within the entire

organization.

Continuous improvement must be implemented in all levels to identify new goals and projects for all stakeholders.

• Developing politics and procedures.

• Controlling strategy KPIs.

• Green products.• Social responsibility

projects.• Awards and

accomplishments.

• Improve and innovate product and services.

• Identify new trends and opportunities.

• Improve customer service and attention.

• Create e-learnings.


The Commercial and Support network (approximately 125 Employees) has been trained for the second consecutive year, thus enriching their technical and commercial knowledge of the Green Lines product. On the other hand, 17 members of the SME, Business, and Corporate credit team, received the Environmental and Social Risk Analysis course imparted by INCAE and UNEP FI. This exercise deepened the degree of understanding regarding the management of environmental and social risks.

Efforts were made to centralize the data in Big Data Pro-dubanco for its general use in decision-making. The con-solidated information of the green portfolio is visible on different platforms and powered by PowerBI. Users have at their disposal information regarding Clients, sustain-ability categories, funders, certifications, and sectors cov-ered by each project.

The classification of environmental and social risks is now carried out on the Bank’s own business platform; this al-lows the ESRA to be part of the information that we keep in the main technological system (Prometeus). Keeping these data grouped opens the space for Big Data Produ-banco to start generating automatic reports and having information on environmental and social risk in real time.

Technical KnowledgeEfficient Information Management

Strategy


For Grupo Promerica and Produbanco, Sustainability is part of the corporate culture and strategy. This is why we work promoting banking that develops relationships, that offers products and services to their Communities, and that supports future generations by guaranteeing the balance between economic growth, care for the environment, and social wellbeing in the countries where we are present. For Produbanco, environmental, social, corporate governance, and economic criteria are essential and guiding principles of our management, and it is because of them that, on September 22, 2019, we became founding signatories of the Principles for Responsible Banking of the United Nations.

[GRI: 103-2, 103-3 Sustainable Finance]

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Sustainable Finance


Internally, Sustainability contributes to the Institution having a comprehensive view of its actions, consolidating the economic, social, environmental, and corporate governance aspects in a management that creates value for our stakeholders: Shareholders, Clients, Employees, Vendors, and Community.

The Sustainable Finance strategy is part of the essence of our business, through sustainable products and services and the management of the commercial portfolio. With the Social and Environmental Risk Analysis System - SARAS, we incorporate the management of these risks in the credit analysis with established policies, manuals, processes, and procedures.

The Sustainable Finance ecosystem is made up of the Vice Presidency of Retail Banking, and its business scope is complemented by Business Banking (Corporate Segment and Business Segment). In addition, it has the essential support of the Risk Unit, which is in charge of credit analysis and covering social and environmental aspects. The monitoring and evaluation scheme has a defined system and is carried out periodically.

As we can see, Sustainability is the responsibility of different areas, and we are working to consolidate an organizational culture that sees it as an opportunity to do business in a responsible manner and in this manner create a competitive advantage for the Bank. Knowing and closely understanding the requirements of our Clients, requires us to have a high level of adaptability and innovation in order to design effective and tailored solutions within the ongoing changes in the market. This in turn opens up countless opportunities for improvement and is presented as a mechanism to enhance institutional capacities in the creation of innovative products and services.

Sustainable Finance


Green Products[GRI: 201-2, FS1, FS2, FS3, FS4, FS5, FS6, FS9, FS10]

For Produbanco, it is a priority to design products and services that allow the productive development of society within a framework of Sustainability contributing towards prosperity and projecting wellbeing for future generations.

Produbanco’s Green Lines Program was presented in the Ecuadorian financial market in 2016 and is the result of a multidisciplinary work in which all the essential factors for structuring a financial solution were analyzed, especially for small and medium-sized companies, which supports the evolution of production towards efficient and sustainable economic, social, and environmental management. Green Lines responds to Produbanco’s Sustainability strategy, which is based on the 2030 Agenda for Sustainable Development, which in turn commits us to develop initiatives to support compliance with the SDGs.

It includes specialized credits for the financing of green business projects; resource efficiency; sustainable production; efficient and environmentally clean technologies; renewable energy; energy efficiency; sustainable construction; efficient agricultural and livestock technology, and sustainability certifications in order to support the productive and sustainable sector of the country.

Green Lines Program

LíneasVerdes

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Green Products

This innovative financing product considers, among the credit evaluation parameters, that the project reduce by at least 20% the environmental impact generated by the company’s activity. It is estimated that from 2017 until now, the reduction of 4,200 tons of waste, the saving of 600,000 m³ of water, and 2.6 million kWh, has been achieved through Green Lines, and that the emission of 267,000 tons of CO2, has been avoided.

ACHIEVEMENTS OBSERVED SINCE 2017 WITH THE GREEN LINES PROGRAM

-4,200 -600,000 -2.6 -267,000tons

of wasteof water

consumption

million consumption

in kWh

tons of CO2 emitted

m3

GreenLines


Green Products

Finance projects through accessi-ble loans that allow the transition to new technologies that involve not only caring for the environment, but also an analysis that shows the social and economic benefit.

To consolidate various process-es that currently have as outlook the participation of all means of production within a framework in which the entire value chain ben-efits on the basis of sustainable management favorable to soci-ety in general, by configuring the equation:

R + D + Sustainability.

To structure a program that seeks not only profitability and financial success, but also strict, measur-able and visible compliance goals, along with environmental objec-tives.

To ensure stability of all stake-holders in the production circle through the sustainable growth of productive sectors.

Provide small and medium-sized industries with access to new technologies and modern in-frastructure that allow them to achieve maximum efficiency in their processes.

Disseminate in a pragmatic man-ner, the social, environmental, and economic benefits of sustainable production.

Objective 1

Objective 4

Objective 2

Objective 5

Objective 3

Objective 6

Objectives of the Green Lines Program

GreenLines


Funders and Lines of Credit Granted

Green Products

As of December 2019, Produbanco has negotiated the opening of several credit lines with international organizations that are used for specific operations with preferential terms and rates. Under these agreements, the Bank is committed to placing a certain amount in specific segments, prior to the respective credit examination based on the Environmental and Social Risk Analysis System.

181.27

73.77 6.77100.73Assigned

Multilateral Funds

Not AssignableNot assigned

USD

USD USDUSD

million

million millionmillion

Use of Multilateral Funds


Funders and Lines of Credit Granted

Green Products

FUNDERACQUIRED

FUNDS (millions)

FUNDS USED

(millions)

%USE

DESTINATION SUSTAINABILITY CATEGORY

Efficient Agricultural & Livestock Technology

GreenBusiness

RenewableEnergy

EnergyEfficiency

ResourceEfficiency

SustainabilityCertifications

BID Invest BID 1 5 5.01 100.12%

BID Invest BID 2 3.33 3.35 100.52%

Developing World Markets DWM

7.5 8 106.67%

Dutch Entrepreneurial Development Bank FMO 1

10 10.04 100.39%

Dutch Entrepreneurial Development Bank FMO 2

15 15.19 101.25%

International Finance Corporation IFC 1

20 20.15 100.76%

International Finance Corporation IFC 2

12 12.04 100.30%

Total 72.83 73.78 101.29%

Source: Retail Banking, Green Lines Report


Accumulated Origination and Balance of the Green Lines Portfolio

Green Products

In its first year of activation (2016), this portfolio closed with USD 11.43 million of disbursements. As of December 2020, it reached an accumulated amount of USD 218.82 through 306 operations that were placed in the SME, Business, and Corporate segments.

Annual Evolution and Accumulation of Disbursements(millions of dollars)

2016 2017 2018 2019

USD30.79

USD11.43

USD169.87

USD218.82

USD89.59

USD 80.28

2020

USD 91.68

USD 58.80

USD 19.36USD 11.43

USD 48.95

Annual Disbursements

Accumulated Disbursements



Participation of Green Lines in the Produbanco Segment Portfolio



Green Products

Produbanco Portfolio

Corporate Segment Portfolio

Business Segment Portfolio

SME Segment Portfolio

USD

USD

USD

USD

million

million

million

millones

3,419.911,257.94

329.78412

2.49%USD

million

Green Lines Portfolio

85.23 3.53%USD

million


44.41

8.06%USD

million


26.58 3.46%USD

million


14.24



Green Products

2016 2017 2018 2019 2020

24

14

109

136

66

43

27

42

1014



Annual and Accumulated Green Lines Client Evolution




Green Products

2016 2017 2018 2019

4023

135

239

2020

104

67

95

1723

306



Annual and Accumulated Green Lines Operations Evolution




Green Products

DISBURSEMENTSGEOGRAPHICAL DISTRIBUTION 2018



1.48

2.24

5.66

2.05

0.22

31.473.57

16.46

3.00

0.30

34.57

0.22

92.29

1.26

0.94

4.43

23.36

0.25

4.70

1.30

90.08

11.43USD

million

30.8USD million

89.59 218.83USD USD million million


Quito, Santo Domingo de los Tsáchilas,Ambato, Guayaquil


Quito, Santo Domingo de los Tsáchilas,Ambato, Guayaquil

Quito, Santo Domingo de los Tsáchilas,Ambato, Guayaquil, Cuenca, Machala, Ibarra

Quito, Santo Domingo de los Tsáchilas, AmbatoGuayaquil, Cuenca, Quevedo, Machala, Ibarra, Manta, Riobamba

Cumulative Distribution of Disbursements by Geographic Destination(millions of dollars)

From 2016 to 2020we have achieved an increase of 150% in the number of geo-

graphic disbursement destinations.


0.22

66.693.72

0.72

70.72 0.25

3.90

0.30

23.36

169.88USD

million

Quito, Santo Domingo de los Tsáchilas, Ambato, Guayaquil, Cuenca, Machala, Ibarra, Manta, Riobamba

7.16

11.00

2.68

9.96


The implementation of the ESRA methodology for credit rating at the beginning of the granting process has not only created value for the Green Lines Program, but also at the level of the Bank’s portfolio, since all commercial credit operations equal to or greater than USD 350 thousand, of any type of Bank, are also analyzed with the same parameters.

This analysis enriches the sustainable standing of the projects to be financed since it allows us to know their viability, not only in the economic aspect but also in the social sphere with its repercussion on the surrounding Community (employees, neighbors, employment, territory, etc.), and the impact on the environment (climate change, CO2 emissions, carbon footprint, water footprint, etc.)

System for the Analysis of Environmental and Social Risks - ESRA

$488,564,828 26% 12% 21%

7% 3% 5%

28% 15% 7%

26%

50

207

198

21

110

62

36

52

158% 2%

18% 10% 6%

5% 2% 0%

$327,662,308

$ 96,950,815

$220,421,097

$176,899,824

$ 30,042,544

$396,757,594

$728,121,238 39%109 15%

$110,942,547

$ 7,254,521

ENVIRONMENTAL AND SOCIAL RISK CATEGORY

DUE DILIGENCE

TO

TA

L E

XP

OSU

RE

>1.5% >4,500

700-4,500

350-700

0.25%-1.5%

0.12%-0.25%

Expanded

Amount AnalyzedNumber of Operations

I II III

$ 672,719,172 36%175 23%

Medium

$ 454,655,667 25%467 62%

Basic

$1,855,496,077 100.00%751 100.00%

(I) Associated to high-risk environmental and social activities | (II) Associated to mid-risk environmental and social activities | (III) Associated to low-risk environmental and social activities

% of Accounting

Equity

Thousands of

dollars

Analyzed Portfolio

Source: Green Lines Report 2019


Strategy

The strategy of the Green Lines Program was developed along the following axes:

The goal was to increase the participation of Green Lines disbursements on the coast. Thanks to the applied strate-gy, an increase of 77.2% was achieved in said region, com-pared to the growth of 40.3% registered in the highlands. In this way, the participation of the coast went from 42% to 48%, and that of the highlands went from 58% to 52%.

On the other hand, the technical assistance carried out with IDB Invest for SME Clients in the areas of Ambato, Santo Domingo, and Machala, will allow increasing the participation rate in those cities as compared to Quito and Guayaquil.

Strategic Axes

Geographical Diversification

INTEGRATION AMONG SEGMENTS

MULTILATERALAGENCIES

GEOGRAPHICAL DIVERSIFICATION

EFFICIENT INFORMATION MANAGEMENT

TECHNICALKNOWLEDGE

STRATEGICAXES 77.2%

increase in share of Green Line

disbursements in the coastal region.

Participation Disbursements

48% | 52%coastal region

highlands region


Multilateral Organizations

Integration Among Segments

During the year, we received a visit from the Entrepreneurial Development Bank FMO, The Development Bank of Austria OeEB, the Banco de Desarrollo de América Latina CAF, Finance in Motion, and FinDev, which opened opportunities for new financing.

The technical assistance program with IDB Invest was executed under the modality of specialized learning processes through the generation of specific projects for each company, which would become the basis for the development of specific consultancies by the Ecuadorian Center for Efficiency of Cleaner Production and Resources (CEER in Spanish).

The main focus of the technical assistance program with the International Finance Corporation IFC, was the presentation of the tool and its general benefits in terms of environmental impacts. It was aimed at builders and vendors of construction materials in the cities of Quito and Guayaquil. Ten projects were selected to be accompanied in their certification.

We achieved the integration of the Environmental and Social Risk team with the Segments and Products team, as well as with those of other segments. In this way, we deepened our understanding of the technical aspects and supported the successful placement of Green Lines during 2019.


Green Account

Green Account is an innovative savings account that contributes to environmental care. It is a pioneering milestone in Ecuador as it is a product that channels local resources exclusively for sustainable projects. Its novel value proposition also enables environmentally responsible users to know the destination of their resources. In addition, it seeks to train the Client in digital literacy and promote banking, since it provides facilities for its agile opening through digital channels, thereby reducing paper consumption, optimizing resources, which then leads to environmental care.

As of December 2020, the balance of this account was USD 9.1 million. Since December 2019 it has grown by 167.65% thanks to its value proposition, which has had a profound impact on both Produbanco’s Clients and new users. Thus, at the end of the year, it registered 17,542 accounts, which represents a 143% growth.

Green Account is a product

whose resources are directed

to the funding of the Green

Lines Program.


Green Account

Dec 18 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20

4 61 137 268 485 639 8471,083

1,4891,856

2,3772,794

3,3963,615

859%3,900

4,607

5,5015,715 5,734

Evolution of the Green Account (thousands of dollars)

Source: Retail Banking, Segments and Products Areas

9.1 17,542 143%balance in

Green Account

as of Dec 2020

accounts

as of

Dec 2020

growth in 2020

accounts

USD

millionGreenAccount


Green Accounts by Opening Channel

17,542 accounts

Source: Retail Banking, Segments and Products Areas

Digital Channels

In-agency

Green Account

2019 2020

7,224

3,167

4,557

17,542

7,664

9,878

143%


Green Account

GR

EE

N C

OM

MU

NI T

Y

GR

EE

N C

OM

MU

NI T

Y

G

RE

EN

CO

MM

UN

ITY

GR

EEN C

OM

MU

NIT

Y

The company produces and sells.

Funds return to the Bank

through loan payments.

The Bank analyzes and finances the

project through a Green

Lines loan.

The project is executed:

Agricultural and livestock Technology

Green BusinessRenewable EnergyEnergy E�ciency

Resource E�ciencyCertifications

of Sustainability

GREENCOMMUNITY

Dynamicsof money within the context of Sustainability

at Produbanco

People open a Green Account

and deposit their money. $

The interaction of the Green Account and Green Lines al-lows us to build a Green Com-munity, enriching the dynamics of money within the context of Sustainability at Produbanco.


Impact Analysis Methodologies Evaluated by Produbanco

D I F F E R E N T P A T H S , S A M E G O A L

Methodology used to count the carbon footprint of financed emissions.

Focus: Environment

Objective: Paris

Agreement

Tool that allows determining the positive and negative impacts of the portfolio.

Focus: Social,

Environmental, and Economic

Objective: SDG

M E A S U R E



Objectives

General Objective

Allow banks to identify their most significant areas of impact based on the nature, content, and geo-graphic scope of their portfolios.

Specific Objectives

• Define impact indicators.

• Establish measurement methodologies.

• Implement data collection systems.

• Assess current level of performance (baseline).

• Set goals that increases its positive impacts while decreasing its negative impacts.

General Objective

Map the commercial portfolio and quantify the tCO2 attributable to Produbanco as a result of the financing it grants to companies.

Specific Objectives

• Align the portfolio.

• Improve data collection.

• Assign a quantifiable value in tCO2 to the port-folio placement.

• Assess current level of performance (baseline).

• Set goals that increases its positive impacts and decreases its negative impacts.



Result impact areas: Commercial Banking

30%

40%

50%

60%

70%Availability - Water

FoodHousing

Health & sanita�on

Educa�on

Employment

Energy

Mobility

Informa�on

Culture & heritage

Integrity & security of personJus�ceStrong insitu�ons,

peace & stability

Quality - Water

Air

Soil

Biodiversity & ecosystems

Resources efficiency / security

Climate

Waste

Inclusive, healthy economies

Economic convergenceOther

posi�ve impacts nega�ve impacts



Result impact areas: Corporate Banking

30%

40%

50%

60%

70%

80%Availability - Water

FoodHousing

Health & sanita�on

Educa�on

Employment

Energy

Mobility

Informa�on

Culture & heritage

Integrity & security of personJus�ceStrong insitu�ons

peace & tability

Quality - Water

Air

Soil

Biodiversity & ecosystems

Resources efficiency / security

Climate

Waste

Inclusive, healthy economies

Economic convergenceOther

posi�ve impacts nega�ve impacts



Steps to follow

MEASURINGFINANCEDEMISSIONS DISCLOSING

DATA

ESTABLISHINGOBJECTIVES

DESIGNINGSTRATEGIES

IMPLEMENTINGCONCRETE

ACTIONS

PORTFOLIOALIGNMENT

Allow banks to identify their most significant areas of impact based on the nature, content, and geographic scope of their portfolios.


Goal Setting

Initially, the Green Lines pro-gram had a portfolio placed in four provinces. By the end of 2020, we reached ten prov-inces and we are expected to close 2021 with coverage in all provinces where we have a presence.

Galápagos

Provinces withGreen Lines

SantaElena

Esmeraldas

Manabí

Guayas

Loja

El Oro

Azuay

Cañar

Chimborazo

MoronaSantiago

Pastaza

OrellanaNapo

LosRíos

Bolívar

Carchi

Imbabura

Pichincha

Cotopaxi

SucumbíosSantoDomingode losTsachilas

Tungurahua

Geographic diversification

Operations23Disbursement11.43





ENVIRONMENTAL

Green PortfolioVs

Total Portfolio

E&S

Sustainable PortfolioVs

Total Portfolio

Disbursed millions

Portfolio stock millions

10% 218.8360.20

2%

*Expressed in millions of dollars

2016 2017 2018 2019 2020


Customers and Consumers

CONTINUOSIMPROVEMENT

UNDERSTANDINGNEEDS

CUSTOMERJOURNEY

EXPERIENCEAS A DIFERENTIAL

BRANDPOSITIONING

GREEN LINESas a financial

solution generatingtangible experiences

- Visualizing &Measuring Impacts

GeographicalSegmentation

Economic SectorSegmentation

BehavioralSegmentation

CuentaVerde

Customer and MarketInformation

DigitalDevelopment

BusinessIntelligence

DataManagement


Agent of Change

Articulating Clusters – Construction & Real Estate Development

CONSTRUCTORS

Sustainable Buildings

Developing new projects with eco – friendly

initiatives to the market.

DesignsE�ciency - services

Creating custom made financial structures

in order to satisfy needs within each part of the value chain

Identify suppliers with e�cient and

eco friendly solutions applicable with

national and international

standards

SUPPLIERS

Equipment, materials and machinery

BANKING

Integral Support

Academia & ConsultantsSpecialized organizations

and technical professionals

CustomersPeople and organizations that

will consume or purchase construction products

Government & RegulatorsUnderstanding legislation and

benefits within sustainable solutions

C O N S T R U C T I O N D E V E L O P M E N T & E V O L U T I O N


Agent of Change

Information Flow - Efficiency

Galápagos North Coast

South Coast

Central Highlands

SantaElena

Esmeraldas

Manabí

Guayas

Loja

El Oro

Azuay

Cañar

Chimborazo

MoronaSantiago

Pastaza

OrellanaNapo

LosRíos

Bolívar

Carchi

Imbabura

Pichincha

Cotopaxi

SucumbíosSantoDomingode losTsachilas

Tungurahua

Technical Training

Bringing customers from several economic activities with specialized consultants in order to generate new solutions within each sector while considering energy, water, waste, etc

Specialized Consultancy

Selecting projects and initiatives to be devel-oped with technical sup-port assuring high a im-plementation rate.

Environmental Certifications

Share best practices and general benefits of E&S certifications in terms of market, competitiveness and production


Environmental Compliance

Our approach to environmental matters is based on risk prevention, both inherent to the business with regard to the activities that Clients carry out with financing, as well as that approach arising from institutional operations. At Produbanco and its Subsidiaries, we manage our im-pacts beyond respecting what is established in the legal framework, through the measurement and compensa-tion of the Corporate Carbon Footprint taking into ac-count direct emissions (scope 1), indirect emissions (scope 2), and other indirect emissions (scope 3).

We have dedicated significant efforts to implement an environmentally friendly infrastructure in every new building, expansion, or remodeling. For this, we take into consideration the use of designs and technologies that reduce energy, water, and air conditioning consumption, and we also facilitate virtual communication that allows us to reduce the impacts of air and land travel. All this also fosters an environment in which Employees identify with the various sustainable axes at Produbanco.

[GRI: 103-2, 103-3 Environmental Compliance

The prevention of indirect environmental risks and im-pacts, derived from the business, are managed through a multidisciplinary team of Sustainable Finance, and the Environmental and Social Risk Analysis System - ESRA. .

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Environmental Management


Energy Efficiency Measures

Innovative design, which has a central focus on being sustainable and

environmentally friendly.

Reduction of Carbon Emissions.

Produbanco is implementing energy

efficiency measures in its main buildings.

Contribution to weakening

global warming effects.

GUAYAQUIL (new)

EKOPARK

IÑAQUITO


Conserving Our Water Sources: The Moorlands of Ecuador[GRI: 304-3]

The vegetation and soils of the moorlands act like a sponge that absorb rainwater or glaciers, stores it, and slowly releases it to supply rivers and thus become a source of vital liquid for human consumption, irrigation, and electrical power generation.

In addition to being providers of water, the moorlands fulfill an essential function on the planet. Due to their low temperatures, they contribute to the capture and storage of carbon from the atmosphere to convert it into organic matter in the soil.

With the signing of the agreement, Produbanco will contribute to the conservation of this Andean ecosystem of great importance for the regulation of water resources and the protection of several endemic species of animals and plants.

This long-term project will be implemented through the Socio Bosque Program, which is promoted by the Ministry of the Environment and Water. Its implementation is carried out through Produbanco’s contribution to the financing of conservation agreements with the owners of the moorlands, who receive economic incentives for the care and sustainable use of the ecosystem. The Sustainable Environmental Investment Fund FIAS, performs the financial administration. In this manner, the preservation of this habitat and its biodiversity is integrated with the wellbeing of the surrounding local communities..

The moorlands have the power to trap five times more carbon than the tropical rainforest. In other words, the conservation of the moorlands is a natural solution to mitigate climate change.

Why the Moorlands?

In line with our vision of sustainable development, in November we signed a collaboration agreement with the Conserva-tion International Ecuador organization (CI-Ecuador) to work towards a common objective: the protection of the moor-lands of our country through the program ‘Conserving our water sources: the Moorlands of Ecuador.’

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Conserving Our Water Sources: The Moorlands of Ecuador

Expand the number of hectares

of moorlands under conservation

agreements within the Program.

Ensure the conservation of the

wetlands that supply water to

the population.

Increase the number of

beneficiaries who receive economic

incentives for the conservation and responsible

management of this ecosystem.

Promote the conservation of

emblematic species of the

moorlands.

P R O G R A M M EO B J E C T I V E S


[GRI: 302-1, 302-2, 302-3, 305-1, 305-2, 305-3, 305-4, 305-5]

Corporate Carbon Footprint

Since 2014, we have reported and verified the process of measuring the Carbon Footprint of our main buildings. For 2019, our objective was to measure and certify our Corporate Carbon Footprint.

The fulfillment of this objective has led us to become the first bank in Ecuador to have an international cer-tification of Carbon Neutrality verified by the Société Générale de Surveillance S.A. SGS, a world leader in in-spection, verification, analysis, and certification, consid-ered as the main benchmark in quality and integrity. It has more than 89,000 employees and a network of more than 2,600 offices and laboratories around the world.

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ActivityType of

EmissionAmount

Intensity 2,726

Employees

tCO2 Emissions

tCO2e Emissions

Intensity 2,726

Employees tCO2e p/c

%

DIRECT EMISSIONS

Fuels 119.67 122.84 2.29%

Diesel in generators Direct 1,131.32 gl 0.42 gl/pc 11.54 11.61 0.004 0.22%

Gasoline mobilization private vehicles Direct 10,539.76 gl 3.87 gl/pc 92.04 94.78 0.035 1.77%

Diesel mobilization private vehicles Direct 1,585.34 gl 0.58 gl/pc 16.09 16.45 0.006 0.31%

Refrigerants 229.07 229.07 4.27%

R-410 Direct 262.00 lb 0.10 lb/pc 229.07 229.07 0.084 4.27%

Fire Extinguishers 0.96 0.96 0.02%

Recharges in CO2 extinguishers Direct 2,110.00 lb 0.77 lb/pc 0.96 0.96 0.0004 0.02%

TOTAL DIRECT EMISSIONS 349.70 352.87

Produbanco 2019 Carbon Emissions Inventory

OTHER INDIRECT EMISSIONS

Armored money transport 145.84 149.12 2.78%

Diesel money transport Indirect 591,560.01 km 217.01 km/pc 145.84 149.12 0.055 2.78%

Continues in next page...


OTHER INDIRECT EMISSIONS (...continuation, comes from previous page)

Electrical power 1,288.19 1,291.88 24.11%

Electrical power consumption at points of service Indirect 6,375,668.63 Kw/h 2,338.84 kw/pc 1,263.21 1,266.83 0.465 23.64%

Electrical power consumption at ATMs Indirect 126,061.90 Kw/h 46.24 kw/pc 24.98 25.05 0.009 0.47%

6,501,730.53 Kw/h = 23,406.23 Gj

Losses due to Transportation and Electrical Power Distribution

Indirecta 666,427.38 Kw/h 244.47 kw/pc 132.04 132.42 0.049 2.47%

Mobilization 3,073.50 3,151.64 58.81%

Gasoline business travel in taxis Indirect 912,479.93 km 334.73 km/pc 204.95 211.04 0.077 3.94%

Diesel business travel in taxis Indirect 136,347.58 km 50.02 km/pc 33.61 34.36 0.013 0.64%

Gasoline commuting Employees (home-work-home) Indirect 8,998,286.92 km 3,300.91 km/pc 2,021.05 2,081.14 0.763 38.83%

Diesel commuting Employees (home-work-home) Indirect 11,107,735.62 km 4,074.74 km/pc 558.61 569.82 0.209 10.63%

Air travel Indirect 4,781 passengers n/a 255.28 255.28 0.094 4.76%


ActivityType of

EmissionAmount

Intensity 2,726

Employees

tCO2 Emissions

tCO2e Emissions

Intensity 2,726

Employees tCO2e p/c

%


Continues in next page...


ActivityType of

EmissionAmount

Intensity 2,726

Employees

tCO2 Emissions

tCO2e Emissions

Intensity 2,726

Employees tCO2e p/c

%



OTHER INDIRECT EMISSIONS (...continuation, comes from previous page)

Messenger Service 176.57 179.90 3.36%

Diesel messenger service Indirect 377,964.89 km 138.65 km/pc 93.18 95.28 0.035 1.78%

Gasoline messenger service Indirect 742,595.11 km 272.41 km/pc 83.39 84.62 0.031 1.58%

Waste 0.01 101.13 1.89%

Common waste Indirect 96,050.61 kl 35.24 km/pc 0.00 101.12 0.037 1.89%

Clinical waste Indirect 50.94 kl 0.02 km/pc 0.01 0.01 0.000004 0.00%

TOTAL OTHER INDIRECT EMISSIONS 4,816.15 5,006.09

TOTAL CO2 EMISSIONS 5,358.96 1.966 100%

Source: Produbanco Corporate Carbon Footprint Report drafted by GreenWise and Certified by SGS.Methodology basis: GHG Protocol and ISO 14064-1: 2006 Greenhouse gases - Part 1: Specification with guidance, at the organization level, for quantification and reporting of greenhouse gas emissions and removals.Source of conversion factors: Several sources were used; these are detailed in the report.Tools used: Excel calculation tool developed by the consulting team (GreenWise). Document name: 2019 Carbon Footprint Tool (Herramienta Huella Hídrica Produbanco 2019). See full report.

Refrigerants

R-22 (is shown separately per indications issued by the Montreal Protocol) Direct 30 pounds 0.011 lb/pc 24.00 24.00

https://www.produbanco.com.ec/media/667894/informe-carbono-neutro.pdf

https://www.produbanco.com.ec/media/667894/informe-carbono-neutro.pdf


Reduction[GRI: 302-4, 305-5]

Our Reduction Plan as of 2025 will be developed in five axes whose main objective will be focused on reducing the main emissions generated by our Employees, in the transfer from their home to the workplace and vice versa.

Good practices in construction and environmentally friendly design in main buildings and in remodeling agencies, have allowed us to reduce electrical power consumption in previous years and set the definition of goals for the optimization of energy use indicators.

Likewise, the enhancement of the multiple communication tools, present in our facilities at the various provinces of the country, and the development of an efficiency strategy in the programming of Employees’ trips (by business or other type of activity), will not only improve the CO2 emissions index, but will give way to the implementation of new ways of working.

Lastly, we are committed to implementing a comprehensive environmental culture where waste separation and recycling become a common practice in all our offices.

AXES OF OUR REDUCTION

PLAN AS OF 2025

Reduction of emissions generated

by our Employees in their commutes

(main source of emissions).

Application of good practices in environmentally

friendly construction and design themes.

Optimization of our energy use indicators.

Reduction in the rate of

CO2 emissions and implementation

of new ways of working.

Implementation of a comprehensive

environmental culture (waste separation and recycling in all

our offices).

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Compensation[GRI: 304-3]

In this new measurement cycle, we will achieve our compensation through the purchase of Carbon Bonds¹ equivalent to 2,379 tCO2e, which covers emissions of scope 1 and 2, and the mandatory items of scope 3 according to the Carbon Neutral Protocol: generated waste for the operation, business trips (flights and taxis), and losses from electrical power transmission and distribution.

The bonds acquired finance the San Antonio El Sitio Wind Power Project in Guatemala². This project contributes to the approximate reduction of 81,392 tons of CO2 emissions per year. The project not only increases energy supply in the region by reducing electrical power costs, but also helps conserve resources and develop the local community.

1. Carbon Bonds or CER Reduced Emissions Certificates: Is one of the three mechanisms proposed in the Kyoto Protocol for the reduction of emissions that cause global warming. This instrument allows through its sale, that investment projects elaborated in developing countries can obtain economic revenues. These projects mitigate the emission of greenhouse gases or sequester carbon dioxide from the atmosphere. Each bond is equivalent to one ton of CO2e.

2. At the end of the process for measuring Produbanco’s Corporate Carbon Footprint, in Ecuador there were still no projects qualified for the certification of carbon neutrality; therefore, the search for the appropriate project was carried out considering the geographic presence area of Grupo Promerica.

This project

contributes to

the approximate

reduction of

81,392 tons of

CO2 emissions

per year.

San Antonio El Sitio Wind

Power Project in Guatemala.

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Compensation

Impacts and benefits of the project

Increased energy supply in the region.

Reduction of electrical power costs.

Technology transfer..Generation of local employment.

Development of local infrastructure.

Socio-economic impacts and benefits

Improvements in local schools.

Donations of school supplies.

Improvements in water and sanitation.

San Antonio El Sitio Wind Power Project in Guatemala.San Antonio El Sitio Wind Power Project in Guatemala.


Compensation

Date: 02 November 2020Reference: VC/0321/2020

VOLUNTARYCANCELLATIONCERTIFICATE

Presented to:CDM Project 6973: San Antonio El Sitio Wind Power Project

Reason for cancellation:Compra de 2,379 CERs para compensación de emisiones de la Huella de Carbono Corporativa deProdubanco.

Number and typeof units cancelled

2,379 CERsEquivalent to 2,379 tonne(s) of CO2

Start serial number: GT-5-4290218-2-2-0-6973End serial number: GT-5-4292596-2-2-0-6973

The certificate is issued in accordance with the procedure forvoluntary cancellation in the CDM Registry. The reason forcancellation included in this certificate is provided by thecanceller.


Training and Learning: 2019 Featured Programs

The goal of the program is to foster new leaders who drive the institution forward with their ideas and commitment.

With the accompaniment of a tutor, participants train for four months in strategic areas to enhance their leader-ship and teamwork skills.

The program has four phases that at the same time constitute filters through which the Employees with the most po-tential are identified:

• Team Building• High potential assessments• Challenges• Final assessment

The process yields a winner who will continue a more in-depth training in each of the Bank’s units, which will al-low him/her to outline his/her high-level career plan.

It allows Employees to carry out intern-ships in departments other than the area in which they work (prior agree-ment with their leadership).

This scheme allows them to acquire a broader knowledge of the Bank’s oper-ation and gives them visibility in light of the opportunities that arise to fill internal vacancies.

It is a development management mod-el that makes a series of tools and pro-grams available to Employees to reach their full potential, as well as to man-age the growth of their professional and personal profile in the role that is most appropriate for them.

It is structured on the basis of the attri-butes that define our culture.

The objective of this program is to em-power and maximize the potential of our female employees to contribute to their personal and professional develop-ment.

To this end, we apply the mentoring system that is summarized in the follow-ing expression:

6= 6 new habits

3 = 3 months

1 = talking 1 to 1 The scheme works with a group of mentors who for three months (2 hours per month) meet with their apprentice (mentee) to support her evolution in accordance with the objectives set.

In June, Rania Anderson, international speaker, coach and author of the book 6 Keys to Success for Women in Emerging Markets, gave the keynote address Success in Women Like Us.

Internal Trainee Program

Internal Internship Program

Expedition Towards your Development Program

Protagonists Program

https://youtu.be/_fOfKV3zocg

https://youtu.be/g4skoNCkz5I

https://youtu.be/dhW_ovf59rg

https://youtu.be/lD21fm_EGnQ

https://youtu.be/_fOfKV3zocg

https://youtu.be/g4skoNCkz5I

produbanco.com

https://www.produbanco.com.ec/

mailto:[email protected]

principles for responsible banking - produbanco

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