Unipol Gruppo S p A : The Unipol Group strategy on climate change 2023

The Unipol Group Strategy

On Climate Change

Updated to June 2023

INTRODUCTION

In 2015, further to the Fifth Assessment Report of the Intergovernmental Panel of Climate Change (IPCC), the Unipol Group published a position paper "Unipol for the climate", which represents the first step forward in the structuring of its strategy on climate-related topics. In the paper, the Unipol Group outlined its vision on the need to activate a model for the prevention and management of catastrophic weather events based on a public-private partnership, which adopts insurance mutuality mechanisms to handle the growing risks deriving from climate change and handle the significant compensation expected, particularly within the Italian national context.

The Sustainability Policy then specified the Group's commitments concerning the protection of the environment and land, sea and freshwater ecosystems as well as the fight against climate change, and affirmed the Group's commitment to reducing greenhouse gas emissions, with the intent of contributing to reaching the objectives set by governments in the Paris Agreement.

In the scenarios evaluated in its Sixth Assessment Report, the IPCC reaffirmed that limiting the increase in the average global temperature to 1.5°C, as required by the Paris Agreement, entails that global greenhouse gas emissions will reach their maximum peak at the latest by 2025 and then, by 2030, will be reduced by 43% [34 - 60%] with respect to 2019 levels 1. Limiting the rise in the average global temperature to 1.5°C also requires reaching net zero CO2 emissions in the early 2050s, along with deep reductions in other GHG emissions2 .

Aware of the triple role that the Unipol Group is called upon to play in the fight against climate change as risk carrier (management of technical insurance risk), risk manager (physical risk management) and investor (institutional investor), and the decarbonisation trajectory outlined by the IPCC to reach the targets for limiting the increase in the average global temperature outlined by the Paris Agreement, the Board of Directors of the Unipol Group has adopted this climate strategy to specify in detail how the Group is preparing to deal with the risks and take advantage of the opportunities connected to the climate, by defining new medium/long-term targets for the reduction of its greenhouse gas emissions to support its path of decarbonisation.

1. IPCC - Working Group III contribution to the IPCC sixth Assessment Report (AR6), Summary for Policymaker, C.1
2. IPCC - Working Group III contribution to the IPCC sixth Assessment Report (AR6), Summary for Policymaker, C.2

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AT A GLANCE: THE MAIN TARGETS

REAL ESTATE DEVELOPMENT

AND MANAGEMENT ACTIVITIES

46.2% reduction by 2030 of scope 1 and 2 emissions related to electricity, gas and other energy sources consumption for all buildings over which the Group has direct control, from the instrumental headquarters and those of diversified companies to the buildings housing UNA Group activities and foreign offices, as well as the car fleet of Group employees, in line with climate science and in particular with the scenario of containing the global average temperature increase within 1.5°C.

REDUCTION BY 46.2% BY THE END OF 2030 OF SCOPE 1 AND 2 EMISSIONS

€1.3BN

INVESTED TO SUPPORT THE 2030 AGENDA IN 2024

INVESTMENTS

• Commitments under the Net Zero Asset Owner Alliance:
• • Sub-portfoliotarget: 50% reduction by 2030, compared to 30 September 2022, in the carbon intensity (tCO2(e)/ EVIC) of its directly managed portfolios of listed equities and publicly traded corporate bonds;
  • Engagement targets: engagement activities with the 20 companies generating the highest Scope 1 and 2 emissions;
  • Transition Financing Targets: target to reach EUR 1.3 billion invested in thematic investments for the SDGs in 2024, including those for combating climate change and protecting the environment, terrestrial, marine and freshwater ecosystems (such as investments in renewable energy and eco-efficiency, sustainable mobility, water, sustainable forest management, organic farming and eco-innovation), up from the EUR 862.2 million invested at the end of 2021.
• Expansion of sector exclusions within the most impactful sectors:
• • a priori exclusion from new investments of those in Corporate Issuers that derive 30 percent of their revenues from coal mining or power generation

from thermal coal, as well as from oil sands, shale gas and arctic drilling related activities, and that do not demonstrate sufficiently ambitious positioning in terms of business transition to a low-carbon emission economy.

UNDERWRITING ACTIVITIES:

• Target for incidence of products with social and environmental value (objective of 30% to be reached by the end of 2024).
• Support to its customers in the transition towards a low carbon economy, through the development of products aimed at incentivising its own MV customers to reduce their emissions with the support of telematics and the reduction of the environmental impacts of the claim management process.
• Exclusion from Non-Life and Life underwriting of companies that derive 30 per cent or more of their revenues from coal mining or thermal coal power generation, as well as companies that engage in unconventional mining practices (such as mountaintop removal, hydraulic fracturing - fracking -, oil sands, deepwater drilling, shale gas and arctic drilling), and that do not

demonstrate a sufficiently ambitious positioning in terms of transitioning the business to a low-carbon economy.

INCIDENCE OF PRODUCTS WITH SOCIAL AND ENVIRONMENTAL VALUE:

30% TO BE REACHED BY THE END OF 2024

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AT A GLANCE:

THE MAIN ACTIONS THROUGHOUT THE VALUE CHAIN

			ASSET MANAGEMENT
	PREMIUMS	REAL ESTATE
			FINANCE
PRODUCT	UNDERWRITING
AND POLICY	TOURISM AGRICULTURAL MEDICAL
FACTORY
	MANAGEMENT

CLAIMS

MANAGEMENT

Range of insurance products and	Medium-term goal of reducing Scope
services aimed at supporting
1 & 2 emissions in line with climate
customers in mitigating and adapting
science
to climate change

Target for incidence of products	Commitments under
with social and environmental value	the Net Zero Asset Owner Alliance

Sensitive sector exclusions and	Expansion of sector exclusions
monitoring

Emission reduction incentive	Target of financing for SDGs
with the support of telematics

Reduction of the

environmental impacts of the claim management process

Legenda:

Mitigation

Adaptation

Biodiversity

Circular economy

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A 2030 SCOPE 1 AND SCOPE 2 EMISSION REDUCTION TARGET BASED ON CLIMATE SCIENCE

Unipol is one of the main real estate operators in Italy based on the dimension of its activities. The Group has a consolidated process for analysing and monitoring its direct impacts. Unipol is committed to carrying out property development activities aimed at maximum energy self-sufficiency, urban re-qualification investments designed to make cities more sustainable and investments for the energy reclassification of existing property assets, not only with reference to the instrumental property but also to the property used by third parties.

Consistent with these commitments, Unipol Group has set a medium-term target: in line with climate science, and in particular with the scenario of containing the global average temperature increase to within 1.5°C, Unipol is committed to reducing Scope 1 and Scope 2 emissions related to the consumption of electricity, gas and other energy sources for all buildings over which the Group has direct control, from the headquarters instrumental to the core insurance business to those of diversified companies to the buildings that are the headquarters of the UNA Group's activities and foreign offices, as well as the car fleet of Group employees, by 46.2 percent by 2030 compared to 2019, using the market-based methodology in accordance with the GHG Protocol.

This goal will be achieved by pursuing the acquisition of electricity from renewable sources (including diversification of procurement methods), the implementation of energy efficiency interventions and the continuous consolidation of an energy management system certified in accordance with the ISO 50001 standard, with the goal of reducing the emissions connected to energy requirements by roughly 2% per year across all energy carriers by the end of 2030.

INVESTMENTS FOR THE TRANSITION TOWARDS NET ZERO CO2 EMISSIONS BY THE END OF 2050

REDUCTION OF THE EMISSIONS OF ITS INVESTMENT PORTFOLIOS TO NET ZERO GREENHOUSE GAS EMISSIONS BY THE END OF 2050

Aware of the fundamental role of institutional investors in supporting the transition to a low carbon economy, the Unipol Group is fully committed to help achieve the goals of the Paris Agreement.

In order to adequately monitor the impact of its investments on climate change, the Group measures, monitors and reports on metrics associated with the carbon footprint of its financial portfolio (Corporate - Corporate Bond and Equity - and Government portfolios) and evaluates its future alignment with the Paris Agreement goals (Paris alignment) on a forward-lookingbasis 3.

In order to consolidate its process of aligning its financial portfolio to a trajectory of containing the global average temperature increase to around 1.5°C, the Unipol Group has joined the Net Zero Asset Owner Alliance, thereby committing to reduce the emissions of its investment portfolios to zero net greenhouse gas emissions by 2050 and to take action to reduce greenhouse gas emissions through the engagement of the companies it invests in, setting specific intermediate targets.

3 The analysis currently does not include the following asset classes: cash, UCITSs, ETFs, derivatives and unlisted instruments.

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In line with the Target Setting Protocol of the Net Zero Asset Owner Alliance4 , Unipol has set the following intermediate targets to 2030:

• Sub-portfoliotarget: Unipol Group commits to reduce the carbon intensity (tCO2(e)/EVIC) of its directly managed listed equities and publicly traded corporate bond portfolios by 50% by 2030, compared to 30 September 2022. The commitment to reduce carbon intensity concerns the Scope 1 and 2 emissions of the companies included in the perimeter. The assets covered by the target - as at 30 September 2022 - are USD 16.1 Bn (EUR 16.5 Bn)5 ;
• Engagement targets: to support the achievement of the sub-portfolio target, the Unipol Group will carry out engagement activities with the 20 companies generating the highest Scope 1 and 2 emissions. In 2022, their emissions accounted for more than 70 per cent of the total absolute emissions of the assets covered by the target sub-portfolio. Engagement activities will include bilateral engagement activities and collective engagement activities at company and sector level, through initiatives such as Climate Action 100+.
• Transition Financing Targets: the Unipol Group aims to reach EUR 1.3 billion invested in thematic investments for the SDGs in 2024, including those for combating climate change and protecting the environment, terrestrial, marine and freshwater ecosystems (such as investments in renewable energy and eco-efficiency, sustainable mobility, water, sustainable forest management, organic farming and eco-innovation), up from the EUR 862.2 million invested at the end of 2021.

The Unipol Group will report annually on the progress made against its targets.

EXCLUSION OF SECTORS NOT ALIGNED WITH THE TRANSITION TOWARDS A LOW CARBON ECONOMY The Group's policies governing ESG risk management call for exclusions and specific disinvestment objectives as concerns carbon. With respect to the oil and gas industry, monitoring is in place on the alignment of the investee companies with decarbonisation processes in keeping with the goals of the Paris Agreement.

According to the Responsible Investment Guidelines published in August 2022, the Unipol Group excludes a priori from new investments those in Corporate Issuers that obtain 30% or more of their earnings from coal mining activities or the generation of electricity from thermal coal, and that do not show a sufficiently ambitious position in terms of transitioning their business to a low carbon economy.

The Group has committed to completing its disinvestment from coal by the end of 2030.

Unipol has assessed its exposure to fossil fuel mining or energy production from fossil fuels sectors, considering the combined weight of companies in the portfolio that have revenues from such activities and the role such activities have on those revenues.

In order to strengthen its commitment to the Paris Agreement goals, and in particular to the objective of net zero CO2 emissions by the end of 2050, the Unipol Group therefore undertakes to expand its industry exclusions, establishing additional a priori exclusions from new investments of those in Corporate Issuers that obtain 30% or more of their earnings from activities connected to tar sands, shale oil and arctic drilling and that do not demonstrate sufficiently ambitious positioning in terms of business transition to a low- carbon economy.

In line with the portfolio decarbonisation process, the Group undertakes to gradually reduce the thresholds of earnings from fossil fuels mentioned above, deemed eligible for the assessment of investments in Corporate Issuers.

1. Second version published in January 2022.
2. The Eur/USD Exchange Rate used for the conversion is 0.9748 (as at 30 September 2022)

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