Bank Hapoalim B M : ESG 2022 Report

Environmental, Social, Governance

2022 REPORT

Photos of employees of the bank are shown throughout the report, creating a wonderful refection of the mosaic of Israeli society.

We at Bank Hapoalim believe that our diversity powers our strength. While diversity is part of our values, we also see a diverse workforce as a source of creativity and innovation and as a key element of our growth as a business.

Now more than ever, with social and political divisions deepening around us, it is important to remember that diversity also powers the strength and uniqueness of Israeli society.

This awareness should urge us to strive for unity and acceptance, and to work together for the sake of our children's future and the stability of Israel's society and economy.

4	22	46
Introduction	Responsible	Financial
	action for our	inclusion
	customers

66	74	80
Action to beneft	Bank Hapoalim	Strengthening
society and the	Volunteers	employees' capabilities
community		and well-being

110	118	146
Responsible	Responsible action	Corporate
supply chains	to protect the	governance, ethics,
	environment	compliance, and
		information security

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Letter from the Chairman of the Board and the CEO

2022 was a complex year. The ongoing fghting in Europe, rising interest rates and infation, and also, recently, a domestic sociopolitical crisis engendering great uncertainty have all heightened our commitment, as a major fnancial organization in Israel, to base our actions on values-driven responsibility. This responsibility is expressed, among other forms, through impact banking, which has been embedded into the bank's renewed vision: "Committed to growth through impactful, innovative, fair banking for our customers."

As part of our ambition to promote fair banking, we have decided to help our customers cope with the increase in mortgage payments as a result of the higher interest rates and infation by absorbing the increase announced in January 2023 in the interest rate on prime-track mortgages, for customers who we proactively identifed as those primarily harmed by the wave of rate hikes. We also offered eligible customers with existing prime-track mortgages the option to spread mortgage payments over more installments. In recognition of the role of small businesses as a key growth driver for the economy, we launched a subsidized loan fund dedicated to these businesses.

Within the implementation of impact banking, the Social Banking Unit at Bank Hapoalim continued its work over the last year to reduce social inequalities through support for hundreds of initiatives promoting diverse employment, social mobility, and inclusion of people from every part of the broad tapestry of Israeli society. The Financial Growth Center expanded its offering of tools and knowledge on astute fnancial behavior, providing individual guidance for households and small businesses and creating targeted content, including content adapted for ultra-orthodox and Arab society, women entrepreneurs, and small businesses.

We are committed to tackling climate change as a crucial global challenge. Over the years, we have provided more fnancing for projects promoting a green environment than any other fnancial institution in Israel. This year, we reached the goal we had set for fnancing of these projects by 2030 - NIS 20 billion; as a refection of our ambition to continue to improve our environmental impact in the coming years, we therefore set a new goal of NIS 37 billion in green project fnancing. We also published the Impact Report for the bank's Green Bond, the frst ever issued in Israel. We were pleased to discover that the projects fnanced during the bond's frst year would contribute to the prevention of greenhouse-gas emissions of approximately 147,000 tCO2e per year. We are continuing our work to reduce the environmental impacts and carbon footprint of the bank, while managing the climate and environmental risks associated with our activities.

The actions and impact of the bank in environmental, social, and governance matters are refected in high scores on local and international annual ESG ratings, positioning the bank with the top tier of leading banks in this feld around the world. We are proud to say that this year, too, our extensive activities in these areas led to an overall increase in the bank's 2022 ESG ratings.

The employees of the bank are a refection of the human mosaic that is the society of Israel. Women and men, nonreligious and religious people, Muslims, Christians, and Jews, LGBTQ people, people with disabilities, all working cooperatively in the awareness that our togetherness is our power. This is the foundation of our strength. Beyond the values underlying our practices, we believe that diversity makes our organization more creative and innovative, and is one of the keys to the growth of our business.

The bank's success in coping with the economic and social challenges we faced over the last year is the direct outcome of the quality of its human capital and the professional excellence of our employees. We would like to take this opportunity to thank each and every one of them, as well as our customers and all of our partners.

The combination of extensive, quality business activity with environmental awareness and deep social engagement has been an integral element of our organizational culture and business operations for many years, and will continue to serve as the compass for our interactions with our stakeholders in the years to come.

Ruben Krupik	Dov Kotler
Chairman of the Board	President and CEO
of Directors

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Embedding ESG principles at Bank Hapoalim and promoting impact banking

This report, the sixteenth published by Bank Hapoalim, refects many years of commitment to embedding environmental, social, and ethical values in our routine business activities. This is made possible, among other factors, by a supportive and empowering organizational culture. This commitment to all of our stakeholders is expressed all the more powerfully in times of complex developments, such as those of the last two years - the COVID-19 crisis, a rising interest-rate and an infation environment, and deepening social inequalities.

Recognition of the importance of incorporating ESG principles into the core of business operations is gaining momentum around the world. A leap forward has occurred in Israel, too, in this feld, on the part of regulators as well as investors, employees, and customers, all of whom expect a commitment to ESG targets, transparent reporting, and action to promote environmental, social, and ethical values, and taking into consideration the environmental and climate risks in our business decisions.

Bank Hapoalim is one of the frst organizations in Israel to embed the concept of ESG in its organizational DNA, so that today it is evident on every level of the organization and in its routine business operations; over the last few years, we have further expanded our actions in this area. For example, we have increased the scope of fnancing for projects promoting a green environment; we were also the frst to issue a green bond, and the frst to invest in ESG bonds by Ogen, designed to support small businesses experiencing diffculties. We have continued to help our customers transition to the use of solar power, expand the reach of our responsible investment advising services, develop social-environmental deposits, and promote fnancial empowerment for the general public through the Financial Growth Center.

As an integral part of the economic and social fabric of Israel, grounded in our commitment over many years to promote impact banking, this year we continued to enhance our social impact through the Social Banking Center. The center led dozens of projects designed to reduce social inequalities, promote equal opportunities and social mobility, encourage diverse employment, and assist victims of domestic abuse.

In early 2020, within our ambition to create meaningful impact, we set ESG targets for 2030, addressing aspects of the promotion of a green environment, gender equality, and diverse employment. At the end of 2022, after achieving the original goal we had set for investments and fnancing of green projects, we raised our target to NIS 37 billion by the end of 2030. This year, we embarked on the process of measuring carbon emissions in the credit portfolio of the bank for 2021, to provide a baseline for future measurements. This effort is rooted in our aim of reducing the impacts of our business operations on greenhouse-gas emissions, in order to support the climate goals of the State of Israel.

In view of climate-related regulatory developments and the need to collaborate on a shared strategic course of action, while recognizing the opportunities and threats inherent in this feld, this year we formed an ESG steering committee, focused on climate aspects. The committee is chaired by the head of the Human Resources Division and the head of the Risk Management Division. Senior executives from various divisions are on the committee, including relevant members of the board of management. The committee will convene twice annually and will include external experts. The steering committee is charged with monitoring the ongoing implementation of ESG strategy, examining the attainment of targets set within the strategy, and revising the strategy from time to time, as necessary, while forming intra-organizational collaborations to promote ESG issues.

We are proud to see our actions refected in high scores for Bank Hapoalim in international ESG ratings. This is also the ffth consecutive year in which the bank has ranked at the top of the ESG ratings in the Maala index, which encompass all companies in Israel.

This report refects the extensive activity of all of the employees of the bank, who act each day to promote ESG values with a meaningful impact on the society and environment of Israel; we would like to take this opportunity to thank everyone who shared and helped in the creation of the report. For any clarifcations or inquiries regarding the report, please contact the Head of ESG at Bank Hapoalim, at [e-mail]

Amit Oberkovich	Naama Halevy-Peer	Sharon
Senior Deputy Managing Director	Head of Social Banking Center	Head of ESG
Head of Human Resources	Human Resources Division	Social Banking Center

Vision and mission

Our vision:

Committed to growth through impactful, innovative, fair banking for our customers.

Our mission:

Helping people, communities, and businesses achieve well- being and thrive.

Our promise to our customers:

Experts working for you.

Our values

Dedicated to customers' best interests Focusing our actions on what matters to customers, while adapting to their evolving needs, to create meaningful value.

Making it happen

Taking the initiative and moving processes forward quickly, to deliver relevant solutions in real time.

Working together, for you

Joining forces and mobilizing for the success of our partners, to enable our customers to beneft from the full range of our capabilities.

Growth and development

Encouraging curiosity, learning, and continual improvement, as the foundation for high- quality, up-to-date banking that advances our customers' growth.

Fairness and responsibility

Treating everyone with fairness and compassion; acting with integrity, justifying the trust placed in us by the public.

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