Discover Financial Services : Corporate Impact Report (2023 Discover Corporate Impact Report )

Corporate Impact Report

IntroductionSocialEnvironmental

Table of contents

A message from Hope About this report About Discover

Our mission and values Corporate Impact at Discover Managing our Corporate Impact Goals and progress

2023 highlights

Social

This is who we are

Our North Star Goals

Empowering people

Our representation and industry representation Gender, race, and ethnicity in management Hires, promotions, attrition of salaried employees Hires, promotions, attrition of hourly employees Diversity beyond recruitment

Everyone belongs here Equity journey

ERGs impact our company ERGs impact our communities Part of the community Joining the Whitehall community Building in Chicago's South Side Partnering with diverse businesses Partnering with local businesses

GovernanceAppendix

3		Transforming tech	30
4		Opening doors, closing opportunity gaps	31
5		Attracting tech talent to Chicago	32
6		Mentoring future talent	33
7		The power of our engineers	34
8		Funding innovation, fostering change	35
9		Helping customers	36
10
	Inclusive marketing	37
		Cards that help customers	38
		Stepping forward together	40
12
13		Environmental
14		Big goals, small footprint	42
15		Our total emissions	43
16		How we'll reduce emissions	44
17		Building for tomorrow	45
18		Sending less to landfills	47
19		Sharing rides and saving water	48
21		Working for a better world	49
22
23		Governance
24
25		Corporate governance at Discover	51
26		Board diversity	52
27		Board refreshment and Shareholder engagement	53
28		Risk management	54
29		Ethics and compliance	55

Our Compliance Management System and Responsible AI	59
Cybersecurity and data privacy	60
Policy engagement	62

Appendix

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A message from Hope

Discover® was founded on a simple yet powerful idea: that we could make a difference by giving back. We do this through products and services, and recognize the broader corporate impact of our mission to help people achieve brighter financial futures.

As a bank, we play a vital role in society. In 1986, in the spirit of doing more for consumers, we created a brand-new credit card with no annual fee that gave money back on every purchase-a revolutionary concept at the time. That card disrupted financial services, and Discover has continued to transform banking and payments in the nearly four decades since.

From pioneering Cashback Bonus to Cashback Debit, from no annual fee to free FICO scores, from 24/7 customer service to Online Privacy Protection, Discover has a long history of innovation. What we do, however, is about much more than products and services; it is about the difference those products and services make in our customers' lives. We are there for them during some of their most important moments and help them pursue and achieve

their goals.

Beyond delivering a great customer experience, we are committed to driving lasting change, being good stewards of the environment, and building a stronger risk and compliance framework to ensure we are doing all we can for our customers,

shareholders, and communities. We remain committed to diversity, equity, and inclusion, understand the importance of creating opportunities for others, and know the role a bank can play in these efforts.

When we help someone save money or build credit, we aren't just giving them an account number or piece of plastic; we are helping them take agency and ownership of their lives. When we pursue environmental sustainability, it's not just about conserving resources today; it's about conserving resources every day and paying it forward for future generations. When we strengthen corporate governance, it's not about leaning into transparency and accountability when it's convenient; it's about committing to these guiding principles over the long term to earn and preserve trust.

These efforts help us advance equity and sustainability, and we understand creating meaningful change does not happen overnight. That is why we are committed to long-term investments in programs and initiatives that build from the ground up and will benefit people- including those in our local communities-for generations to come.

We are proud of the progress we have made and optimistic about what lies ahead. As we continue along this journey, we are excited for the opportunity to honor our legacy, drive meaningful change, and build a brighter future together.

Hope D. Mehlman, Executive Vice President,

Chief Legal Officer, General Counsel and Corporate Secretary

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About this report

This report covers our progress and performance in the fiscal year 2023, which ended December 31, 2023, unless otherwise noted. In selecting content for inclusion in this report, we referenced the results from our 2021 non-financial materiality review as well as frameworks and initiatives such as the Global Reporting Initiative Standards (GRI) and the Sustainability Accounting Standards Board (SASB). The terms "Discover," the "company," "we," "us," and "our" are used in this report to refer collectively to Discover® Financial Services, a Delaware corporation, together with its subsidiaries, including Discover Bank, where appropriate.

This report contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are identified by words such as "anticipates," "aims," "aspires," "believes," "commits," "estimates," "expects," "intends," "may," "projects," "plans," "could," "should," "will," "continue," and other similar expressions. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance, and are subject to certain risks, uncertainties, and other factors, many of which are beyond our control and are difficult to predict. We describe some of the risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, any of these forward-looking statements in our SEC filings, including our most recent Annual Report

on Form 10-K and our subsequent reports on Forms 10-Q and 8-K. Except as required by law. We do not intend to update or revise this report, including any forward-looking statements contained herein, except as required by law.

This report uses terms such as "material" or "materiality" to reflect relevant or significant issues important to Discover and our stakeholders. Used in this context, these terms are distinct from, and should not be confused with, the terms "material" and "materiality" as defined by or construed in accordance with securities law or as used in the context of financial statements and reporting. This report is intended to provide information from a different perspective and, in certain cases, in more detail than that required to be included or otherwise appropriate in financial reporting, including our filings with the SEC. Many of the numbers and percentages used in this report are estimates and may be based on assumptions and third-party data. Our ability to verify such assumptions and data is limited. Actual results and outcomes may differ from those expressed in or implied in this report due to, among other factors, the accuracy of such assumptions and data, as well as the compliance of third parties with our policies and procedures in providing such data. In addition, regulations, industry practices, methodologies, standards, and underlying science remain subject to development with respect to key topics covered in this report, such as greenhouse gas emissions. As a result, certain information disclosed in this report could be

different from the information reported we have disclosed or may disclose in the future. The information provided in this report reflects the Discover approach to Corporate Impact as of the date of this report and is subject to change without notice. Any references to "sustainable investing," "sustainable investments," "diversity, equity, and inclusion," or similar terms in this report are intended as references to the internally defined criteria of Discover or our businesses only, as applicable, and not to any jurisdiction-specific regulatory definition.

Our report design

Every photo in this report features Discover employees or offices-there are no stock photos. We want readers to see a real representation of Discover, and we want employees to see themselves in these pages.

We also use different shapes and colors fitted together throughout the report. This represents our diverse employee population who make a vibrant tapestry of backgrounds. Even though we're different, we work together towards our shared goals. We are many parts moving in unison.

©2024 Discover Financial Services. All rights reserved.

Discover®, the Discover logo, and other trademarks used in this report are the property of Discover Financial Services, or their respective owners and may not be used without permission.

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About Discover

Discover® is one of the largest digital banks in the United States, offering a broad array of products, including credit cards, personal loans, home loans, and deposit products. The Discover brand is known for rewards, service, and value. Across all digital banking products, Discover seeks to help customers meet their financial needs and achieve brighter financial futures.

Discover Global Network® , the global payments brand of Discover Financial Services, strives to be the most flexible and innovative payments partner in the United States and around the world.

PULSE® is one of the nation's leading ATM/debit networks, and Diners Club International® is a global payments network with acceptance around the world. Our Network Partners business provides payment transaction processing and settlement services on our network.

$128.4

billion

loans

$84 billion

consumer deposits

70+ million

global point-of-sale

acceptance

locations

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Mission:

Help people spend smarter, manage debt better, and save more so they achieve a brighter financial future

Core Values:

Doing The	Innovation	Simplicity	Collaboration	Openness	Volunteerism	Enthusiasm	Respect
Right Thing

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Corporate Impact at Discover

We make it our mission every day to contribute to a more equitable and sustainable world so everyone can achieve a brighter financial future.

We recognize a brighter financial future is attainable only in a world that is both equitable and sustainable. Our program helps us advance sustainability and equity across our business. Diversity, equity, and inclusion support our Corporate Impact program and strategic focus around financial inclusion, social impact, and environmental sustainability. While our commitment to governance and the Discover Core Value of "Doing The Right Thing" provides the foundation for this important work, regular engagement with our key stakeholders is critical to advancing our strategy. We do this through a variety of mechanisms including shareholder outreach, surveys, meetings, partnerships, and events.

Governance

We commit to "Doing the Right Thing" by being transparent, accountable, and ethical in everything we do.

Diversity, Equity, and Inclusion

We make diversity, equity, and inclusion a part of our culture so our employees can thrive and we can best serve our customers.

Social Impact

We create meaningful, relationship- based investments to address social determinants that impact brighter financial futures.

Financial Inclusion

We live into our mission of creating brighter financial futures by supporting the financial wellness of our employees and customers.

Environmental Sustainability

We contribute to a more sustainable world through resource conservation and the reduction of our operational impact on the environment.

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Managing our Corporate Impact

We have teams at all levels that are dedicated to our Corporate Impact strategy. This teamwork and collaboration enables us to execute on our initiatives and goals.

The Nominating, Governance, and Public Responsibility (NGPR) Board Committee works with other Board committees to oversee our key policies, programs, strategies, reporting, and goals related to our Impact. The NGPR Committee receives updates on these efforts at least quarterly. Our efforts are guided by a steering committee that provides leadership around our program initiatives; it is chaired by our Chief Legal Officer, General Counsel, and Corporate Secretary, and is comprised of Executive Leaders and key Senior Leaders. Strategy becomes tactical as working groups, made up of subject matter experts across our focus areas who meet monthly to drive progress. Our program management team collaborates weekly with leaders across our Impact focus areas to manage our Corporate Impact program.

Managing our Corporate Impact

Board Of Directors

Audit	Compensation and Human	Nominating, Governance, and Public	Risk Oversight
Committee	Capital Committee	Responsibility Committee	Committee
		Works with other Board committees to
		oversee our key policies, programs,
		strategies, reporting, and goals
		related to our Corporate Impact.

Environmental, Social, and Governance Steering Committee

This Committee meets at least quarterly.

Chaired by our Chief Legal Officer, General Counsel, and Corporate Secretary.

Includes Executive Leaders and Senior Leaders responsible for Impact focus areas.

Working Groups

These groups meet at least monthly.

Program Management

Team members focused on managing our Corporate Impact program.

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Goals and progress

Diversity

Foster a diverse and equitable workforce that is reflective of the customers and communities we serve

Achieved 42% representation of women at the Officer level, a 6% increase from 2022. Continued to progress in POC1 representation, with our greatest gains at our People Manager level

Equity

Establish and monitor equity measures to identify and address potential biases, which will improve recruiting, retention, and internal mobility

Established a measurement system that helps us assess potential equity gaps in our talent processes

Inclusion

Achieve and maintain equally strong employee inclusion across all identity groups by 2024

Achieved goal of maintaining equally strong inclusion scores from employees across all identity groups

Social Impact

Increase hyperlocal economic impact through hiring (2,000 jobs) and combined Community Reinvestment Acts CRA investments & philanthropic giving ($530+ million) across all locations by 2025

Created 555 hyperlocal jobs in Chatham, contributed $213,619,910 combined CRA investments and philanthropic giving in 2023

Business Diversity: Achieve a $125 million spend by 2025, representing more than a 100% increase from 2020

Spent over $123 million with diverse- owned businesses2, a 14% increase over our spend in 2022. Our spend with minority- and veteran-owned businesses increased 34% and 87% respectively

In progress

Achieved

Financial Inclusion

Enable more people to enter and advance within the financial system and support the financial wellness of our employees

Developed our first Financial Inclusion North Star Goal

Reached more than six million students through the Pathway to Financial Success in Schools program since since 2017

Environmental Sustainability

Reduce our Scope 1 and Scope 2 GHG emissions3 by 50% from the 2017 baseline by 2030

Reduced our Scope 1 and 2 emissions by 24% from our 2017 baseline

Conduct lifecycle assessments and build out additional goals

Continued conducting life cycle assessments with a focus on paper vs. electronic statements and credit card material to help inform potential environmental reduction strategies through the end of 2024

1 POC is defined as People of Color; POC comprises all races/ethnicities in the United States that are not categorized as White/Caucasian.

2 A business with at least 51% ownership by one or more diverse group(s). Diverse groups include ethnic minorities, women, veterans, people with disabilities, or members of the LGBTQ+ community.

3 Greenhouse gases (GHG) Scope 1 is defined as direct emissions from company's resources, like fuel oil, natural gas, mobile combustion, and refrigerant losses. Scope 2 is defined as indirect emissions generated by electricity purchased from a utility provider.

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2023 highlights

74% diversion rate

of recyclable or reusable

materials across all

our U.S. offices

Increased overall

representation of diverse

groups across Discover

$123+ million in spend with

diverse-owned businesses, a

14% increase from our

spend in 2022

	Saved 46 million
	gallons of fresh
24% reduction in	water since 2017
Scope 1 and Scope 2 emissions
from our 2017 baseline

Set our first Financial

Inclusion North Star Goal

that builds on our foundation of financial literacy and inclusion in our products and services

Voted Best

Employer

by several

organizations-see all the awardswe

earned in 2023

52,813

employee volunteer hours

Achieved

Inclusion North

Star Goal of equally

strong employee inclusion across all identity groups

Established an

Office of Ethics

and Conduct

as part of our commitment to a strong and resilient risk culture

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