Status. Rating D- D D+ C- C C+ B- B B+ A- A A+ poor medium good excellent. Industry

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1 oekom Corporate Bayerische Landesbank Industry Financials/Public & Regional Banks Status Prime Country Germany C+ ISIN DE000BLB12G0 Prime Threshold C poor medium good excellent Industry Leaders Key Issue Performance Company name Country Grade (in alphabetical order) Deutsche Kreditbank AG DE B- La Banque Postale S.A. FR C+ Landesbank Baden-Württemberg DE C+ Legend: Industry Company Prime Sustainability impacts of lending and other financial services/products Customer and product responsibility Sustainable investment criteria Labour standards and working conditions Business ethics D C B A Distribution of s History 88 companies in the industry 3 A B C 1 D Monitor Company Score -1 Level Minor Industry Maximum Score -18 Risk Minor Minor Moderate Significant Severe Minor Moderate Significant Severe oekom Corporate / Last Modification: Page 1 of 48 oekom research AG

2 Analyst Opinion Anja Löffler Sector specialist Sustainability Opportunities Bayerische Landesbank (BayernLB) offers financial products and services to corporate and institutional clients, real estate clients, public sector clients, and private clients. The company and its subsidiaries provide a comparably wide range of financial programs with a sustainable benefit. This includes, amongst others, programmes for the health and education sector, for public infrastructure with an environmental or social value, for the social sector or for social housing purposes. From an environmental point of view, BayernLB is engaged in the financing of renewable energy projects and in the provision of green loans promoting energy-efficiency, amongst others. In addition, the company enables clients to invest in a socially responsible manner, by offering relevant investment products that apply a comprehensive exclusion screening as well as a best-in class approach. However, the aforementioned products and services do not constitute the main business of the company. Sustainability Risks For a financial company with significant activities in the area of international project finance and investment banking, it is crucial to properly address related risks. BayernLB excludes several controversial practices (e.g. controversial weapons) from its entire business operations. In its asset management business, the company additionally excludes investments in soft commodities and has requirements with regard to gold trading, which is comparably innovative for the industry. The company adequately manages its credit risks as it integrates social and environmental criteria in its lending decisions. This includes the exclusion of sector-specific practices such as mountain top removal, illegal logging or uranium mining. BayernLB also applies relevant social and environmental guidelines such as the standards of the World Bank Group, although, these standards do not apply to the entire loan portfolio. The company has taken relatively good steps to ensure responsible treatment of clients in areas such as responsible marketing, tax compliance of clients, or responsible treatment of clients with payment difficulties. BayernLB further shows an above-average performance with regard to the management of employee-related risks. The company has implemented restructuring processes in the past years; however, there are measures in place to ensure responsible redundancy processes for all affected employees. Finally, business ethics risks are well managed through the implementation of a code of conduct supported by relevant compliance measures, such as adequate reporting channels and comprehensive compliance training. Yet, it was alleged that the company's former subsidiary MKB Bank was involved in the 'Russian Laundromat' money laundering scandal in the past. Governance Opinion BayernLB is owned by the Free State of Bavaria (75%) and the Association of Bavarian Savings Banks (25%) (as at 25 January 2018). Although separate persons hold the positions of CEO and chair of the supervisory board, the independence of company s chair is limited, as he was previously the CEO of the company. At least half of the members of the supervisory board as well as relevant board committees (audit, remuneration, nomination) can be considered independent. A comparable board committee dealing with sustainability issues is missing. Moreover, BayernLB discloses its remuneration policy for executives. Yet, apparently the policy does not include important elements for sustainable value creation such as long-term incentive components and ESG targets. Finally, business ethics risks appear to be comparably well managed through the implementation of a code of conduct covering almost all important compliance aspects (including corruption). The code is supported by relevant compliance measures, such as adequate reporting channels, compliance risk assessments and audits, and comprehensive compliance training. Yet, it was alleged that the company's former subsidiary MKB Bank was involved in the 'Russian Laundromat' money laundering scandal in the past. oekom Corporate / Last Modification: Page 2 of 48 oekom research AG

3 A. Social and Governance 50. C+ B. Environmental 50. C A.1. Staff and Suppliers 15. B B.1. Environmental Management 7.5% B - staff - freedom of association - equal opportunities - health and safety - work-life balance - employment security - training and education - suppliers - environmental management system - climate change strategy - travel and transport - green procurement A.2. Society and Product Responsibility 25. C B.2. Products and Services 40. C- - society - human rights - community - gov.relations/influence on publ.pol. - stakeholder dialogue - customer and product responsibility - social impact of prod. and services - social aspects along the value chain - env. impact of products and services - env. aspects along the value chain - climate impact of the corp. value chain - lending / investment banking business - asset management / own investments A.3. Corporate Governance and Business Ethics 10. C+ B.3. Eco-efficiency 2.5% B+ - corporate governance - board independence - shareholder democracy - executive compensation - shareholder structure - business ethics - energy intensity - GHG emission intensity - freshwater intensity - paper use intensity oekom Corporate / Last Modification: Page 3 of 48 oekom research AG

4 Controversial Business Practices Potential Moderate Severe Very Severe Human Rights Controversies Company Supplier Financiers : Shortcomings in consultation process in connection with financed Dakota Access Pipeline, USA Labour Rights Controversies Company: Freedom of association Company: Forced labour Company: Child labour Company: Discrimination Company: Other areas Supplier: Freedom of association Supplier: Forced labour Supplier: Child labour Supplier: Discrimination Supplier: Other areas oekom Corporate / Last Modification: Page 4 of 48 oekom research AG

5 Controversial Business Practices Controversial Environmental Practices Potential Moderate Severe Very Severe Risk of financing activities with a negative environmental impact. Company Supplier Financier Business Malpractice Company: Corruption Company: Financial accounting Company: Competition Company: Taxes Company: Money transfers : 'Russian Laundromat' money laundering scandal Company: Other/Miscellaneous oekom Corporate / Last Modification: Page 5 of 48 oekom research AG

6 Controversial Business Areas Net Sales: Net Sales: 5% Net Sales: 1 Other Categories Alcohol no no no Producer: beer/wine Producer: high-proof beverages/foodstuffs Trader: beer/wine Trader: high-proof beverages/foodstuffs Animal Testing no Tests beyond legal requirements - Tests within and/or beyond legal requirements - Chlorinated Hydrocarbons no no no Producer Embryonic Research no Specialised companies - Marginally involved companies - Fossil Fuels no no no Total coal-related activities Total oil-related activities Total natural gas-related activities Hydraulic fracturing Oil Sands oekom Corporate / Last Modification: Page 6 of 48 oekom research AG

7 Controversial Business Areas Net Sales: Net Sales: 5% Net Sales: 1 Other Categories Furs no no no Producer Trader Gambling no no no Particularly controversial forms of gambling Other forms of gambling GMOs no no no Producer User Trader Military no no no Producer: weapons (systems) non-banned Producer: weapons (systems) banned Producer: other armaments Trader: weapons (systems) non-banned Trader: weapons (systems) banned Trader: other armaments oekom Corporate / Last Modification: Page 7 of 48 oekom research AG

8 Controversial Business Areas Net Sales: Net Sales: 5% Net Sales: 1 Other Categories Nuclear Power no no no Producer: nuclear power Producer: uranium Producer: key components for nuclear power stations Trader: nuclear power Trader: uranium Trader: key components for nuclear power stations Pesticides no no no Producer Pornography no no no Producer Trader Tobacco no no no Producer: end products Producer: components/accessories Trader: end products Trader: components/accessories oekom Corporate / Last Modification: Page 8 of 48 oekom research AG

9 Additional Company Information Company Profile * Copyright 2018, S&P Capital IQ (and its affiliates, as applicable). All rights reserved. Bayerische Landesbank, a commercial bank, provides various banking services for large corporates and mittelstand companies, real estate customers, financial institutions and asset management customers, and the public sector in Europe and the United States. It offers various services for corporates, such as supply chain, investment, capital market, subsidized, syndicated, project, municipal special, acquisition, and asset financing, as well as liquidity management, forfaiting, guarantee, equity capital markets, and leasing services; purchase of receivables and financing of receivables portfolios; export finance, documentary credits, bank guarantees, and forfaiting; treasury, commercial paper, customer valuation tool, and European Market Infrastructure Regulation services, as well as hedge energy and commodities; and structured products, private placements, and custody services. The company also provides financial markets services, including capital investment and treasury; loan syndication, agency desk, import/export and trade financing, and export finance; and transaction banking. In addition, the company provides various services for real estate customers, such as real estate portfolio, development project, real estate fund, and foreign property financing; and property services comprising capital investment and consulting on acquiring and selling real estate/m&a, fund and asset management, real estate valuation, and facility management and construction controlling. Further, it offers direct banking for retail customers, residential mortgage and municipal lending, and energy and infrastructure project financing; asset management; project management, and real estate valuation and research services; building management, construction work, and consulting services; credit cards; and security, office management, and catering services. The company was founded in 1884 and is headquartered in Munich, Germany. Bayerische Landesbank is a subsidiary of BayernLB Holding AG. Company Contact Bayerische Landesbank Hendrik Fritze Konzernstrategie & Konzernkommunikation Brienner Straße 18 DE München Tel.: hendrik.fritze@bayernlb.de Web: oekom Corporate / Last Modification: Page 9 of 48 oekom research AG