Sustainability Reporting

Our Reporting Logic

This is Hoist Finance’s fifth integrated sustainability report, covering the reporting period from 1 January 2021 to 31 December 2021. The sustainability report is presented each accounting year and covers all our operations, unless otherwise stated. The most recent previous sustainability report was issued 23 March 2021.

This sustainability report has been prepared in accordance with the Swedish Annual Accounts Act (ÅRL) and is developed in accordance with the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines: Core Option, the UN Global Compact (UNGC) Ten Principles, and the Sustainable Development Goals (SDGs). Our Annual Report serves as our UN Global Compact Communication on Progress (CoP), Active level. Furthermore, this report includes our EU Taxonomy Reporting for 2021, and builds on our role as a certified NASDAQ ESG Transparency Partner, as this encourages us to continuously improve our transparency measures.

The structure of our sustainability report and references in relation to statutory obligations regarding the information on our commitment to the environment, social conditions, employees, human rights and anti-corruption are found below. The scope of our sustainability report is presented in the GRI Content Index of this report. The Head of Sustainability is responsible for preparing the Sustainability Report. The Board of Directors are responsible for approving the Sustainability Report.

Sustainability Report Structure

Contact

Please contact Group Head of IR, Ingrid Östhols with questions concerning sustainability.
ir@hoistfinance.com

Progress tracking 2021 - Key metrics

Data collection process

Improved data collection- and streamlining processes has been a clear focus area for the Sustainability Function in 2021. Our new digital platform secure enhanced data quality, including more precise emission factor calculations and a broader scope of variables in our Greenhouse Gas (GHG) Protocol emissions reporting. A consequence of the improved data collection process is that all 2021 data are not fully comparable to last year’s reporting. The following variables are included in our GHG emissions reporting for 2021:

Scope 1: Company cars as well as our solar energy production in Italy.
Scope 2: Purchased energy in our offices, including electricity, heating and cooling.
Scope 3: Business travel (including air, rail and hotels), letters sent to customers, cloud usage, and office material (paper for internal use).

We create a great place to work (scores in GPTW-survey)⁵
	2021	2020	2019
We contribute to an inclusive financial ecosystem
People repaying a debt with Hoist Finance in full	137 400	38 000	-
Customers supported to get back to the financial ecosystem (paid in full, made payment, made payment plan)	923 300	-	-
Customer satisfaction rate in digital self-serve portals	92%	91%	88%
TEAM U collaboration: Companies saved from bankrupcy with support via the Hoist Finance-financed online portal	32	-	-
TEAM U collaboration: Improved reach to people in financial distress via online platform	25%	-	-
TEAM U collaboration: Financial damage prevented for debtors and entrepreneurs	EUR 8 m	-	-
TRUST-index, %	76	77	68
Diversity, %	91	91	89
Wellbeing, %	82	84	68
We uphold the highest ethical standards
Received Whistleblowing cases	7	-	-
Managed Whistleblowing cases	7	-	-
Result in HOFI anti-corruption index	84
Number of investigations (data subject request and personal data breaches)*	27	-	-
Number of investigations closed*	25
Number of investigations where measures have been taken*	2	-	-
We combat climate change
Total CO2 emissions, Metric tonnes	1142	636	2621
Energy consumption within the organisation, kWh	2,052,251¹⁾	820,386 ²⁾	1,873,049 ⁴⁾
Scope 1: Direct CO2 emissions, Metric tonnes	239	41	109
Scope 2: Indirect CO2 emissions; market based, Metric tonnes	468¹⁾	264 ²)	1,107 ⁴⁾
Indirect emissions per sq. m. office space, Metric tonnes	0,02¹⁾	0.02 ²)	0.08 ⁴⁾
Scope 3: Other indirect GHG emissions, Metric tonnes	435	332 ³⁾	1,406
Other indirect emissions per employee (FTE), Metric tonnes	0,3	0.2 ³⁾	0.9
Total amount of sent letters to customers	9,685,044	10,780,478	N/A

1 Excluding BENE, Greece and Cyprus. Note that the average of these offices are 13 FTEs.
2 Excluding BENE, Greece, London
3 Excluding BENE, London
4 Excluding BENE, Greece and Poland.
5 Number of work-related injuries, turnover, and diversity metrics in Our People in Figures Section.

Comments on results

Ethical standards

*Hoist Finance had contacts/investigations from supervisory authorities due to customer complaints or personal data breaches during 2021. Two of them resulted in warnings but no administrative fines issued. There were two serious data breaches with our third parties, a fire in a paper document storage warehouse and a ransomware attack on one of our debt collection agencies. In both situations we have reported this to the supervisory authorities and the investigations are ongoing.

Environmental data

Our total CO2 emissions increased from 2020 to 2021, due to gradually coming back to our offices and consuming more energy. Also, our Scope 2 reporting includes two additional offices than previous years. Our Scope 3 reporting is also higher than in 2020, which is not surprising as we have included both rail travel, hotels and cloud usage for the first time, and improved our ability to measure CO2 emissions related to our external letters. However, results are much stronger than in 2019, when we consumed more energy per square meter, had less renewables, and travelled significantly more. In summary, we have managed to meet targets for both CO2 emissions and letters in 2021.

Progress tracking 2021 - Indicators and achievements 2021

Below, we have listed all indicators set out for the reporting cycle of 2021 and the achievements that were made to reach each specific indicator. Indicators marked as green has been fulfilled, indicators marked as yellow has been partially fulfilled/put on hold, and indicators marked as red has not been fulfilled.

Our Goals	Our Indicators and Commitments 2021	Achievements 2021	Our Progress
Reduce indirect and direct Co2 emmissions.	Reduce CO2 emissions by 30% compared to 2019. Continous reduction in energy consumption combined with intention to move all bought energy to renewable sources.	49% of renewable energy in offices During 2021, there was still an option to work from home in all markets. 444 500 digital meetings during 2021. Although a slight decrease from 2020, the preference for digital meetings remains.
Reduce paper consumption.	Migrate 10% of letters to digital.	Digital customer self-service portals implemented in 8 markets. Letter Dashboard in place to idenfity redundant letters. Rules Engine deployment in 3 markets. Process for migration of letters to digital platforms and removal of redundant letters initiated.

Reduce business risks connected to climate change.	Further develop database to include climate change related risks in all markets with secured portfolios.	We continously populate our database with data for our French and Italian secured assets. We integrated environmental risk data with other portfolio data, allowing for inclusion of environmental risk assessment in our investments processes.
Excellence in customer satisfaction.	Implement CSAT in three customer touchpoints in all markets and all segments. Have a CSAT dashboard in place by end of year.	Due to unforeseen changes in management and Covid-19 the deployment has been postponed to 2022. Pilot conducted in Poland and France during 2021. Average of satisfied customers in pilots: 80%.
Digital channel development for improved servicing.	30% digital collection rate. 95% satisfaction rate.	28% self-service collection through portals (2020: 20%, 2019: 15%) Portal customer satisfaction rate 92% (2020: 91%, 2019: 88%)
Forming external partnerships with organisations that have new innovative ideas for increased financial inclusion.	Establish 1-2 impact partnerships.	Due to Covid-19 the development for new partnerships was put on hold during 2021.
Business Partner satisfaction.	80% of client banks will rate Hoist Finance as top three in the market.	86% of client banks rated Hoist Finance as top three in the market. The questionnaire was sent to more than 85 banks over Europe with a response rate close to 50%.
Employee health and wellbeing.	85% score in employee well-being in annual Great Place to Work survey. 77% score in TRUST index in the annual Great Place to Work survey.	During the year we have worked diligently to support our employees in all markets. Examples of actions during the year is found in the People Section.
Diversity and equal opportunity.	A minimum of 90% score in diversity category in the annual Great Place to Work survey.	During 2021 we analysed Group level data to define harmonized diversity focus areas across our markets. Read more here.
Gender equality	A common reporting standard to be developed 2021.	During 2021 we collected data to set a baseline for harmonized reporting on gender equality. Read more here.
Strong customer integrity processes.	100% (allowing for a 2% margin) of staff trained in data protection and how to treat personal data.	GDPR e-learning completed by 98% during 2021 (98% 2020; 86% 2019).
Robust framework on anti-corruption practises.	Create a HOFI anti-corruption index. 100% of employees to undergo anti-corruption training (allowing for a 2% margin). 100% of employees to undergo AML training (allowing for a 3% margin).	Anti-corruption Index developed. Anti-corruption e-learning completed by 98% (98% in 2020). AML e-learning completed by 99% (97% in 2020).
Sustainable and local sourcing.	100% of new suppliers ( > EUR 10 thousand and five employees) screened according to sustainable procurement practices (ESG) in all markets.	Processes for sustainability screenings finalized and implemented. However, recording platform is not running effectively, causing difficulties to collect harmonized data to support results.

EU Taxonomy Regulation Reporting – Article 8

Context

During 2021, we have seen a large magnitude of updates in climate related regulation from the EU Commission. The implementation of the Sustainable Finance Disclosure Regulation (SFDR), updates of the Taxonomy Regulation and related delegated acts, and the proposal for the amendment of the Corporate Sustainability Disclosure Regulation (CSDR) to the Non-financial Reporting Directive (NFRD) will reshape the playing field for a sustainable financial sector. Below you find Hoist Finance’s first yearly reporting on EU Taxonomy disclosures for 2021.

Scope and applicability

Hoist Finance is not included in the scope of the SFRD following definitions presented in its Article 2(1) or Article 2 (11). We do however support the purpose of improved transparency measures within the financial sector. According to the Taxonomy Regulation and our obligation to publish a consolidated non-financial statement pursuant to the NFRD, Hoist Finance reports our EU Taxonomy disclosures as a ‘financial undertaking’ pursuant to Article 1 (8) in the Delegated Act supplementing Article 8 of the Taxonomy Regulation. More granularly, Hoist Finance reports the disclosures of a ‘credit institution’ as defined in Article 4(1), point (1) of regulation <EU 575/2013>.

Disclosures

Exposures	SEK m	%
Taxonomy non-eligible and taxonomy-eligible economic activites	26,217	86%
Central governments, central banks and supranational issuers and derivatives	1,139	4%
Trading portfolio and on demand inter-bank loans	2,047	7%
Undertaking that are not obliged to publish non-financial information	427	1%
Other assets	542	2%
Total assets	30,372	100%

Specification of gross carrying amount from exposures to taxonomy non-eligible and taxonomy-eligible economic activities	SEK m	%
of which undertakings that are obliged to publish non-financial information
Financial corporations	3,935	15%
Credit institutions	3,934	15%
Other financial corporations	1	0%
Non financial corporations	1,036	4%
of which undertakings that are not obliged to publish non-financial information
Households	20,710	79%
of which loans collateralised by residential immovable property	2,996	11%
of which motor vehicle loans	0	0%
Local government financing	513	2%
Collateral obtained by taking possession	24	0%
Total	26,217	100%

Qualitative disclosures

As Article 10 of the Delegated Act suggests, Hoist Finance reports on the disclosure list set for January 2022, which is the predecessor to the quantitative KPIs set for January 2024. We also report on the qualitative information set out in Annex XI of the Delegated Act.

The proportion in total assets of exposures to Taxonomy non-eligible and Taxonomy-eligible economic assets is constituted by Hoist Finance balance sheet and consist of loans and advances, debt securities and equity instruments as follows the Annex 6 of article 8 in the Taxonomy Regulation. We also present the proportion in our total assets of the exposures to central governments, central banks and supranational issuers and derivates in the form of Treasury Bills and Treasury Bonds and Derivatives. The proportion in our total assets of the exposures to undertakings that are not obliged to publish non-financial information are related to Hoist Finance’s s participations in joint ventures, actual and deferred taxes and prepaid expenses. Data sources for taxonomy disclosures are internal data warehouse and is aligned with Hoist Finance's FINREP (FINancial REPorting).

Trading portfolio reporting is not included in the scope as we do not trade with financial instruments and holds no trading book. However, our banking book holds green instruments of EUR 500m at 31 December 2021. Our on demand inter-bank loans consist of cash and non-restricted lending to credit institutions.

ESG data sources are mainly based on regulatory reports in accordance with FINREP ("FINancial REPorting"), which are derived from Hoist Finance data bases, such as general ledger, collection systems and portfolio data bases etc.

As a debt collector with a credit market license, we have a large part to play to help financial markets to strive for more transparent sustainability reporting. However, our portfolios consist of consumer debts. Hoist Finance complies with the disclore obligations of the Delegated Act supplementing Article 8 of The Taxonomy Regulation through this reporting. However, the EU Taxonomy will currently not impact sustainability or business KPI development or the engagement with our customers. Hoist Finance’s single Taxonomy-eligible economic activities are within our real estate companies in Italy, France and Cyprus, purposed to hold seized assets. As these assets add up to a very small segment of the total assets in our balance sheet, it is currently not our priority to include Taxonomy-related development within our business KPIs.

Annual and sustainability report 2021