Clearly defined roles

BCF is structurally composed of a Board of Directors, an Executive Board, an Audit and Risk Committee and a Compensation Committee.

The procedures for electing the Board of Directors and the terms of office of its members, as well as the related powers, are defined in the Law of 22 November 1988 on the Banque Cantonale de Fribourg (LBCF). The composition of the Board of Directors as well as the education, professional background and other mandates of its members and its Chairman are published on the BCF website and in the Annual Report. The competencies of the Board of Directors are defined and published, as well as the various Board committees. The process for the nomination and selection of members of the highest governance body is defined and published.

The strategy of BCF is developed by the Executive Board in collaboration with the Board of Directors. It is approved by the Board of Directors. An annual seminar of the Board of Directors is organised to discuss key elements for the Bank’s development. A self-assessment of the performance of the highest governance body is carried out each year.

The Audit and Risk Committee regularly monitors risk management. Major concerns are submitted to the Executive Board and the Board of Directors.

The economic, environmental and social commitments are made explicit. Stakeholders (customers, employees, suppliers, representatives of the State and of civil society) are informed about the reporting processes.

In the governance of BCF, ESG responsibility is declined and ensured by:
– The Board of Directors, which defines and implements the strategy. Ms Dominique Jordan has been the ESG representative on the Board of Directors since September 2023. In her function, she stands surety for ESG risks by ensuring close cooperation with François Briguet, member of the extended Executive Board of BCF and head of the ESG working group;
– BCF’s Executive Board, which proposes strategy, develops business models and implements action plans.

BCF is developing its ESG activities through a working group (WG ESG) that is cross-functional to its organisation. The ESG WG is led by the Head of Strategy / ESG / Transformation, who is a member of the extended Executive Board.

The members of the GSS WG are representatives from the following areas:
– Board of Directors Assistants;
– Communication;
– Human Resources;
– Legal, Risk and Compliance;
– Credit risk Management;
– Finance;
– Products and Services;
– Marketing and social commitment;
– Real Estate and Logistics;
– IT and digital channels.

Each member is included in the subgroups of the areas reported in the Sustainability Report , i.e.:
– Sustainable Products and Services;
– BCF as an employer;
– Social commitment;
– Corporate ecology and climate protection.

The ESG WG holds regular meetings according to the Bank’s requirements, but at least once a month. For specific issues, ad hoc working groups are convened by the Head of ESG, who organises them at short notice.

If necessary, projects are conducted in parallel (e.g. mobility plan, SBA guidelines) in order to ensure an efficient pace for the achievement of the set objectives. In these cases, an appropriate organisation is defined according to the required competences, involving all necessary internal and external
stakeholders.

The ESG manager ensures that priorities are well coordinated and that potential conflicts of interest do not hinder the achievement of ESG actions. The coordination of priorities for the implementation of the Bank’s strategy and transformation is the responsibility of the Executive Board. Assumptions of a lasting conflict of interest are therefore immediately addressed within the Executive Board.

As regards ESG, BCF must take into account very specific risks that can have a significant impact on its reputation and financial performance. These risks are divided into three areas :
– the risk of «greenwashing» concerning any misleading information/misrepresentation that the Bank may make in connection with the ESG pillars (inappropriate or unapplied internal practice, non-ESG products, lack of advice, etc.);
– physical risk, linked to the financial effects of climate change. These effects can be direct, for example damage to real estate or a decline in productivity, or indirect, such as disrupting supply chains. Physical climatic risks are classified as acute when they result from extreme events (droughts, floods, storms) and chronic events when they result from gradual changes (rising temperatures, landslides, flooding, etc.);
– the risk of transition, linked to the Bank’s transition to a decarbonised economy. A poor transition will have a negative impact on market, reputational, technology, political and legal risks.

The three ESG risks for BCF are integrated into the bank’s overall risk management and are an integral part of the internal control function monitored by the Executive Board and the Board of Directors. The ESG risk level is currently classified as low to medium.

Greenwashing risk

The risk of « greenwashing » is low for BCF, despite the pressure from the rating agencies, which raise the rating scales over time. In this respect, it should be noted that strengthening the valuations entails the underlying risk that companies will attempt to demonstrate more than reality in order to obtain a higher ESG rating.

Oversight in BCF is ensured by good governance in the decision-making process, which enables the involvement of all stakeholders responsible for the measures to be implemented.  Decisions and reports are systematically reported and approved by the Executive Board and the Board of Directors. Moreover, any disclosure follows the Bank’s formal process, which involves the Head of Communication who is herself part of the ESG working group.

Finally, as a result of the current and future tightening of regulations (e.g. SBA Directives) (e.g. Ordinance on the Climate Report and the recommendations of the Task Force on Climate-related Financial disclosures (TCFD)), there is a significant decrease in the possibilities of causing greenwashing. The differences are directly sanctioned by a downgrade in the rating of rating agencies that require quantitative performance and impact indicators.

Physical risk

Because of its location in the middle of Switzerland, on a terrain configuration with little gradient overall and not on an unstable zone, the Bank entails an inherent low risk.

As a result, it has not taken any action to date and the situation is reviewed periodically.

Transition risk

The Bank has complied with the two SBA Directives, which are binding on all SBA member banks. In formulating its investment and credit policies, it has secured the necessary basis for a positive impact on the market risk. Nevertheless, it must review its ambitions annually through the objectives laid down in its Sustainability Charter in order to be able to measure the real impact.

The Bank must anticipate new ESG regulations and best practices and document its actions in its sustainability and management reports in order to provide maximum transparency for investors.

Other risks (market, corruption, money laundering, fraud, etc.) are an integral part of the management of the Bank’s overall risks and are not developed in this report.

Qualitative analysis

Greenwashing risk

To date, BCF has remained very cautious about the announcements made and has always ensured that it has factual and quantitative proof of any publication made.

All measures announced in 2023 are ongoing and/or planned actions with a specific budget allocated. This ensures that no promise that could not be kept will be announced.

Rhysical risk

Given the low inherent risk level, the Bank has not taken any specific measures as it stands. The situation is periodically reviewed. No measures are currently planned in the short term (i.e. 2024).

Transition risk

The new investment policy was implemented starting the 1st of January 2024 and the ESG preferences of clients have been gathered since 2024 as well. The indicators are therefore not yet available for the period assessed in this report (2023).

The same applies to indicators relating to credits. BCF’s banking system was configured in accordance with the SBA Directive in the fourth quarter of 2023. The collection of ESG data began on the 1st of January 2024.

The quality of ESG data is part of a continuous data improvement process for new customers from 01.01.2024 and for existing stock by the end of 2024.

Thus, the development of these indicators, particularly those relating to advice, can really be measured with a degree of hindsight from 2025 onwards only.

Process steering

Aware that any change in corporate culture requires special effort and long-term motivation, the process put in place at BCF is very pragmatic in order for action to be effective. For BCF, it is important to give our employees meaning internally so that they can provide expert advice. The aim is to bring all stakeholders to climate change.

This process is supported by the Bank’s Board of Directors and Executive Board, which allow for the provision of human and financial resources and the training of each consultant in order to achieve the objectives required by double-delivery.

The ESG working group prioritizes high-impact actions to be undertaken, taking into account stakeholders involved in the business models of BCF activities.

According to the Global Reporting Initiative (GRI) standards, two dimensions of analysis should be considered in order to assign a weight to ESG issues, namely:
– Financial materiality that studies the impact of societal and environmental issues on the business’s economic performance;
– Impact materiality that will address the impact of business activities on the environment and society.

These two axes enable creating the matrix of double materiality as explained below. The horizontal axis demonstrates the importance of the challenge for stakeholders, while the vertical axis represents the magnitude of the economic, social and environmental impact of BCF business model. This ensures that the most important sustainability issues affecting the stakeholder groups, such as employees, customers and partners, are prioritised. It also highlights the key issues of the business model of BCF.

Among the new parameters to be considered in the matrix of double materiality are the two Directives issued by the Swiss Bankers Association (SBA), namely:
– Guidelines for Mortgage Providers on improving the energy efficiency of buildings;
– Guidelines for Financial Service Providers on the integration of ESG preferences and risks in investment advice and asset management.

These two transversal directives within the organization ensure materiality on advice, training, data and enable the setting of indicators to monitor future changes in the impacts on CO2 emissions.

In 2023, BCF laid the groundwork for being able to implement these Directives in order to meet the binding transitional deadline set by the SBA on 1st January 2024. To this end, it brought together new stakeholders with external real estate and investment service providers. In this context, the advisors were trained on sustainability aspects in the real estate and investment sector with the aim of providing client advisory services in accordance with the SBA Guidelines.

The material issues presented in the matrix are addressed in this report.

In short, BCF covers a wide range of indirect emissions associated with its operations and its entire business ecosystem, including employees, suppliers, customers and the companies in which it invests. Thus, in order to achieve a major impact on scope 3, it assesses its physical and transition risks in order to pursue sustainable objectives and thus ensure the materiality of environmental (economic, social or environmental) impacts.

Defining scopes

In order to establish a company’s carbon balance, the greenhouse gas emissions it produces are categorized into 3 perimeters, so-called «scopes».

Scope 1 : direct greenhouse gas emissions, i.e. those that occur directly at company level (room heating, vehicle emissions held by the company, etc.)

Scope 2 : indirect energy-related emissions necessary for the operation of the company (electricity, heating, etc.)

The scope 3 of a bank is mainly composed of the following emissions:
A. Emissions related to investment and financing: indirect emissions associated with investments and financing granted by the bank to other companies or projects. This could include activities in carbon-intensive sectors (industries, construction, etc.).
B. Supply chain emissions: emissions from the activities of the bank’s suppliers, such as manufacturing of products, transportation of goods, etc.
C. Customer-related emissions: Indirect emissions associated with the activities of the bank’s clients, such as those arising from the use of the bank’s financial products for investments or purchases.

To develop and concretely implement ESG projects, BCF follows a clearly defined blueprint. Building on BCF’s values, the ESG WG systematically incorporates the ideas raised by all stakeholders that can have a positive impact into its ESG action plan.

This process ensures a consistent and orderly approach across the organisation of the Bank and practical implementation of the contribution projects applying BCF’s vision.

Vision

Sustainability is fully integrated into BCF’s vision based on four core values: trust, competence, efficiency and ESG commitment. All of BCF’s activities are thus based on the principles of sustainable development based on ecological, societal and economic criteria. The principles of good governance are applied.

The corporate governance guidelines, the risk policy principles, the credit policy, the Sustainability Charter, the staff regulations and the staff guidelines are pillars of the sustainable development management.

Mission

The mission of BCF is included in the Law of 22 November, 1988 on the Banque Cantonale de Fribourg (LBCF). According to art. 2 of the LBCF, BCF pursues three goals in carrying out its tasks:
– to contribute to the development of the economy of the canton of Fribourg;
– to provide for the financial needs of companies and individuals; to offer them the possibility of secure investments for their savings and capital;
– to provide financial resources to the canton of Fribourg.

Strategy

BCF creates a climate of trust and meets the needs of its clients in a responsible manner in accordance with ESG principles.
This means:
– sharing its values with its clients;
– systematically integrating ESG criteria into its activities;
– intensifying the role of ambassador of its ESG brand by its employees.

Business models

BCF builds its strategy by developing its business models. In particular, it follows the «New Generation Business Model» method. By applying this methodology, the added value for clients is always at the center of BCF’s concerns, activities and innovations. Thus, the ESG expectations of clients are an integral part of the business models implemented by BCF.

Contributing projects

To decline business models, the Board of Directors decides on the investment budget for future achievements and thus fully supports the ESG efforts proposed by BCF’s Executive Board, while taking all our values below into account.

Our values

Trust

The client is at the heart of our business. BCF responds to the needs of its clients and is a trusted partner. Relationships are transparent, direct and constructive.

Competence

BCF relies on qualified and committed employees. It encourages their ongoing training so that they can constantly develop their skills.

Efficiency

BCF places great importance on efficiency, whether in its relations with clients, its products, its processes or its organisation. The Bank’s management structure and operational processes allow for rapid decision-making.

ESG commitment

BCF’s activities are based on the principles of sustainable development based on ecological, societal and economic criteria. The principles of good governance are applied.

Transparent dialogue

Through regular and in-depth exchanges with its stakeholders, BCF is able to identify the requirements it must meet, observe trends and define strengths and potential for improvement. BCF integrates all economic actors who play a significant role in the creation of value or in the activities of BCF. The authorities and the media are informed primarily through press releases, publications and regulatory reports.

With customers

The personal relationship with the Bank’s contact persons and close contacts throughout the bank’s business area are of paramount importance. The intensity and frequency of contact is adapted to the needs of the client and the extent of the client relationship.

Customers can choose from a wide range of access channels to benefit from services (counters, ATMs, e-banking, mobile banking). BCF also organises events to promote dialogue with its regional stakeholders. Market or satisfaction studies concerning the services offered are carried out regularly.

With employees

Employee satisfaction surveys are conducted internally. The ideas put forward in this context are then discussed and analysed by the Youth Council (CDJ), which brings together employees between the ages of 25 and 35. The ideas selected and the resulting proposals are submitted to the Executive Board, which takes note of them to potentially develop them. This encourages employees to adopt an initiative and entrepreneurial spiri.

BCF’s personnel regulations provide for the existence of a Personnel Commission (COPE), which defends the interests of employees in relation to the Bank’s management bodies. A separate regulation governs this Personnel Commission.

With the State of Fribourg

A regular and institutionalized dialogue on economic, ecological and social issues is conducted with the State of Fribourg. Meetings are held regularly with the sustainable development delegate of the State of Fribourg. In addition to financial and economic issues, the strategy of the Cantonal Climate Plan of the Canton of Fribourg is taken into account by BCF.

With suppliers and partners

Suppliers and partners are measured on procurement criteria in the framework of tenders and bids. An exchange on ESG measures is conducted with the partner in order to build a relationship of trust and thus to seek synergies for a joint commitment.

With external parties

BCF actively collaborates with the cantonal banks in French-speaking Switzerland and neighboring regions: BEKB, BCVs, BCGe, BCN and BCJ. As a founding member of Carbon Fri, BCF works with the Foundation since its creation.

BCF recognizes international human rights standards and  identifies with the values and aspirations they convey. BCF’s  personnel guidelines regulate the protection of employees’ integrity: employees may not be discriminated against directly or indirectly. Managers are responsible for ensuring that the
working environment is conducive to work and free from any form of harassment.

Employees have an internal communication channel for reporting personal attacks or irregularities such as violations of laws, regulations and directives.

The Personnel Regulations and the Personnel Guidelines are an integral part of the employment contracts. They include rules of conduct relating in particular to corruption and money laundering. Employees confirm in writing that they have received these guidelines and undertake to comply with them. These topics are discussed at the induction day for new employees and during various training courses.

More generally, BCF invests considerable resources to effectively combat money laundering and terrorist financing. It also complies with tax requirements. Clients are responsible for complying with the legal and regulatory provisions applicable to them, which include, among other things, the obligation to file tax returns and pay taxes. Clients release the Bank from any liability in this regard.

Ensuring compliance

Compliance and respect for ethical rules are among BCF’s core values. As a responsible bank, BCF makes the loyalty and integrity of its practices the core of its relationship approach. Acting in compliance means ensuring that BCF’s actions comply with the provisions specific to banking and financial activities, whether they are legislative or regulatory in nature, or whether they are professional, ethical or internal standards. Compliance  with these principles is a duty to our clients and a guarantee of confidence and reputation for the Bank.

All client complaints are centralized in the Legal, Risk and Compliance Division, which reports them to the various bodies according to gravity: the Executive Board, the Board of Directors or the Swiss Banking Ombudsman.

In the event of specific questions or complaints concerning banking and financial transactions carried out by the Bank, customers can turn to a neutral mediator: the Swiss Banking Ombudsman. The Swiss Banking Ombudsman acts as an information and mediation body without jurisdiction for clients of the member institutions of the Swiss Bankers Association (https://bankingombudsman.ch/fr/)

Combating tax fraud

In order to combat tax fraud, BCF applies the various regulations relating to the automatic exchange of tax information,  whether in application of the OECD standard (EAR) or in the context of the FATCA agreement concluded between Switzerland and the United States.

These standards allow the tax authorities of adhering states to obtain data and financial information on accounts and securities deposits held by their taxpayers abroad. At the national  level, Switzerland has put in place the Federal Act on the International Automatic Exchange of Information in Tax Matters (AEIA) and the FATCA Act, which serve as the legal basis for the automatic exchange of information in tax matters.

These standards apply to both natural and legal persons. Data on clients and their assets will only be exchanged if  Switzerland has concluded an agreement with the partner  state concerned. A list of partner states with which Switzerland currently has an EAR is available on the BCF website and on the website of the State Secretariat for International Financial Matters. The latter also provides all information on the EAR.

Combating money laundering

The Banque Cantonale de Fribourg has implemented measures to combat all forms of corruption within the institution. For example, it includes in its internal regulations a prohibition on accepting money or other gifts, on gaining the promise of or securing, directly or indirectly, any benefits whatsoever related to the professional activity, with the exception of gifts of minor commercial value, the maximum value being described in said regulations.

BCF is subject to the Swiss Financial Market Supervisory Authority (FINMA) and thus meets all the requirements of the financial sector. It has a compliance and risk management division that mainly carries out the duties and responsibilities described in «FINMA Circular 2017/1 Corporate Governance – banks», particularly all points of the 2nd line of defense. This ensures the separation of controls and the independence of decisions. The division is made up of four structural units, including the compliance unit, which verifies compliance with legal, regulatory and internal provisions and the adherence to the standards and rules of ethics used in the market in
question.

In this context, the compliance Department is responsible for the annual assessment of compliance risks related in particular to combating money laundering and the financing of terrorism and for drawing up a risk-based plan of action. It implements these Directives, which are aimed at establishing the rules of conduct and organisation to be adopted in order to ensure effective management of combating money laundering and terrorist financing.

The main aim of a dedicated Directive applicable to all employees is to implement the rules, obligations of due diligence and usages to prevent the risk of money laundering within the Bank. Furthermore, all employees of the Bank are trained, when they are hired, on the applicable regulations relating to the prevention and combating of money laundering and the financing of terrorism.

The Bank is also audited annually to ensure that its processes are in line with the legal and regulatory framework.

www.bcf.ch/fr/la-bcf/propos-de-nous/informations-juridiques

Protecting personal data

The protection of personal data is of paramount importance to the Bank. BCF is committed to strict compliance with the Swiss Federal Data Protection Act (DPA), which, together with banking secrecy, protects clients against unauthorized access to their personal data processed by BCF. Governance principles, as well as technical, organisational and infrastructural measures have been put in place for this purpose.

The Bank processes the data of its clients and business partners in particular in order to meet its contractual, legal and/or regulatory obligations and for the pursuit of its legitimate interests such as the development of the business relationship with its clients.

In order to meet the obligations mentioned above, BCF may outsource certain services to third parties, particularly in the IT or administration sector. Such third parties are contractually bound to protect data confidentiality and security. Furthermore, the Bank implements the measures reasonably necessary to secure the transfer of data to third parties. Such third parties may only use subcontractors themselves if the Bank has given its consent.

In particular, the client has the right, subject to legal restrictions:
– to access his/her data and obtain information about the Bank’s procedures for processing his/her data;
– rectification of personal data if it is inaccurate or incomplete;
– revoke consent;
– request, to the extent legally possible, the return of data provided to the Bank or their transfer to a third party (right to portability);
– restriction of the processing of its data, for example by opposing the processing of its personal data for marketing purposes;
– erasure of data if the data is no longer necessary in particular for the purposes for which it was collected or processed, subject to the applicable retention periods.

BCF will retain the personal data for as long as is necessary to fulfil its legal and contractual obligations. As a rule, documents are destroyed ten years after the business relationship is terminated or the transaction is terminated.

Internally, the obligation to respect client confidentiality, in particular banking secrecy, is specified in the employment contracts of employees as well as in the personnel regulations and directives. Employees are regularly made aware of the importance of compliance with the relevant standards and measures, including through internal training courses.

Complete information on the processing of personal data by the Bank and the rights of clients in this regard can be found in the «Personal Data Protection Policy» available on the Bank’s website. Customers are also made aware of data protection considerations in BCF’s General Terms and Conditions and regulations, in a specific information sheet and in the terms of use of its website.

Ensuring data security

All personal and sensitive data is protected by a multi-level security system. Consequently, all of the Bank’s non-public areas are protected by an access control system and only duly authorized persons have access thereto.

Likewise, access to BCF’s IT systems can only be made using a personal ID and password of each employee. Every personal computer is also protected by a personal password.

Access to the data is only authorized for employees of the Bank, or for duly authorized persons, who respect the principle of having access to information only when it is necessary «need to know».

With regard to cybersecurity in particular, the effectiveness of the system is regularly evaluated and its resistance to cyber-attacks tested. The IT infrastructure is entirely outsourced to Swisscom (Switzerland) AG, which has implemented its own security standard (ITSLB IT Security Level Basic) based on best practices in the technical, organisational and infrastructure fields.

Swisscom’s approach is deployed in all IT layers used by BCF: applications, databases, services, storage, workstations, networks and servers. In each of these layers, Swisscom guarantees the security of the configuration, protection systems, identity and access management, control and reporting.

General terms and conditions and regulations

BCF clients can easily consult the Bank’s General Terms and Conditions and regulations online in a dedicated section, as well as the following documents and information:
– the brochure of the Swiss Bankers Association (SBA), which provides general information on the main financial services and the risks involved in trading in financial instruments;
– a description of the financial services offered by BCF as well as the provisions put in place to protect investors;
– an information notice concerning commissions and retrocessions, specifying the scope of article 31 of the General Terms and Conditions of the Banque Cantonale de Fribourg.