TCFD REPORT 2021 TACKLING CLIMATE CHANGE 20 PUTTING CLIMATE AT THE HEART OF OUR BUSINESS STRATEGY depending on the environmental impact of the financed object (project, asset, general- purpose financing). As such, it encourages financing solutions with the most positive impact (“green” transactions) and penalizes negative impacts (“brown” transactions). The GWF rating methodology was finalized in 2019 for all sectors financed by the bank, with the exception of the financial sector. After the methodological development and a proof of concept phase, the GWF was implemented in the bank’s IT systems and incorporated in the bank’s processes along the lending, credit granting and portfolio management value chain. This methodology is gradually being deployed and can be integrated into European taxonomy criteria, in line with the European Commission’s progress on the “Sustainable Finance Platform.” GWF use has increased since it was introduced in 2019: • credit process and lending decision-making; • credit risk assessment:  the GWF is used to monitor the bank’s overall climate transition risk as well as for projecting the balance sheet until 2050 as requested by French banking regulator, the French Prudential Control Authority (ACPR), for an inaugural climate stress testexercisecompletedinearly2021; • strategic dialog with clients andtheresultingsustainablefinancialproductstructuring; • active portfolio management, including distribution and securitization; • commercial strategic planning, including client tiering, priority setting and identification of sustainable  finance opportunities. In 2020, an extensive screening exercise was completed to assess both the transition potential of existing clients’ business models as well as the opportunity to develop sustainable finance solutions for clients with exposures rated “ brown.” This resulted in a differentiated client tiering and adapted commercial activity in order to accelerate the development of sustainable finance. It was also decided to exit some client relationships with no transition potential. The GWF tool applies to all sectors, geographies and banking products The Green Weighting Factor is an effective tool for decision-making, fostering strategic dialog with our clients and encouraging “green” operations. Since its integration into Natixis’ credit granting process two years ago, GWF has actively influenced our teams’ performance in the development of sustainable finance. Today, GWF forms the cornerstone of our banking activities’ climate strategy. Karen Degouve Head of Sustainable Business Development & Green Weighting Factor Project Manager, Natixis