SUSTAINABILITY REPORT AND NON-FINANCIAL INFORMATION ... · LABORAL Kutxa was founded in the Basque...

LABORAL Kutxa declares that this Report has been prepared in accordance with the GRI standards: the exhaustive option, and complies with the requirements of Law 11/2018, dated 28 December, on non-financialinformation and diversity, according to the external verification carried out y AENOR.

SUSTAINABILITY REPORT AND NON-FINANCIAL INFORMATION STATEMENT 2019

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CONTENTS

0.Letter................................................................................................................................. 4

1.Aboutus............................................................................................................................ 7

1.1.GroupPresentation.....................................................................................................8

1.2.Operatingstructure.....................................................................................................9

1.3.Cooperativism...........................................................................................................10

1.4.Values,principles,standardsandrulesofconduct....................................................11

1.5.Geographicdistributionofoffices.............................................................................12

1.6.TheGroup'smainfigures..........................................................................................13

1.7.Strategyandriskmanagement..................................................................................14

1.8.Principlesandgovernance.........................................................................................17

1.9.Developmentofthegoverningbodies.......................................................................21

1.10.Remunerationofthegoverningbodies...................................................................21

1.11.Corruptionandbribery............................................................................................21

1.12.Moneylaundering...................................................................................................23

1.13.RegulatoryCompliance............................................................................................24

2.Responsiblemanagement................................................................................................25

2.1.Managementapproach.............................................................................................26

2.2.Commitmentsandachievements..............................................................................28

2.3.CSRRoadmap............................................................................................................29

2.4.LABORALKutxa'sCSRScorecard................................................................................30

2.5MaterialityAnalysis...................................................................................................31

2.6.UnitedNationsGlobalCompactandSustainableDevelopmentGoals(SDGs)............33

3.Managementof stakeholders...........................................................................................35

3.1.Ourrelationshipwithclients.....................................................................................363.1.1.Managementapproach..........................................................................................................363.1.2.Maincustomerfigures............................................................................................................363.1.3.Dialoguewiththeclientele....................................................................................................363.1.4.Responsiblemanagementwithcustomersandexcellenceinqualityofservice..................383.1.5. Protection of privacy and the security of data and operations..............................................41

3.2.Ourrelationshipwiththeworkforce.........................................................................483.2.1.Managementapproach..........................................................................................................483.2.2.Mainmagnitudesoftheworkforce.......................................................................................493.2.3.Dialoguewiththeworkforce..................................................................................................493.2.4.StaffDevelopment..................................................................................................................503.2.5.Diversityandequalopportunities..........................................................................................533.2.6.Conciliation.............................................................................................................................563.2.7.RemunerationManagement..................................................................................................563.2.8.OccupationalHealth&Safety................................................................................................57

3.1.6.Responsibleproductsandservices........................................................................................42

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3.3.Ourrelationshipwithsociety....................................................................................613.3.1.Managementapproach..........................................................................................................613.3.2.Mainfigures:Profitsharinginsociety...................................................................................653.3.3.Dialoguewithsociety.............................................................................................................663.3.4.InitiativesendorsedbyLABORALKutxa.................................................................................67

3.4.Ourrelationshipwiththeenvironment.....................................................................693.4.1.Managementapproach..........................................................................................................693.4.2.Mainfiguresandinitiativesdeveloped..................................................................................70

3.5.Ourrelationshipwithsuppliercompanies.................................................................763.5.1.Managementapproach..........................................................................................................763.5.2.Mainfigures............................................................................................................................773.5.3.Dialoguewithsuppliers..........................................................................................................773.5.4.Initiativesdevelopedduringtheyearforresponsiblesuppliermanagement......................78

4.Otherfigures...................................................................................................................79

4.1.Customers.................................................................................................................80

4.2.People.......................................................................................................................83

4.3.Environment.............................................................................................................89

5.InformationontheReport...............................................................................................90

6.Annexes............................................................................................................................93

6.1.Tableofequivalencies...............................................................................................94

6.2.TableofGRIindicators..............................................................................................96

6.3.ReportingleveloftheReport..................................................................................101

6.4.AENORverification..................................................................................................1016.5.Principles for Responsible Banking..........................................................................102

0.LETTER

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2019hasbeenbroughttoaclose,averyspecialyearforthepeopleofLABORALKutxaaswecelebratedourfirst60yearsofexistence.Itwasayearinwhich,lookingback,wewereabletorememberthereasonandthepurposeforwhichthiscooperativeprojectwascreated,aswellasthepathwehavetravelledtogethere.Butithasalsobeenayearinwhichwehavelookedto the future.Takingallof this intoaccount,wehaveundertakena strategicdeliberation toanalysethechallengesthatwewillfaceinthecomingyears.Thesearedemandingandexcitingchallengesthatwearekeentotackle,bearinginmind,aswehavedoneforthepast60years,ourwayofdoingthingsinwhichpeopleandacommitmenttoourenvironmentcontinuetobeamajorpartofourmission.

Duringthestrategicdeliberationthatwillguideusthroughuntil2022,wehaveanalysedourposition and the initiatives that we must promote in order to face challenges such as theacceleration of digitalisation and open banking, while maintaining the same vigour for ourtraditionalbusiness.Wehavealsoevaluatedthetechnological, talentanddatamanagementskillsthatweneedtostrengthentoachievethegoalswehaveset.Itisimportanttonoteherethat,forthefirsttimeever,oneofthefivemajorblocksinwhichthePlanhasbeenstructuredexplicitly includes sustainability as a strategic element for LABORAL Kutxa. This block isintendedtobeacross-cuttingelementthatsetsout,fromtheperspectiveofgovernanceandcommitmenttosustainability,howtherestoftheprogrammesareaddressed.Consistentwiththestrategicimportancethatwehavegivenit,wehavecommittedourselvesforthisstrategicperiod, together with the usual business and management objectives, to achieve 10measurable sustainability objectives. These objectives cover the main social andenvironmentalchallengeswefaceasacompany:equality, theenvironment,managementofsupplier companies and a contribution to the economic and social progress of oursurroundings.

In addition to our 60th anniversary and the process of strategic deliberation, anotherparticularlynoteworthydevelopment in2019was thechangeover,duetoretirement,of theGeneralManagementofLABORALKutxa.Thenewmanagementteamhasbeenheadingupthecompany fora yearnow,afteranefficienthandoverprocess thatallowedus toachieve theresults we had set ourselves, while at the same time achieving industry-leading solvency,liquidityandprofitabilityratios.

VictorHugoiscreditedwiththephrasethatnothingismorepowerfulthananideawhosetimehas come.Well, 2019has been the year inwhich sustainability has transformed thewayofthinkinginthefinancialsector.Fromthebankingregulators,throughtoindustryinitiativesandeverythingrelatedtosociallyresponsibleinvestment(SRI),aturningpointhasbeenreached.The impact of the business on society, good governance and especially the contribution offinanceincombatingtheclimatecrisisthatwemustaddresshavebecomethemainfocusofagendas,initiativesandprojects.

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Within this transformation, a milestone in 2019 that we are especially proud of is that inSeptemberwebecameoneofthe130foundingsignatoriestotheUnitedNationsPrinciplesforResponsibleBanking.Thisinitiative,whichisdestinedtobecomeareferencewithinthesector,seekstodefinethecommitmentandresponsibilitiesofthefinancialsystemtocontributetoasustainable future, in line with the Sustainable Development Goals (SDG) and the ParisAgreements on climate change. These Principles provide the framework for the sustainablebanking system of the future and help the industry to demonstrate how it contributespositivelytosociety.

In LABORAL Kutxa, as a credit cooperative created precisely to contribute in a fair andequitable manner to the economic and social progress of our society, we want to be keyplayersinthisnewwayofunderstandingthebankingsystemthatthePrinciplespromote.Thesamecanbesaidwithregardto theenvironmentalchallengeswe face,bothbecauseofourresponsibilitytowardstheplanetandfuturegenerations,andbecauseweareawarethattheworstconsequencesof theclimatecrisiswillbesufferedbythemostdisadvantagedForthisreason,in2020,oneaspectwewanttogivegreaterimpetustoistheanalysisofthepotentialimpactonourorganisationandonoursurroundingsoftherisks,bothdirectandtransitional,oftheclimatecrisis.

Before concluding, Iwould like to reiterate our commitment to the Principles of theUnitedNationsGlobalCompact inordertocontinueadvancingwithrespecttoHuman,EmploymentandEnvironmentalRightsandtheFightagainstCorruption.WealsomaintainoursupportfortheSustainableDevelopmentGoals(SDGs)ofthe2030Agenda.

TxominGarcíaHernández

ChairmanofLABORALKutxa

1.ABOUT US

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1.1.Grouppresentation

LABORAL Kutxa, is presented on its corporate website asa solid and responsiblemodel ofcooperativeandparticipativebanking.“LABORALKutxarepresentsadifferentwayofbanking,basedoncooperationandcommitmenttooursociety.Ourmainobjectiveisthesatisfactionofeach client and the generation of wealth and employment in our environment. We are aCooperative Bank, guided by values and a philosophy that lead us to prioritise the commoninterest over the individual, tomake decisions in a participative and responsibleway and toreinvestourprofitsinsociety.”

ItisacreditcooperativeinwhichthemajorityofthecapitalisheldbythecooperativesoftheMONDRAGÓNgroupandbyworkingorretiredmembers(collaborativepartners).

The consolidated LABORAL Kutxa Group includes banking and insurance businesses. The“Retail Banking” business offers both investment and savings products. In investment, themain areas of activity are the marketing of mortgage products, consumer credit, workingcapitalandcorporatefinance.Asregardssavings,themainproductsaredeposits(ondemandand term deposits), bank guarantees, means of payment services (credit and debit cards),investmentfunds,pensionfundsandEPSVs.ThisbusinessismainlycarriedoutbyCajaLaboralPopularCoop.deCrédito (hereinafterLABORALKutxaandwithheadquarters inMondragón,PaseoJMArizmendiarrietas/n20500Gipuzkoa),throughitsnetworkofbranches,orbycertaincompanies that are 100% dependent on it, which are considered a direct extension of thebusinesscarriedoutbytheParentCompany.Strategic,managementandoperationaldecision-makingisfocusedontheGoverningBoardofCajaLaboralPopularCoop.deCrédito.

The "Insurance Business" includes the activity carried out by the Group through SegurosLagun-Aro Vida, S.A. and Seguros Lagun-Aro, S.A. The Group is engaged in life insurancebusiness,marketinglifeinsurance,lifesavingspoliciesandunit-linkedpolicies.Inaddition,itisactive in non-life insurance, mainly in car insurance, civil liability and in multi-risk sectors,mainly forhomes.Strategic,managementandoperationaldecision-making is focusedontheBoardsofDirectorsofbothcompanies.

Seguros Lagun Aro Vida and Seguros Lagun Aro (hereinafter Seguros Lagun Aro) are twopublic companies, 100%owned by LABORAL Kutxa. Thus, evenwhen the employees do notownthecompany,theyparticipateinthemanagementandbusinessresults.

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TheinvesteecompaniesthatmakeuptheLABORALKutxaGroup:DependentEntities Activity %Owned HeadquartersSegurosLagunAroVida,S.A. Insurance 100%

CalleCapuchinosdeBasurtonº6,2º,48013Bilbao(Bizkaia)

SegurosLagunAro,S.A. Insurance 100%Seg.LagunAro2003,IEA Insurance 100%CajaLaboralGestiónSGIIC,S.A.

Investmentfundmanager

100%PaseoJoséMaríaArizmendiarrieta5,1ªArrasate-Mondragón20500Gipuzkoa

CajaLaboralPensionesGFP,S.A.

Pensionfundmanager

100%PaseoJoséMaríaArizmendiarrietaSNEdificio51ªArrasate-Mondragón20500Gipuzkoa

ISGAInmuebles,S.A.RealEstateDeveloper

100%

PaseoJoséMaríaArizmendiarrieta4Arrasate-Mondragón20500Gipuzkoa

CajaLaboralEuskadikoKutxaCartera,S.L.U.

Holdingcompany

100%

SociedadGestiónActivosCajaLaboral,S.A.U.

PropertyAssetManager.

100%

CajaLaboralBancaseguros(CLBS)O.B.S.V.,S.L.U.

BankingInsuranceOperator

100%CalleGranVíaDiegoLopezdeHaro,2–PISO1,Bilbao,48001,Bizkaia

AssociatedEntities

ATEGIGREENPOWER,S.L.Photovoltaicinstallations

28.57%CalleGoiru(edb),1–Piso3,Arrasate/Mondragón,20500,Gipuzkoa

1.2.Operatingstructure

The current structure as at 31/12 is basically spread across 5 large functional areas andexpandedthroughthevariousDepartments,Sections,ZonesandNetworkofoffices.

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LagunAroInsurance

1.3.Cooperativism

WHATDIFFERENTIATESUSFROMOTHERBANKSANDSAVINGSBANKS?

WEAREACOOPERATIVECREDITUNION

ThepeoplewhoserveyouatLABORALKutxaaremembersoftheorganisation,wearecommittedtotheprojectandbelieveinit,sowearededicatedtogivingeachpersonthebestservice.Customersatisfactionisthebestguaranteeforourbusinessplans.

GIVINGBACKTOSOCIETY.USEFULBANKING,COMMITTEDTOOURSOCIETY

Ourdividendiswhatwegivebacktosociety:25%ofourdistributablesurplusesareusedtofinanceprojectsofeconomicandsocialinterest,trainingandjobcreation.Therestwereinvestintheentitytostrengthenitssolvencyanditsfuturedevelopment.

WEAREWORKERS,PARTNERSANDSTAKEHOLDERS

LABORALKutxaisnotlistedonthestockexchange,itisnotsubjecttospeculativepressurefromthefinancialmarkets.Allpartnersparticipateinthecapitalandinthedecisionsoftheorganisation,withresponsibility,assumingtheconsequencesofourmanagement.ThekeydecisionsarevalidatedattheGeneralMeetingwiththeparticipationofallpartners,guaranteeinganefficientandresponsiblemanagementthatallowsustoobtainprofitsandreinvesttheminoursociety.

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SHARECAPITALASAT31/12/2019

759.6MEUROS

1.4.Values,principles,standardsandrulesofconduct

LABORALKutxaregulatesindividuals'activitiesonthebasisofcertainrulesofconduct.Intheareaofthesecuritiesmarket,theserulesorguidelinesofconductareessentiallyincludedinan"InternalCodeofConductspecifictothesecuritiesmarket",whichappliestothepeoplewhomake up the Governing Board, the Board of Directors and those involved in this area ofactivity.In2018,theadaptationtoRegulation596/2014oftheaforementionedInternalCodeofConductwasapprovedandtheCNMVwasinformed.Intheareaofethicsandintegrity,theentity'srules,whichalsoapplytoCLBS,aresetoutinthe"CodeofEthicsandProfessionalConduct"andthe"GuidetoGoodPracticeandProfessionalSecrecy".BothdocumentsarepublishedontheintranetandareupdatedandreviewedbytheRegulatoryComplianceDepartmentandthe InternalAuditDepartment.Modifications to theCodeofEthicsandProfessionalConductrequiretheapprovaloftheGoverningBoard.As a continuation of the Code of Ethics, in the field of prevention and response to possiblecriminalbehaviourapplicabletotheentity,theinternalregulationsareincludedinthe"CrimePreventionandResponseManual"andinthe"CriminalCompliancePolicy".Thereisa“ComplaintsChannel”thatallowspeopletoreport,guaranteeingtheprotectionofthe complainant, irregularities of potential importance linked to the Code of Ethics and theCriminalCompliancePolicyand the“EthicsCommittee”actsasa supervisorybody for theseregulations, which is chaired by the Social Management Department and also includesRegulatoryCompliance,LegalAdvice,theFinancialDepartmentandInternalAudit.Thisbody,inaddition tomonitoring,grantsauthorisationsorexceptionsanddealswith thecomplaintsreceivedthroughtheComplaintsChannel,ensuringtheappropriateaction.In2019and2018therewerenoqueriesorcomplaints.

TheGroup's insurancecompanies, Seguros LagunAroandSeguros LagunAroVida,althoughhavingalegalstatusasajoint-stockcompanyandnotasacooperativecompany,sharealargepartofthewaysofdoingbusinessandcooperativevalues.Seguros Lagun Aro is part of the European mutual and cooperative insurance association -EURESA,andsharesthevaluesofmutualityandcooperationthatthisAssociationdefendsandis,therefore,committedto:

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- applyingtheguidingprinciplesofthesocietaleconomyinallitsactivities,- designingproductsandservicesthatmeettherealneedsofconsumers,- ensuring that policyholders and shareholders are actively involved in the life of the

company,eitherdirectlyorthroughtheirrepresentatives,- combiningthefinancialpicturewithethicalconduct,and- ensuringthatitsactivitiesareundertakenwithinthecontextofapeople-centredeconomy

gearedtowardssustainableandsociallyresponsibledevelopment.

Thecontractsenteredintobytherealestateassetmanagementcompanieswiththirdpartiesin thecourseof theirbusiness,ensure that theycomplywith (andenforce their suppliers tocomply with) the regulations related to occupational health and safety, respect for theenvironmentandhumanrights,establishingspecificobligations, theirexpressacceptancebythirdparties,andseriouspenaltiesfornon-compliance.

1.5.Geographicdistributionofoffices

LABORALKutxaincorporatestheinsuranceactivitywithinastrategyofBankingandInsurance,sothattheGroupcompanies(SegurosLagunAroSAintheNon-LifeareasandSegurosLagunAro Vida) market their products for the most part through the offices and the website ofLABORALKutxa. Seguros LagunAro complements thesebanking channelswith a networkofselectedbrokers.

ThePrivateIndividualsofficesarestaffedbypeoplefromLABORALKutxaandalsopeoplefromitsinvestee,CajaLaboralBancasegurosSLU,anassociatedBanking-insuranceoperator-CLBS.CLBS incorporatedallthepeoplecomingfromSegurosLagunArowhowerepartoftheSalesNetwork of the "Direct Channel" of Seguros Lagun Aro, and also some other support staff,basicallyinmarketingactivities.In2019,5officeswereclosed.

There isalsoa specialisednetworkof companies (towhichmustbeadded theCooperativesandLargeCompaniesofficeandthePublicSectoroffice).

OFFICEDISTRIBUTIONMAP

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1.6.TheGroup'smainfigures

Item 2018 2019

Totalassets(Mll)OwnFunds(Mll)Customerdeposits(Mll)Credittocustomers(Mll)

22,9891,68919,48113,253

25,0581,76421,42513,973

OfficesATMs

309535

304538

InterestMargin(Mll)GrossMargin(Mll)AdministrationCosts(Mll)Profitaftertax(Mll)

246.5394.7227.0124.2

249.9395218.9127.4

ThedistributionofwealthgeneratedbytheGroupisshowninthefollowingtable:

Item(thousandsof€). 2018 2019

1. Directlygeneratedfinancialvalue 392,642 401,806

GrossMargin(beforeotheroperatingcharges)

ProfitsonSaleofMaterialandAwardedAssets

389,674

2,968

399,130

2,676

2. Distributedfinancialvalue 284,212 284,975Paymenttosuppliercompanies(Operatingcosts)- othergeneraladministrativecosts.- otheroperatingchargesStaffcostsIncometaxInterestoncapitalInvestment/DonationstothecommunityDevelopmentandEducationFund(FEP)IntercooperativeSocialFund(FSI)

107,01175,18031,831108,50611,41833,56523,7129,48514,227

104,73370,97933,754108,40611,68934,31625,83110,33215,498

3. Financialvalueretained(1-2) 108,430 116,831

Withregardtotherealestateassetmanagementcompanies,CajaLaboral istheowner(soleshareholder) of two companies, ISGA, S.A. and Sociedad para la Gestión de ActivosInmobiliariosdeCajaLaboral,S.L.(SGA).Thecompanieshaverecordedaloss,includedintheGroup'sconsolidatedresults,of€14.3M.Item(thousandsof€).Managementofrealestateassets 2018 2019Revenue(Sales) 68,320 45,286Operatingcosts 6,588 4,274Staffcosts 0 0Financialcostsforinterestanddividends 624 388Grosstax 2,527 2,085

RegardingCLBS,thekeyfinancialfigures,includedintheconsolidatedresults,are:Item(thousandsof€).CLBS 2018 2019Turnover(commissions) 39,758 41,400StaffCosts 10,703 10,270TotalCosts 37,459 37,911Pre-taxprofit 2,457 3,490

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Theobjectiveoftherealestateassetmanagementcompaniesin2019wastopurchaseassetsfromdevelopers inpaymentofdebtowedtoLABORALKutxaandtodisposeofalltheassetsowned, both finished products (houses, garages, premises, etc.), as well as completing theworkinprogressinordertosellthefinalproductandalsothesaleoflandoritsmanagementfortransformationintohousing,throughself-builddevelopmentorbybuilding.

In2019,viatheISGAcompany,workwascarriedouton17realestateprojects involvingtheconstruction of 707 homes, of which 4 projects have been completed, bringing the totalnumberofcompletedhomesto87.

Noneof the land, developments in progress or completedhousing is adjacent to or locatedwithinprotectednaturalareasorunprotectedareasofhighbiodiversity.

The activity of these real estate asset management companies, implies a minimumparticipation in theSpanishrealestatesector. Its indirecteffect is relatedto thecontractingouttothirdpartiesoftheactivitiesnecessaryforitsexecution.

LABORAL Kutxa performs its tax obligations in the regions in which it operates. It thuscontributes to the sustainabilityofpublic servicesand theprogressof Society. Theamountsrelatingto2019areasfollows:

Taxesandduties(thousandsof€)LABORALKutxa 2018 2019Corporateincometax 11,418 11,689Taxes(propertytax,taxonprofessionalandcommercialactivities,etc.) 7,593 7,451V.A.T. 2,198 7,620(1)Total 21,209 26,760Taxesandduties(thousandsof€)LagunAro 2018 2019Corporateincometax 1,951 1,904Taxes(propertytax,taxonprofessionalandcommercialactivities,etc.) 92 89Total 2,043 1,993(1)VATfortheconsolidationgroupfrom2019.

The Public Administration does not form part of the capital nor does it have anyrepresentationonthegoverningbodiesofLABORALKutxa.ThefinancialsupportreceivedfromtheAdministrationisasfollows:

Item(thousandsofeuros) 2018 2019Subsidies(aidforemployment,trainingandenergyinvestments) 538 308Item(thousandsofeuros) 2018 2019SubsidiesLagunAro(Euskera) 20 11

1.7.Strategyandriskmanagement

Astrategicdeliberationwascarriedoutduring2019whichledtothepreparationofaStrategicPlanfortheyears2020-2022.ThestrategicdeliberationsatLABORALKutxafollowanannualcycle, as part of a management process that systematises competitive surveillance in thevarious markets and the review of business models and strategic commitments, which arethendevelopedineachManagementPlan.

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The2020-2022StrategicPlanhasbeenpreparedafteraperiodofdeliberationthatbeganwithanassessmentofthedegreeofcompliancewiththe2016-2019StrategicPlanandadiagnosisoftheinternalandexternalsituation.Thiswasthefirststrategicdeliberationtobecarriedoutwithacross-groupperspectivewhichalsoincludedtheinsurancecompanies.Itwasaprocessledby theBoardofDirectors inwhichdifferent levels of the cooperativeparticipated, fromdepartment heads to section heads and staff from the sales network. The project wassupportedbyDeloitteandwasapprovedbytheGoverningBoard.

Thefollowingambitionwasdefined:

Transformationoftheentityinordertoensureitscompetitivenessandfuturesustainabilityinacomplexmarketenvironmentbymeansofadifferentiatingapproach.

Themainactionpointsthathaveemergedfromthestrategicdeliberationare• Profitability - incomestatement. Inanenvironmentofextremely low interest rates,

sustainingthecurrentlevelsofprofitwillbethemainobjectivefortheyear.Thiswillrequireanincreaseinbusinessvolumes.

• Solvency. Solvency management will be another of the fundamental managementtools,beingthemainparameterthatguaranteesthefutureandindependenceoftheentity.

• Businessstrategy.Thecommercialstrategywillbeaimedatincreasingmarketsharestoagreaterorlesserextentdependingonthedifferentregions,segmentsandprioritybusinesses,therebyincreasingthedynamicsofthecommercialactivity.

• The insurance business. Opportunities and competitive differentials should beharnessedtodrivegrowthbypromotinghigherlevelsofintegrationoforganisationalstrategies,policiesandculture.

• RiskPolicy.Thestrategicdeliberationwillleadtoareviewofthecurrentriskappetiteframework,andriskpolicieswillalsobereviewedand,whereappropriate,redefined.Thechangesinthebusinessstrategy,andtheprojectionsanddecisionsintheareaoftreasuryandcapitalmarketswillbealignedwiththisframework.

• Treasury and capital markets. In a scenario like the current one, marked by thecontinuousgenerationofliquidityandanunstableenvironmentwithmajordifficultiesin obtaining an acceptable risk-return ratio, the investment strategy for the surplusliquiditywillbeimplementedwithacriterionofprudence.

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The implementationoftheStrategicPlanfortheyears2020-2022willbebasedonfivemajorblockscovering15programmes.

Riskmanagementisconsideredtobeakeyelementinthisstrategicplan.Forthisreason,theriskappetiteframeworkdesiredbytheentityhasbeenreviewedandthefitoftheobjectivessetoutinallprogrammeshasbeensubsequentlyadjusted.Inaddition,measuresareproposedtoextendtheriskcultureinthenetworkandthefirststepsaretakentoimprovetheinternalmodels.

Sustainability and corporate governance appear for the first time in this Strategic Plan as atransversalelementthatcoversalltheprogrammesthatshapeit.Intheareaofsustainability,the company will continue to contribute to the economic and social progress of itssurroundings and to reduce the impact of its activities on the environment. These projectsalignwiththeSustainableDevelopmentGoals(SDGs)andwiththe2030Agenda.

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In addition, each yearSeguros LagunAro drawsup itsManagementPlan,whichestablishesobjectives and action plans, in accordancewith the balance of quantitative indicators in itsmanagementscorecardaswellasthequalitativeconclusions.

1.8.Principlesandgovernance

Corporategovernance

LABORALKutxahasnotestablishedanyformalpolicyforhiringseniormanagersnativetothegeographical areaswhere it carries out itswork, as thebusiness is carriedout at a nationallevel and the criteria followed are those based on appropriate professional skills. All of theexecutivestaff(the8membersoftheBoardofDirectors)arefromtheareaswheretheEntityoperates.

WithregardtoCorporateGovernance,wecanciteasprogressmadein2019that:• Asaresultofchanges in theGoverningBoard, thecompositionof theAuditCommittee

andtheRiskCommitteewerechanged,andperformancereportswerepreparedforthosedirectorswhostoodforre-election.

• The manual governing the procedure for selecting and assessing the suitability ofdirectorsandkeyoffice-holderswasadaptedtotheEBAguidelines.

• The "CNMV Technical Guide 1/2019 on Appointments and Remuneration Committees"wasincorporatedintotheinternalprocedures.

• Thepolicyfortheselection,appointment,reappointmentanddiversityofcandidatesforgoverning directors was updated. The balance of knowledge, skills, diversity andexperienceoftheGoverningBoardhasalsobeenassessed.

• TheannualassessmentofthesuitabilityofboththemembersoftheGoverningBoardandthekeyoffice-holdershasbeencarriedout.

• Theapplicationof theprocedures followed for the selectionandappointmentof seniormanagementmembersappointedin2019hasbeenanalysed.

AttheLagunAroBoardofDirectorsmeetinginJanuary2019,inaccordancewithArticle18ofRoyal Decree 1060/2015, 20 November, on the organisation, supervision and solvency ofinsurance and reinsurance companies ("RDOSSEAR"), the minutes recorded that each andeveryoneofthemembersoftheCompany'sBoardofDirectorshadfulfilledtherequirementsofsuitabilityandgoodrepute.

(1) 4ofwhichareworkingpartners.(2) Agedatanotavailable.

GoverningBodyBetween30and50 Over50

2018 2019 2018 2019M W M W M W M W

GoverningBoard(1) 2 3 1 4 4 3 5 2Auditors 1 0 1 0 1 1 1 1ResourcesCommittee(2) 9 3 9 3 - - - -OperationsCommittee 0 2 0 3 3 0 2 0AuditCommittee 1 0 0 1 0 2 2 1AppointmentsCommittee 1 1 1 1 2 1 2 1SocialCouncil 10 7 10 10 2 1 2 1BoardofDirectors 1 0 3 1 6 1 3 1RisksCommittee 0 2 0 3 2 1 2 1RemunerationCommittee 0 1 1 1 2 1 2 1

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AllinformationregardingcorporategovernanceisavailableontheLABORALKutxacorporatewebsite.https://corporativa.laboralkutxa.com/informes/

ThesupervisorybodiesofLABORALKutxaare:

Committee/Organisation DutiesYearofest.

Structureoftheadministrativebody

GoverningBoardSeniormanagement,supervisionofManagement,representationoftheCompany.AnalysesannuallytheaspectsrelatedtoCSRandtheimpacts,risksandeconomicandsocialopportunitiesonacontinuousbasis.

1960

ResourcesCommitteeStatutorybodyresponsibleforresolvingappealsagainstcertaindecisionsoftheGoverningBoard.ElectedattheGeneralMeeting

1993

AuditCommitteeSupervisesinternalauditservices,knowsthefinancialreportingprocessandinternalcontrolsystems,supervisescompliancewithcodesofconductandcorporategovernancerules

2004

AppointmentsCommittee

IdentifiescandidatesfortheGoverningBoard,evaluatesthesuitabilityofitsmembersandthebalanceofknowledge,skills,diversityandexperienceofthegroup.Pursuesanobjectiveofrepresentationoftheunderrepresentedsex.

2012

RisksCommitteeAdvisestheGoverningBoardonthemanagementandsupervisionofallsignificantrisksandonthemonitoringoftheapplicationoftheglobalpropensityforriskappropriatetotheCompany'sstrategy.

2015

RemunerationCommittee

ProposestotheGBthegeneralremunerationpolicy,ensuringanindependentannualevaluationofitsapplicationandinformingitoftheremunerationpolicyoftheexecutivesincludedinthe"identifiedgroup".

2016

SupervisoryandadvisorybodiesSocialCouncil Employmentsystem,advicetotheGoverningBoardandGeneralManagement 1960CustomerService Managementofcustomerqueries,complaintsandclaims. 1994HealthandSafetyCommittee

ConsultativebodyonOccupationalRiskPrevention. 1996

HizkuntzaBatzordea Committeeforlinguisticstandardisation. 2000EnvironmentCommittee EnvironmentalSystemManagement. 2001MoneyLaunderingPreventionCommittee

ControlandcommunicationbodyforthePreventionofMoneyLaundering. 2003

CSRCommittee

DelegatedbodyoftheBoardofDirectorsinmattersofCSRandwiththeparticipationofmembersfromthevariousDepartmentsandInsurance.ApprovestheCSRReport.ItischairedbytheHeadofQuality,whogivesanannualstatementtotheGov.Board.

2008

GlobalRiskControlandALCO

Controlofliquidity,interestrate,credit,marketandoperationalrisk.TheALCOistheAssetsandLiabilitiesCommittee.

2008

EqualityCommittee-Berdintasuna

PromotesandguaranteesequalitybetweenwomenandmenandmonitorsthecurrentEqualityPlan.

2009

OperationalRiskCommittee

Globalcontrolofoperationalrisk 2010

EthicsCommitteeEnsuretheapplicationoftheprinciplesandvaluesthatgovernthebusiness,primarilythoseincludedinitsCodeofEthicsandProfessionalConduct

2015

ProductsCommitteeInapplyingMiFID,itevaluatesandapprovestherisksofeachproductofferedtotheclients.

2015

IntegratedSecurityCommittee

EnsuresacomprehensivesecuritystrategyfortheEntity,bothphysicalandlogistical.

2015

ProjectsCommitteeOrdersandprioritisesthepriorityinterdepartmentalprojectstoensuretheirsuccess

2017

DataProtectionCommittee

Supervisesandpromotespoliciesandproceduresregardingdataprotection. 2019

19

In order to avoid conflicts of interest between the Company and the members of theGoverningBoard, inaddition to the ruleson incapacitiesand incompatibilitiesestablished intheArticlesofAssociationandtheInternalCodeofConductfortheSecuritiesMarket,thereisa specific provision in the Governing Board’s Regulations concerning the voting system foradoptingresolutionsinwhichsuchconflictsmayarise.

Theseprocedures,whichhavebeenincludedinpreviousReports,consider:• IncapacitiesandincompatibilitiesofthemembersoftheGoverningBoard.• CodeofConductfortheSecuritiesMarket.• RegulationoftheGoverningBoard’sRegulationstoavoidconflictsofinterest.

TheEthicsCommittee'smissionistopromotetheethicalbehaviourofLABORALKutxainallitsactivities.ItisanautonomousbodyreportingtotheGeneralManagerthatisestablishedasachannelfortheComplaintsManagementSystemregardingbreachesoftheCodeofEthicsandprofessional conduct, as well as in criminal matters and as a manager in disciplinaryproceedings.EveryyearitsubmitsanEvaluationReporttotheBoardofDirectorsintheeventofanyproblematicsituation.TheCommittee ismadeupof5people,currently3menand2women.

Eachyear theAppointmentsCommitteeperformsa continuousassessmentof the individualsuitabilityofthemembersoftheGoverningBoard(theirintegrity,knowledge,experienceandwillingness to exercise good governance) and of the balance of knowledge, ability, diversityand experience of the Board as awhole. Also, the evaluation report on the structure, size,compositionandperformanceoftheGoverningBoardispresentedinthesameCommitteeonanannualbasis.

With respect to theRisk Committee, the Company conducts an annual review, based on itsstrategy and the level of health of its financial situation, of risk tolerance levels in what isknown as the Risk Appetite Framework, tolerance levels that refer to capital, liquidity andprofitability, and themonitoring of which is carried out with a series of indicators that arereported to the banking regulator. In addition, the Governing Board annually approves theCreditRiskPolicyManual,whichincludesriskpolicies,proceduresandcriteria.

In 2017, the Board of Directors approved a new Projects Committee, whose purpose,supported by a Project Office, is to improve the management of those projects that aredefinedasprioritieswithintheannualManagementPlan.

Asregardsriskmanagement,adetaileddescriptionofthedifferentbasicriskscanbefoundintheannual InformationofPrudentialRelevance,whichdetails thetrendsand impactonthebusinessof themost importantrisks:credit,market,operational, interestrateaswellas theriskprofileandmanagementmechanismsapplied.

AtSegurosLagunAro the final responsibility for themanagement, controlandmitigationofriskslieswiththeBoardofDirectorsandSeniorManagement.Thereisa"Policyofsuitabilityforkeypositions"thataimstoensurethatallthepeoplewhorunSegurosLagunAromeettherequirementsofsuitabilityandintegrity.Bothbodiesareresponsiblefor:• The communication of general principles and documented management policies,

includingthedesignandupdatingoftheriskmanagementframework.• The definition, understanding and periodic review of the exposure profile that the

Companywishestoassumeatanygiventimedependingonthedefinedbusinessstrategy.

20

• Ensuring the suitability and periodic review of the limit structure of the different risks,takingintoaccountthedesiredexposureprofile.

• Ensuring an adequate organisational structure of the risk management: assigningresponsibilities, ensuring that there areno conflicts of interest through the appropriatesegregationofduties.

• Approvingriskmanagementpolicies,ensuringthattheyincludethefunctionsassumedbyeach body in relation to risk management and control, the hierarchical link betweenfunctionsandthereportinglines.

• Ensuring the independent review of the risk management framework and theincorporationofrecommendationsmadebyInternalAudit.

Independentlyofthemembersoftheadministrativeandmanagementbodies,SegurosLagunArohasdefinedthefollowingfundamentalfunctionsofthegovernancesystem:

Riskmanagementfunctionü Defining the methodologies and indicators to be used for the measurement and

evaluationofrisksandassistingintheirimplementation.ü Workingwith the technicaldivisions in the identificationandcategorisationof risksand

preparingtheCompany'sriskmatrix.ü Carryingoutperiodicevaluationsontheimpactthatfuturescenariosandstresssituations

wouldhaveonthelevelandsolvencyoftheCompany.ü Assisting the technical departments in applying themethodology and the underwriting

riskmeasurementandevaluationmodels.ü Evaluatingthestructuralmismatchbetweenassetsandliabilitiesü Evaluatingtheadequacyandintegrityoftheinformationusedtoquantifyriskü Activelyparticipatinginthenewproductapprovalprocessü Leading the process of internal evaluation of risks and solvency of the Company, being

responsibleforpreparingtheappropriatereport.

Regulatorycompliancefunctionü Determining and assessing the risk of regulatory non-compliance and keeping the

regulatoryriskmapuptodate.ü Advisingonnewproducts,servicesandmarketsfromaregulatorypointofview.ü Verifyingthepreparation,coordinationandexecutionoftheCompliancePlan.ü Continuousstafftrainingonregulatorycompliance.

InternalAuditFunction:Checktheadequacyandeffectivenessofthe internalcontrolsystemandthevariouselementsoftheGovernanceSystem.

Actuarialfunctionü CoordinatingandreviewingthecalculationofTechnicalProvisions.ü ExpressinganopinionontheunderwritingstrategyofeachCompany.ü Expressinganopiniononreinsuranceagreementsandretentionstrategy.ü Contributingtotheeffectiveimplementationoftheriskmanagementsystem.

For each of the above-mentioned functions, there are written policies approved by themanagementandgoverningbodyoftheCompanywhichdefine,amongotherthings,thetasksand responsibilities with a suitable distribution and a clear separation of functions inaccordancewiththecurrentSolvencyIIregulationsonindependence.

21

1.9.Developmentofthegoverningbodies

In2018, the third trainingprogrammedirectedat themembersof theGoverningBoardandmembersofManagementwascompleted.This136-hourtrainingprogramme,providedbyAFISchoolofAppliedFinance,beganin2017andcoveredaspectsofeconomics,financialmarketsand investment management (regulation, risks, etc.), banking company management,companyfinanceandinsurancecompanymanagement.Thefourthprogrammewasdesignedduring2019andwillcommenceinFebruary2020.

Trainingoncorruption issues is referredto inthe2014Report. In2016, themembersof theGoverning Board received the same training as everyone else on the Crime Prevention andResponseManualandtheCriminalCompliancePolicy.

1.10.Remunerationofthegoverningbodies

The people who form part of the Governing Board of LABORAL Kutxa and the Board ofDirectors of Lagun Aro do not receive remuneration for their governing functions and,therefore,thereisnolinkbetweentheirremunerationandtheperformanceoftheCompany.The following table shows the remuneration of themembers of the Board ofDirectors, theChairmanof theGoverningBoard and theDirectorswho, asworkingpartners, have formedpartoftheGoverningBoardintheyearsindicated.

LKItem(thousandsofeuros) 2018 2019Totalpayfortheirwork 1,390 1,534Capitalisedcooperativereturns+Contributioninterest 284 243Total 1,678 1,777Averagepayperperson 139.9 126.9

WithregardtotheremunerationoftheBoardofDirectorsofLagunAroLagunAroItem(thousandsofeuros) 2018 2019Totalpayfortheirwork 484 458Capitalisedcooperativereturns+Contributioninterest 3 3.9Total 487 461.9Averagepayperperson* 97.4 92.38* 3menand2womenin2019and4menandonewomanin2018.

1.11.Corruptionandbribery

LaboralKutxahasaCriminalCompliancePolicy,withseveralRegulationsandCodesofConductincluding,amongothers:

- CodeofEthicsandProfessionalConduct,- GuideofGoodPracticesandProfessionalSecrecy,- InternalRulesofConductspecifictothestockmarket.

Organisationally, ithasalso setupanEthicsCommittee, an InternalAuditdepartmentandaRegulatory Compliance department to prevent irregularities and monitor compliance withrulesandprocedures.

Businessunitsanalysed

BelowarethebusinessunitsofLABORALKutxathathavebeenanalysedwithrespecttorisksrelatedtocorruption:

Index

22

2018 2019Actual Target Actual Target

Totalno.ofofficesanalysed 83 83 93 88

%Officesanalysed 27% 27% 31% 29%

Itshouldbenotedthatthecontrolsandremoteauditanalysesimplementedhaveaneffecton100%ofthebranchesoftheOrganisation.Inthe2realestateassetmanagementcompanies,ISGAandSGA,thenecessarypreparationshave been made to adapt to the new regulations in the area of Prevention of MoneyLaundering,andthesehavebeenexaminedbyindependentexperts.

Withrespecttomeasurestakeninresponsetoincidentsinvolvingcorruption,therehavenotbeenanysuchcasesin2018or2019.

During 2019, the internal control and communications procedures and organisations weresubject to an annual review by an external expert, PB Consultores S.L., which assessed theoperational effectiveness of the procedures and organisations in the prevention of moneylaunderingas“VeryGood”withahigherscorethanthatofthepreviousyear.Belowaretheactionsthatwerecarriedoutduringthepastyear:

Actionstakenin2019TheManualonthePreventionofMoneyLaunderingandFinancingofTerrorismhasbeenamended,introducingseveralimprovements.Thesix-monthlyreports,SummaryofSpecialExaminationTransactionsandaSelf-assessmentRiskReportonMoneyLaunderinghavebeenproduced.Thetransactionrelatingtothe"StatementofMovementofMeansofPayment"hasbeenimproved,addinganoticeontheconsequencesoftransferringmeansofpaymentwithouttheS1document.Internally,theexistenceofaComplaintsChannelintheEntitytoreportillegalactionshasbeenreiteratedthroughanInformativeNoteTheRemediationPlanhasbeenupdatedtoaddressdeficienciesintheFormalIdentificationofcustomers.AnalystsandthepersoninchargeofthePBCUnithavereceivedspecificpracticaltraininginthePreventionofMoneyLaundering

The Money Laundering Prevention Unit has sent 10 reports of transactions suspected ofmoney laundering to the Executive Service of the Commission for the Prevention ofMoneyLaunderingandMonetaryOffences.

In Seguros Lagun Aro, the planning of internal audits to supervise the inherent risks ofsubscriptionandcompliancewithregulationsand/oradministrativeprocedures,aswellasthedocumentmanagement,arecarriedoutin100%ofthebranches,bothintheCLBSchannelandin theBrokeragechannel,basedon thealertsandanalysisof the riskgroupsestablished forthevariousaudits,bothannualanddaily.

Regulationsandcodesofconduct

LABORALKutxaregulatesindividuals'activitiesonthebasisofcertainrulesofconduct.Intheareaofthesecuritiesmarket,theserulesorguidelinesofconductareessentiallyincludedinan"InternalCodeofConductspecifictothesecuritiesmarket",whichappliestothepeoplewhomake up the Governing Board, the Board of Directors and those involved in this area ofactivity.

23

Intheareaofethicsandintegrity,theEntity'srulesarearesetoutinthe"CodeofEthicsandProfessional Conduct" and in the “Guide to Good Practices and Professional Secrecy”. Bothdocuments are published on the intranet and are updated and reviewed by the RegulatoryComplianceDepartmentandtheInternalAuditDepartment,respectively.

As a continuation of the Code of Ethics, in the field of prevention and response to possiblecriminalbehaviourapplicabletotheEntity,theinternalregulationsareincludedinthe"CrimePreventionandResponseManual"andinthe"CriminalCompliancePolicy".In2019,acriminalriskreassessmentprocesswasinitiated,aswellastheabove-mentionedupdateoftheManualandthePolicy,thatwillbecompletednextyear.

There is a "Complaints Channel" that allows people to report irregularities of potentialimportance linkedtotheCodeofEthicsandtheCriminalCompliancePolicy.There isalsoan"EthicsCommittee"asabody forcriminalprevention,with themissionofpromotingethicalbehaviorintheEntity,resolvingqueriesonthesubjectanddealingwithcomplaintsreceivedintheComplaintsChannel.

1.12.Moneylaundering

The management policies of LABORAL Kutxa identify the greatest risks in the areas ofcorruptionandbriberywiththefightagainstmoneylaunderingandthefinancingofterrorism.In this regard, itundertakes toestablish thenecessarybodiesandprocedures inaccordancewithcurrentregulationsandinternationalstandards.Forthisreason,• TheCommittee for the Prevention ofMoney Laundering and the Financing of Terrorism

andaPreventionUnithavebeencreatedwithintheorganisationalstructureoftheEntity,withspecificfunctionsintheareaofprevention.

• Precise rules and procedures have also been established, which are contained in a“MoneyLaunderingandFinancingofTerrorismPreventionManual”,thelatestversionofwhichwasapprovedon30/01/2019.

ThispolicyappliestotheentireLABORALKutxaGroup,includingthesubsidiaries.

Theobjectivesoftheserulesandprocedures,whichmustbecompliedwith,are:- To strictly comply with the regulations in force at all times, as well as the

recommendationsissuedbynationalandinternationalbodiesandauthorities.- To introduce rules for action and appropriate control and communication systems to

prevent funds of a criminal origin from being channelled through the LABORAL KutxaGroupandtoimpedeaccesstocertainpersons.

- Toestablishcustomeradmissionpolicies.- To ensure that working partners and other employees adhere to the "know your

customer"procedures.

Thesepoliciesandproceduresareprimarilypreventiveinnature.Inaddition,internalcontrolprocedures are subject to an annual review by an external expert so that a rationale forcontinuous improvement in reducing exposure to thesemoney laundering and financing ofterrorismriskscanbeapplied.

The real estate asset management companies maintain a policy and have implemented amoneylaunderingpreventionsystemthatestablishesthebodies,procedures,internalcontrols

Index

24

andappropriatetoolstocomplywiththeregulationsapplicableinthisfield.Thequalityofthissystemand itspracticalapplicationareexaminedannuallybyan independentexpertand, inthe examination relating to the 2019 financial year, it was rated positively without anyincidents.

1.13.22RegulatoryCompliance

TheRegulatoryComplianceDepartmentincludes,withinitsmanagementscope,thedetectionof transactions suspectedofmarketabuse. In2019 thecomputerapplication registered474alarmswhich, once analysed,werenot classified as transactions suspectedofmarket abuseand,therefore,nocasewasreportedtotheCNMVin2019.

WithregardtoLagunAro:

Index

2.RESPONSIBLE MANAGEMENT

Index

26

2.1.Managementapproach

Therelationshipwithourmainstakeholdersisbasedonthefollowingbasiclines:

Asthebankingactivityisbasicallyaimedattheserviceofandrelationshipwithcustomers,theresponsible management of customers is a priority, especially with regard to the sale ofcomplex savings products, and excellence in service quality as well as contact with thecustomer are aspects identified as being of the highest importance in our outward-lookingmatrix. In all of the above, our objective is for these to be areas in which LABORAL Kutxamaintainssustainableadvantagesoverourcompetitors.Specifically, the comparative data with competing entities show positive differentiations ingeneral,buttheyareparticularlysignificantinimportantaspectssuchasthetransparencyandclarity of information, the trust we generate among our customers and, in general, thecommitmentthatourEntitytakesonwithsocietyasawhole.Inpoint3.1Ourrelationshipwithcustomers,wedescribeindetailourachievementsintheseareas, also including our efforts at transparencywith regard to the solution of problematicsituations with a significant social impact such as over-indebtedness of customers for thepurchaseofhomesorclaimsoflackofvalidity,duespecificallytoalackoftransparency,ortofloorclausesappliedtointerestonmortgageloans.

In relation topeople,LABORALKutxa isaCooperativeCreditUnion inwhichworkingpeoplearemembersandownersofthecompanywithfullrightsandresponsibilities,bothincarryingout their professional duties and in the right to participate in management through therelevant bodies and in the profits from the business. This difference compared to othercompanies defines the approach to the relationships within the company, meaning thatworkers are involved in all three of the possible areas: ownership, results and alsomanagement methods, because our aim is to make our management democratic andresponsible. Specifically, the key decisions are validated at the General Meeting with theparticipation of all partners, guaranteeing an efficient and responsible management thatallowsustoobtainprofitsandreinvesttheminoursociety.

The Cooperative Education training programmes reinforce the cooperative identity of themembers, and encourage the integration and socio-entrepreneurial involvement of newmembers.

In point 3.2 Our relationship with the workforce these and other initiatives are developedfurther.

AnothersignificantdistinguishingfeatureofLABORALKutxais itscommitmenttosocietyduetoitslegalstatusasaCreditCooperative.Asaresult,bylaw,10%ofthedistributableannualprofitofcreditcooperatives isdirectlyallocated tosociety. In thecaseofourCompany, thispercentageissubstantiallyhigher,25%tobeprecise.

Index

27

LABORALKutxawasfoundedintheBasqueCountryaspartofaBusinessGroupwithastrongcommitment to serve society, whose mission includes the creation of associated andparticipatory cooperative work as an essential way to create wealth and well-being, bothamongitsdirectsocialpartnersandinthesocietyinwhichitisimmersed.

Duetoitslegalnatureanditscooperativevocation,LABORALKutxadirectsasignificantpartofits charitable contributions to the promotion of the cooperative world, but it also reservesspecificprovisionsforlocalinitiativesintheareaswhereitsofficesarelocated,andparticularlyforspecificactivitiessuchasthepromotionofself-employmentandentrepreneurship (inthiscasethroughaspecificFoundation,Gaztenpresa)andsupportfortheBasquelanguageandthepromotionofBasqueculture.

Thesemechanismsaredescribedinpoint3.3Ourrelationshipwithsociety.

In order to optimise its relationship with the environment, since 2001, LABORAL Kutxa hasbeenusinganEnvironmentalManagementSystem,inaccordancewiththeISO14001standardforalltheactivitiesitcarriesoutinthethreebuildingsatitsCentralHeadquarters.Althoughitisnotpartofthecertifiedsystem,LABORALKutxatransfersthemajorityofitsenvironmentalactivities from central services to the otherwork centres. This certificationwas renewed in2019.

TheEnvironmentalManagementSystemistheresponsibilityofanEnvironmentalCommitteemadeupofmembersoftheLegalDepartment,InternalAudit,Risks,FixedAssets,SecurityandGeneral Services and Management Planning and Control, with the latter acting as theCoordinator. In accordance with the precautionary principle of the Rio Declaration, itaddresses the possible impacts of the activitywith a view to preventing any environmentaldamage.

Averysignificantnewdevelopmentin2019wasthesigningbyLABORALKutxaoftheUnitedNationsPrinciplesforResponsibleBanking.AlthoughthesePrinciplesrefertotheentireareaof sustainability, given the emergency situation of the climate crisis, they place specialemphasisontheimpactofouractivity(creditandinvestment)ontheenvironment.

Point3.4Ourrelationshipwiththeenvironment,describesthesemechanisms.

With respect to the management of suppliers, it is important to remember the value ofadequatemanagementof the supply chain inorder to achieve theobjectivesof responsibleactivity.

Withoutadoubt,thefinancialactivitythatwecarryout,aswellasthelocalpresenceinaveryspecific geographical area, means that the management risks of these companies are notexcessively important. Nevertheless, as will be seen later on, LABORAL Kutxa has severalinitiativesunderwaywithregardtosuppliers.

AspecialmentionwithinthesuppliersisthatofLagunAro'sbrokers,whichreachesthelevelofsignificant stakeholder within the insurance activity. At the Group level, it is considered asupplierwithdifferentiatedcharacteristics.

Point3.4Ourrelationshipwithsuppliercompanies,describesthesemechanisms.

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2.2.Commitmentsandachievements

BelowarethemainCSRactionscarriedoutduring2019,inaccordancewiththecommitmentsmadebyLABORALKutxa in itspreviousCSR reports,aswellaswith theobjectives for2020.TheseactionsaresegmentedaccordingtotheInterestgroups(inadditiontotheenvironment)defined by the Entity: People-Workforce (P), Customers (C), Society (S) and SupplierCompanies(Sup).

ActionsinthefieldofCSRStatusoftheaction/objective

Governancemechanismsinplaceandexecutiontime

Materialityandstakeholdersaffected

Basicprojectsandactionsin2019andpendingfrompreviousyearsStrengthensolvencyandliquidity Ongoing Strategicpriority HighPandCMiFIDII.Planstoimprovecustomerinformationandadvisorysystemsandtools

Completed2017Prioritisedproject

HighC

Developmentofproceduresandsystemsforcontractingsuppliers.Developmentofapplicationandrecruitmenttable.

Completed2017Supplierprojectworkinggroup

MediumSup

ImplementationoftheIIIBerdintasunaPlan-Equality.PreparationoftheIV.

CompletedCommitteeBerdintasuna16-19

HighP

Usingdigitalisationtoreducepaperconsumptionandboostthemulti-channelrelationship

PartiallyCompleted.Digitalisationstrategicfocus

MediumS

Carryoutthemergerofofficestoincreaseefficiencywhileavoidingthefinancialexclusionofsmallcommunities.

CompletedCommercialDivision2016

MediumS

Linguisticstandardisation:ImplementationoftheStrategicPlanfortheBasqueCountry2016-2019

CompletedHizkuntzaBatzordea16-19

LowCandP

DevelopmentofdigitalskillsforStaff OngoingStrategicfocus2018digitalskills

HighP

Maintainpositionsofexcellenceinthemanagementofcustomerrelations

OngoingIntegratedQualityProcess

HighC

ContinuetoexpandthecoverageofSociallyResponsibleInvestment

PartiallyCompleted Specificteam MediumCandS

GreenMiFID Delayeduntil20202019ManagementPlan

MediumCandM

ImplementBIDEANandensureitssustainability

CompletedCultureandvaluesstrategicfocus19

HighP

Ren.EIFInnovFinandEaSISocialagreement

CompletedEIF2019agreements

Medium-highSandC

Developmentofmanagementsystemsthatpromoteaconstructiveandcollaborativeculture,withself-relianceandcontinuouslearning

OngoingCultureandvaluesstrategicfocus2019

HighP

Reviewofmarketabusecontrolprocedures

PartiallyCompleted.AwaitingITdevelopment

2019ManagementPlan

HighS

FormationoftheDataProtectionCommittee

Completed PDSI2019 HighSandC

ImplementaRecognitionSystemforpeople.

Designed,implementationin2020

Cultureandvaluesstrategicfocus19

HighP

Developmentofmulti-channelcustomerrelations,paymentmethodsanddirectmarketing

OngoingStrategicfocusOmni-channelling,Onenak4.02019

MediumCandP

ImplementtheZainduzHealthPlan Completed Workingteam2019 HighP

Index

29

SupportforcreatingandconsolidatingcompaniesthroughMONDRAGON

OngoingFundsthroughFSIandFEP2019

Medium-lowSandC

Financialeducationplan. CompletedFinancialEducationCommittee2019

Medium-lowSandC

ActionsinthefieldofCSR.Basicprojectsandactionsfor2020Coaching400entrepreneurstolaunchtheirmicro-enterprise

StrategicobjectiveGaztenpresaFoundation

Medium-highSandC

Reducepaperconsumptionby8% StrategicobjectiveEnvironmentCommittee

MediumM

Replacetheelectricitysupplywithonebasedsolelyonrenewablesources.

StrategicobjectiveEnvironmentCommittee

MediumM

Developmentofagreenfinancingproduct StrategicobjectiveBusinessdevelopment

MediumMandC

MoveaheadwiththeapplicationofSociallyResponsibleInvestment(SRI)criteriaintheassetsmanagedbytheManager,Treasuryandintheconcessionofrisks

Strategicobjective

BusinessdevelopmentTreasuryManagerRisks

Medium-highC,SandM

Conductanimpactanalysisofthedirectandtransitionalrisksofclimatechange.

CommitmentundertakenwiththePrinciplesofResponsibleBanking

CSRCommitteeMedium-highSandM

Implementsustainablemobilitymeasuresfortheworkforce.

SustainablemobilityEnvironmentCommittee

MediumMandP

2.3.CSRRoadmap

Asaresultofthedeliberationandconsultationprocesscarriedoutwiththestakeholders(seeMateriality Analysis), the CSR Roadmap has been defined, which addresses the risks andopportunities that were identified as being themost important, and is the benchmark thatLABORALKutxausestoprioritiseitsactivitiesrelatingtoSocialResponsibility.

Index

30

2.4.LABORALKutxa'sCSRScorecard

TheLABORALKutxascorecardprovidesaglobalvisionofthekeyindicatorsintheorganisationwithrespecttothethreeaspects:economic,socialandenvironmental.

Economicperformanceindicators(consolidateddata):Indicators 2018 2019

Profitaftertax(€M) 124,173 127,364

EfficiencyIndex(%)(1) 61.93 61.00

Customerdeposits(€M) 19,481 21,425Customercredit(€M) 13,278 13,973

Solvency(%)(2) 18.76 20.17SpecialFunds(€M) 1,059 954%DoubtfulRisks/Investment 4.46 3.54

(1) EfficiencyIndex:AdministrationCosts+Amortisation/GrossMargin.(2)Totalcapitalratio(CET1)isused.

Prioritisationofareasforaction G. interest/scope

1Excellenceinqualityofservice:transparency,friendliness,avoidanceoferrors,speed

andsimplicityoftheoperationCustomers

2 Protectionofprivacyandthesecurityofdataandoperations. Customers

3 ReinforcetheEntity'ssolvencyandliquidity Economic

4Responsiblemanagementtowardscustomers:explanationandsaleofcomplexsavings

products,avoidingover-indebtednessofcustomers...Customers

5Peoplemanagement:genderequality,work-lifebalance,salarylevelsandintervals,

etc.People

6CSRmeasures:againstmoneylaundering,armsfinancingcontrol,gambling,

pornography...Customers/Society

7Developmentinthedigitalisationofchannels(electronicbanking,telephonebanking,

mobilebanking)Customers

8 Promotingequalitybetweenwomenandmen Society/people

9Reviewandimprovementofinternalcontrolmechanisms(managementdecisions,

codeofethics,corruption,costcontrol).CorporateGovernance

10Contributiontotheeconomicandfinancialdevelopmentofthebusinessfabric:Financingagreementsforcompanies,supportforentrepreneurs,University...

Company

11 Sociallyresponsibleproductsandservices Customers/Society

12Suppliermanagement.Responsiblepurchasingcriteria:purchaselocallyandtakesocial

andenvironmentalcriteriaintoaccountinadditiontoprice.Suppliers

13 Improvethecommunicationwithcustomersandotherstakeholders Customers

14Controloftheresponsibleactivityofoursuppliers:workingconditions,occupational

risks,paymentstotheTaxAuthorities...Suppliers/People

15 Fairbalancebetweencostschargedandinterestpaid.Mutualbenefit. Customers16 Reductioningreenhousegasemissionsandcarbonfootprint Environment

17Environmentalmanagement:recycling,reductioninconsumptionandwaste,selective

collection...Environment

Index

31

Socialperformanceindicators:Aspect/Indicator 2018 Year2019

PeopleNumberofpeopleactive(LK+CLBS) 2,105 2,074TrainingTraininghours/totalworkforce 41.71 81.38Trainingevaluation(1-10) 7.96 7.91HealthandSafetyAbsenteeismin% 3.85 3.80ProfessionaldevelopmentAverageemploymentindex 2.4 2.36Promotion:IncreaseinStructuralIndex 5.5 7.09

Aspect/Indicator2018 Year2019

Women Men % Women Men %EmploymentdynamicsRateofdepartures/turnover 7.5% 7.3% 8.4% 6.70% 6.76% 7.09%Equality%Womenmembers 48.7% 49.54%%Womenmanagers/totalmanagers 30.6% 31.97%Noobjectivesareestablishedregardingemploymentdynamicsandequality.Norisitbrokendownbyregionduetothereducedgeographicalscope.

Aspect/Indicator 2018 2019

Contribution.Funds(FEPandFSI)(thousand€) 21,037 23,437

Taxespaid(thousand€) 21,209 26,760Gaztenpresacompaniescreated 415 405

Environmentalperformanceindicators:Consumptionof: 2018 2019

Advertisingpaper:Kg/Client 0.093 0.116

Internalpaper(Kg/Client) 0.238 0.251Waterinm3 7,447 10,898Electricity(Kwh) 13,277,248 12,915,786Tonercartridge:Unitsconsumed 3,317 3,502Dieselinlitres 1,505 581Kgwastemanaged(1) 158,950 162,283

(1) Theobjectiveistomanage100%ofthewaste.Itsvolumedependseachyearondifferentcircumstances.

2.5MaterialityAnalysis

The 2014 Report describes in greater detail the process followed by the Entity for theconstruction of the firstmaterialitymatrix thatmade it possible to identify the informationneedsofthemainstakeholdersandtoprioritisetheirdemands.

In subsequent years, the information collected has been expanded, improving theinterpretation of the needs and expectations of the different stakeholders with which theEntityinteracts.In2017andin2019,themethodologyandthequestionnairewerereviewed,comparing the resultswith those obtained by other competitors and adjusting them to thedemandsofthestakeholders.

Index

32

TherevisedquestionnaireshavebeenusedforthematerialityanalysisofthisReport,havingobtainedinformationfrom:• Customers (annual consultation): 43 companies, 417 self-employedworkers andmicro-

enterprises,45customersandclientsofpersonalbankingand163KIDEclients(linked),intotal668.TheyareclientsofbothLABORALKutxaandLagunAro.

• 14suppliercompanies(biannualconsultation),• 109workers(members,casualworkersandCLBS;annualconsultation),• ThebiannualconsultationwiththemembersoftheCSRCommittee,whoseopinionsare

representativeofthoseoftheManagement,giventhepeopleinvolved.

Theevolutionovertimeofthematerialityanalysesrevealsthis:- It highlights the alignment between the prioritisation of the stakeholders and that of

LABORALKutxa.61%oftheassessedaspectsareinthesamequadrantofimportanceandtherearenoaspectsinthehigh-low/low-highquadrants.

- The results are very consistent, with the prioritised aspects and those considered lessmaterialvaryingverylittleovertime.

- Awareness is progressively increasing in aspects suchas environmental care and suppliermanagement,althoughinbothcasestheirmaterialityisstillconsideredtobemedium.

Inthematerialityanalysistherearetwoelementsofwhichtheinternalandexternalrelevanceisclassifiedasminor,butwhichareconsideredtobeatthecoreofourmissionandthereforecannot be overlooked as areas of preferential attention. These are the support to thecooperativesofMONDRAGONandthecontributiontothepromotionoftheBasquelanguage.Weunderstandthatonereasonforthelowdemandexpressedforbothelementsisthattheirexpectationsarealreadywellcovered,sothereisnoneedforadditionalinitiatives.

MaterialityMatrix2019Mater. Aspect

HIGH 6-Excellence in service quality: reduce errors and improve operations

12-Protection of privacy and operational and data security

MEDIUM-HIGH

1-Strengthen the solvency and liquidity of the Entity

16-Promotion of equality between women and men

9- CSR measures: against money laundering, control of financing to arms, gambling,pornography,...

11- People management: gender equality, conciliation, salary levels and intervals, etc.

5- Responsible management with clients: explanation and sale of complex savings products,avoid over-indebtedness of clients...

7-Development in the digitalisation of the channels (electronic, telephone, mobile banking)

18-Review and improve the internal control mechanisms (administrative decisions, moneylaundering, ethical code, corruption, cost control).

MEDIUM

15- Environmental management: recycling, reduction of consumption and waste, selectivecollection...

3- Contribution to the economic and financial development of the business fabric: Businessfinancing agreements, support for entrepreneurs, University...

10-Socially responsible products and services

13-Improve communication with our clients and other stakeholders

33

21- Control of the responsible performance of our suppliers: working conditions, occupationalhazards, payments to the Tax Office...

23- Supplier Management. Responsible purchasing criteria: local purchasing and taking intoaccount social and environmental criteria as well as the price.

8-Reduction of the emission of greenhouse gases and carbon footprint

14- Fair balance in costs charged and interest paid. Mutual benefit.

MEDIUM-LOW

17- Social action: sponsorship, contributions to NGOs, social activities, developmentcooperation...

20-Flexibility in the recovery and refinancing of unpaid debts

LOW

22-Contribution to the Sustainable Development Goals (SDGs) of the 2030 Agenda of theUnited Nations.

2-Support the cooperatives of Mondragon

4-Contribute to the financial education of clients and society19-Promotion of the Basque language and culture, as well as promoting the use of the Basquelanguage in internal relations and with customers

2.6.UnitedNationsGlobalCompactandSustainableDevelopmentGoals(SDGs)

EachyearLABORALKutxahascarriedout,withinitsacquiredcommitment,astatementoftheannualprogressonthePrinciplesoftheGlobalCompact.Since2018,theprogressachievedontheSustainableDevelopmentGoals(SDGs)and,thisyear,ontheUNPrinciplesofResponsibleBankinghasbeenaddedtothisstatement.

ThemainaspectsthatLABORALKutxahasworkedonin2019,aswellasthedegreeofprogressmade, are setout in theCommitmentsandAchievements section in the secondpartof thisReport. Therefore, the following table analyses which of these aspects are in line with thePrinciples of the Global Compact, the Sustainable Development Goals and the Principles ofResponsibleBanking:

Index

34

CSRobjectivesandchallengesassumedinthe2019CSRReport

GlobalCompact SDGResponsible

BankingPrinciplesCarryoutthemergerofofficestoincreaseefficiencywhileavoidingthefinancialexclusionofsmallcommunities.

Principle1Objectives1,3and

8Principles1,2,3

and4DeploymentoftheIIIBerdintasunaPlan-EqualityanddevelopmentoftheIV.

Principles1and6 Objective5 Principles1and4

Useofdigitalisationtoreducepaperconsumptionandtocreateapersonaliseddistancerelationship

Principle9Objectives13and

15Principles1,2and

3Linguisticstandardisation:ImplementationoftheStrategicPlanfortheBasqueCountry2016-2019

Noprincipleapplies

Objective11 Principles1and4

Implementationofcontractingproceduresandsystemswithsuppliercompanies

Principles1to5Objectives1,3,5,6,8,10,12and16

Principles1,4,5and6

Developmentofthedigitalcompetencesoftheworkforce Principle9Objectives8,9and

12Principle4

Implementthehealthplan-Zainduzforallpeople. Principles1and8Objectives3,8,11,

12and17Principles1and4

Maintainpositionsofexcellenceinthemanagementofcustomerrelations

Principle1 Goal8 Principles3and6

Developmentofmanagementsystemsthatpromoteaconstructiveandcollaborativeculture,withself-responsibilityandcontinuouslearning

Principles1,6and10

Objectives5,8and17

Principles1,5and6

RenewalofEIFguaranteeagreementsformicrocreditsandinnovativecompanies

Principle1Objectives1,5,8,

9and10Principles1and3

Accompanimentto425entrepreneurstolaunchtheirmicroenterprise

Principle1Objectives1,5,8,

9and10Principles1,2and

3ImplementGreenMIFID Principles1to10 Allobjectives Principles3and6Developmentofmulti-channelcustomerrelations,paymentmethodsanddirectmarketing

Principle9Objectives8,9and

12Principle3

ContinuetoexpandthecoverageofSociallyResponsibleInvestment

Alltheprinciples AllobjectivesAllthe

BeginningSupportforthecreationofcompaniesandconsolidationofexistingonesthroughMONDRAGÓN

Principles1,3and6

Objectives5,8,9,10and16

Principles1and4

ImplementBIDEANandensureitssustainabilityPrinciples7,8and

9Objectives8,9and

12Principles4and5

Reviewofmarketabuseprocedures Principle10 Goal16 Principles5and6

Financialeducationplan. Principle1Objectives4,12

and17Principles1,3and

4

FormationoftheDataProtectionCommittee Principle1Objectives8,9,12

and16Allthe

Beginning

SustainableDevelopmentGoals(SDGs):OngoingactivitiesThemain actions that LABORAL Kutxa is developing andwhich are explained in this ReportlinkedtotheaspectsconsideredasprioritiesoftheSustainableDevelopmentGoals(SDGs)andtheUnitedNations2030Agendaaresummarisedbelow:• Obj. 5 Gender equality : Prepared the IV LK Equality Plan; Equality objectives of the

StrategicPlan.• Obj.8Decentworkandeconomicgrowth :Gaztenpresa;Recruitment tableandsupplier

managementapplication;ZainduzHealthPlan,FinancialEducation;Sustainablemobility.• Obj. 9 Industry, innovation and infrastructure : Different improvements in digitalisation;

PDSI-2;Dataprotectioncommittee.• Obj. 10 Reduction of inequalities: Green MiFID; Review of market abuse control

procedures;SociallyResponsibleInvestment.• Obj.17AlliancestoachievetheObjectives:Brandpositioning;RenewaloftheEIFInnovFin

andEaSISocialagreements;UNResponsibleBankingPrinciples.

MANAGEMENT OF STAKEHOLDERS

Index

36

3.1.Ourrelationshipwithclients

3.1.1.Managementapproach

ThepolicyoftheLABORALKutxaGroupinitsrelationshipwithcustomersandresponsibilityforproductshasbeenincludedinpreviousreportsandintheresponsiblemanagementapproach.The importancegiven to thisarea is reflected in theexistenceofaDepartmentwhosebasicfunction is the application of this approach. The clientele is segmented between Privateclients, Self-employed clients, Business clients and Company clients. There is a specificmanagement process for each of these segments and a commercial offer tailored to theirneedsandexpectations.

3.1.2.Maincustomerfigures

The following table shows the evolution of the Group's clientele. The database is updatedannually,whichmeansthatinactivecustomersareremovedfromthedatabase

GeographicAreaNumberofclients

%2018 2019

Araba 141,839 136,658 12.17Aragon,CataloniaandLaRioja 72,149 72,176 6.43AsturiasandCantabria 32,623 33,041 2.94Bizkaia 350,029 348,540 31.05CastilleandLeon 125,232 125,397 11.17Gipuzkoa 280,056 260,435 23.20Madrid 18,319 18,968 1.69Navarra 119,990 119,848 10.68Headquarters 7,568 7,585 0.68TotalKutxaLABOR 1,147,805 1,122,648 100%PrivateCustomers(%) 87.47% 87.14%AutonomousCustomers(%) 8.3% 8.5%BusinessCustomers(%) 3.27% 3.41%BusinessCustomers(%) 0.87% 0.95%

3.1.3.Dialoguewiththeclientele

As in previous years, in 2019 an effort has been made to maintain a dialogue with thecustomers in order to meet expectations and demands regarding financial and insuranceproductsinordertoundertakenewimprovementactions.Inaddition,thesemechanismsareintegratedintoacomprehensivequalityprocess,thepermanentobjectiveofwhichisthatthequalityofcustomerserviceandcare,inthevariousrelationshipchannels,bemaintainedasadifferentialadvantageovercompetitors.

Thefollowingdiagramdescribesthenumerouscommunicationmechanismsinplace:

Index

37

Theresultscomparedtootherbankingandinsurancecompetitorsarefavourable.Someofthemostrepresentativeareincludedinthefollowingtables.

Satisfactionofbankingcustomers(score1to10) 2018 2019Satisfactionamongpreferentialcustomers 7.24 7.21Recommendationlevel 6.97 7.01Source:TrackingstudyoftheimageandbrandofLABORALKutxa.TheareaistheBasqueCountryandNavarre.IkerfelComparativebenchmarkingwiththebankingsector.Potentialcustomers(score1to10)

2018Differentialwithsector.2018

2019Differentialwithsector.2019

SectoralObjectiveQualityStudy(EQUOS-Stiga) 7.59 +0.39 7.75 + 0.39Satisfactionofbankingcustomers(BMKSFIN–Stiga) 7.83 +0.38 7.73 + 0.25

LagunAro.BenchmarkingintheinsurancesectorSatisfactionofinsurancebrokers(score1to10)

2018 2019

Overallsatisfactionwiththecompany 8.1 7.4InsuranceMarket 8.1 7.3Source:ICEAcontinuoussatisfactionstudy.

LagunAroisthesecondentityinthestudyinnetrecommendationsinreportswithanNPSof26.5.

Based on these dialogue mechanisms and the expectations detected in the customers,improvementactionsarecarriedouttoincreasetheirsatisfactionwiththeservicereceived.LABORAL Kutxa Customer Service has responded since 1994 to the queries, complaints andclaimsthatclientsmake.Theactivity intheServicehasdecreasedby28.05%withrespecttothe previous year, mainly due to the lower number of complaints and claims related tomortgageloanformalisationexpensesandalsotothedecreaseinthecasesrelatedtobankingactivity.

38

TheresultsofthisServiceare:CustomerService 2018 2019Numberofcasesopened 9,121 6,563Written:brochure/letter 7,456 5,228Internet/Telephone 1,240 972Publicbodies:OMIC/RegionalGovernments 336 341Others 89 22

Following preparation of the 2018 CSR Report, as has become customary in recent years, acommunicationcampaignwaslaunchedinwhichtheReport'sExecutiveSummarywassenttothemostcloselylinkedcustomers.Alongwiththisinformation,aquestionnairewasattached,by means of which those who wanted could contribute their opinion on Corporate SocialResponsibility. Four differentmailingswere sent: to company customers (6,755 customers),self-employed and micro-business customers (82,409), private individual customers fromPersonalBanking(14,684)andtoKIDEprivatecustomers(156,437).Intotal260,285customersofwhich30%readthemail.Intotaltherewere668responses.Themainresultsandconclusionsofthisdialogueprocessaredetailedbelow:WhenaskediftheircompanypreparesaCSRreport,23%currentlyprepareaCSRreport,27%plantodosoand50%sayitisnotamongtheirpriorities.

QuestionnaireNo.ofmailings

No.ofreplies

Assessment

2019 2019 2018 2019Companycustomers 6,755 43 7.4 7.8Self-employedandmicro-businesses 82,409 417 7.6 7.6PrivateindividualsfromPersonalBanking 14,684 45 8.7 8.7KIDEprivatecustomers 156,437 163 7.9 8.2Total 260,285 668 7.9 8,075

Whencompanyclientswereasked if theyproducedaCSRreport,23%currentlydidso,27%plannedtodosoand50%saiditwasnotamongtheirpriorities.

3.1.4.Responsiblemanagementwithcustomersandexcellenceinqualityofservice

Responsiblemanagementwith the LABORAL Kutxa customers focusesmainly on the sale ofcomplexsavingsproducts.Excellence inthequalityofserviceandcontactwiththecustomerareaspectsidentifiedasbeingofhighestimportanceinourmaterialitymatrix.ü In2019,financinghasbeenanareaofintensework.Specifically,inMay2019westarted

the accreditation process in the Law on Real Estate Credit Contracts (LCCI) and 1,589people have obtained the APT category required by the Bank of Spain (94% of thoseaffected).

ü In the same line of responsible management towards clients, in order to facilitatebusiness financing, a particularly relevant line of action is the collaboration with theEuropean Investment Fund (EIF) of the European Investment Bank (EIB). During 2019,three agreements have been in force whereby the EIF guarantees a part of the riskassumed by LABORAL Kutxa, so that the financing can be carried out under morefavourable price conditions and guarantees for those companies included in theagreements:

Index

39

o European Union Program for Employment and Social Innovation-EaSI, for jobcreation viamicrocredits up to€25,000, aimedat entrepreneurs. Signed in 2015foranamountof€75MandrenewedinMarch2018.

o InnovFin SME Guarantee Facility to facilitate innovation in SMEs and small andmedium capitalisation companies. Signed in 2016 for an amount of €100M andrenewedinJuly2018.

o Specific EaSI programme for the promotion of social economy companies.RenewedinOctober2019foranother2andahalfyears,andanamountof€50M,withtheamountoftheoperationsbeingabletoreachupto€500,000.

ü Coveringtheareasofcustomerrelationsmanagement(transparency,kindness,inquiryoftheneedsandactivelistening,clarityintheexplanations,...)andthatrelatedtocustomerserviceinaspectsofquality,personalservice,absenceoferrors,etc.,themostimportantinitiative is the “Integrated Quality Management Process”. A process that seeksexcellence in compliance with the measurement parameters of the external (towardscustomers)andinternal(fromtheCentralServicestoitsinternalcustomers,theBranches)service.

ü A key element in the quality of advice and relations is the speed of adaptation to theunstoppable digital transformation. An adequate user experience in a digital bankingworld requires a personalised, but omni-channel relationship between manager andclient, an objective that LABORAL Kutxa seeks with the deployment of theOnenak 4.0projectinitsoffices.

Inrelationtotransparencyandclarityofinformationü LABORALKutxahasbeenamemberofAutocontrolsince29July2008,anassociationwith

theobjectiveof contributing toadvertisingbeingaparticularlyuseful instrument in theeconomic process, ensuring respect for advertising ethics and the rights of consumers,withtheexclusionofthedefenceofpersonalinterests.In2019LABORALKutxamadethefollowingenquiriestoAutocontrol:

Preliminaryadvice 2018 2019Positive 319 370Withmodifications 52 126Negative 1 0TOTAL 372 496Professionalethicsconsultations 69 65

ü All the information onmain products/services (Savings, cards,Mortgages, Loans, Plans,Funds, Insurance,Services,Onlinebanking) ,aswellassocialnetworks (Blog,Facebook,Twitter,YouTube,etc.) isavailable fromthehomepageofourwebsiteLaborkutxa.com,aswellasontheLagunArowebsite.

Another area related to responsible management with customers is the problem of over-indebtedness.Itsimportanceaccordingtothematerialitymatrixhasbeenreduced,inparallelwith the improvement of the economic situation and the greater normalisation ofunemploymentrates.Givenitshighimpactonthepeopleaffected,butalsoinordertoensuretransparencyinanareathathasgeneratedasignificantsocialandmediaimpact,ouractionsin

40

relation to customerswithpaymentdifficulties,especiallyon theirmortgages, aredescribedbelow.Within the policy of personalised negotiation in cases where customers have difficulties inpayingfortheirhomes,thefirststepistoofferthecustomer(iftheymeettherequirements)theCodeofGoodPracticeswhichLABORALKutxa joined in2012,providingasecondchancemechanism,areductioninthefinancialburdenandothermeasures.Codeofgoodpractice 2018 2019

Applications 56 67Denied 44 53Approved 12 14

TheconditionssetoutinthisDecreehavebeenappliedtothe14approvedoperations,whichalsoincludetaxbenefits.Ofthese,12havebeensigned.

Therearealso31homesassigned,outofthe35available,totheSocialHousingFund.

The operations to which this Code does not apply, because they do not meet any of therequirements laid down by law, have followed the procedures and protocols of LABORALKutxa.These, inaddition to restructuringof thedebts, also includedation inpaymentasanalternativeforsharingthelossofvalueofthemortgagedproperty,aswellasagreementsfortheformerowner'srighttoremain,despitethejudicialawardingofthepropertytoLABORALKutxa.Notwithstanding thishigh levelofagreements, theBankhasbeenawarded39homes (26ofthemnon-habitual),insomecasesapplyingdationinpaymentagreementsandinothersasaresultofjudicialenforcement.Evenafterthecourtrulinginthelattercases,itmaybepossibleto apply for a stay of executionon the disposal of the former home. In 1 case, the right toremain in thepropertywas recognised in thecaseofapersonwhoceased tobe theowneraftertheenforcement.

FloorclausesIn January 2017, an extrajudicial procedurewas regulated to resolve claims related to floorclauses in mortgage contracts for home purchases. Based on consumer protection, theseclausesweredeclaredabusive,andthereforevoid,notinthemselves,butbecauseofthelackof transparency intheir inclusion incontracts.Thus,channelswereestablished,regulatedbyRDL 1/2017, to make it easier for customers to reach out-of-court settlements in order toeliminatetheeffectoftheseclauses.LABORAL Kutxa informed its customers of a voluntary claim systemprior to instituting legalproceedings.CustomerswhohavenotwantedtousethisadditionalsystemhavebeenabletogototheSAC,althoughthenumberhasbeensmall.Thecumulativevolumesofclaimsreceivedarethefollowing:Extrajudicialclaimsforfloorclauses.RDL1/2017 AsatDec2018 AsatDec2019

- Rejected(RDLnotapplicable) 1,008 1,089- Accepted 449 465- Denied 3,337 3,427- Beinghandled 25 24

TOTALincoming 4,819 5,005

41

ThemostfrequentreasonfordenyingtheclaimisthattheEntityconsidersittobeproventhatin thisparticularcase the transparencyrequirementsweremet.Ascanbeseen, in2019thenumberofclaimsreceivedwasmuchlowerthantheprevioustwoyears.

LABORALKutxaalsohasaregularpracticeofconsultingitscustomersonthedifferentaspectsofitsactivity.Withintheusualquestionnairetherearetwoquestionsdirectlyrelatedtotheirperception of LABORAL Kutxa as a socially responsible financial institution. In 2019, 2,400surveyswereconductedasking:whichorganisationsdoyouthinkstandout inthefieldof…?(Multipleandspontaneousanswers).Theresultwas:• With honest and responsible management, which can be trusted: 20% of respondents

nameLABORALKutxa.• Nationalentity,committedtosocietyandlocaldevelopment:35%.

CustomerService 2018 2019Totalcases 9,121 6,563NatureofthecasesComplaints 7,506 5,073Claims 1,286 1,319Consultations 5 13Suggestions 9 12Lettersofcongratulations/gratitude - 2Sundrypetitions,others 315 144

3.1.5.Protectionofprivacyandthesecurityofdataandoperations.

Personaldata.In compliance with Regulation 2016/679, dated 27 April 2016, regarding the protection ofnaturalpersons in relation to theprocessingofpersonaldataandwithOrganic Law3/2018,dated5December,ontheProtectionofPersonalData,LABORKutxamustapplyappropriatetechnicalandorganisationalmeasuresinordertoguaranteeandbeabletodemonstratethattheprocessingisinaccordancewithsuchregulations.To this end, LABORAL Kutxa has approved a "Personal Data Protection Manual" and hasappointed a Data Protection Officer in order to comply with the following data protectionprinciples,byvirtueofwhichpersonaldatamustbe:

a) treated in a lawful, honest and transparent manner in relation to the data subject(“lawfulness,honestyandtransparency”)

b) collected for specific, explicit and legitimate purposes, and not subsequentlyprocessedinamannerincompatiblewithsuchpurposes("limitationofpurpose")

c) appropriate,relevantandlimitedtowhat isnecessary inrelationtothepurposesforwhichtheyareprocessed("dataminimisation")

d) accurateand,wherenecessary,updated("accuracy")e) held in a form that permits identification of the data subjects for no longer than is

necessaryforthepurposesofprocessingthepersonaldata(“limitationofthestorageperiod”)

f) processed in a way that ensures adequate security of personal data, includingprotection against unauthorised or unlawful processing and accidental loss,destruction or damage, through the use of appropriate technical or organisationalmeasures(“integrityandconfidentiality”)

Index

42

For the implementation and continuous improvement of the obligations described above,LABORALKutxamustcarryoutabiannualexternalaudit.

ComprehensiveSecurityMasterPlan(PDSI)In 2019,we continuedandaddressednew security initiatives, included in theplan thatwasapprovedin2016.Duringtheyear,theEntity increaseditssecuritycapabilities intheareaofGovernance (dissemination of the Security Standards Body, continuous training activities incybersecurity,ongoingdevelopments in regulatorycompliance,etc.),Protection (developingits third partymanagementmodel, improving themanagement of privilegeduser identities,updatingguidestoimprovethesecuredevelopmentofsoftware,etc.),surveillance(SOC/SIEMservice,cyber-intelligence,hackingexercises,etc.)andResilience(updatingincidentresponseprocedures,implementingaBusinessContinuityManagementSystem,etc.)Inaddition,attheendoftheyear,LABORALKutxacarriedoutanewsecurityassessment inorder to evaluate its level of maturity based on a reference framework, with the aim ofidentifying its strengthsandweaknesses, comparing itwithother similarentitiesandhavingsufficient information to make decisions, so as to be able to define a new comprehensivesecurityplanforthenext3years,inlinewiththeentity'sstrategy.

3.1.6.Responsibleproductsandservices

Socialorsustainabilitycriteriaincreditpolicyarepresentinthefollowingproducts:§ Micro-loans:SeetheinformationregardingGaztenpresa.In2019theagreementwithEIF

(theEuropean InvestmentFund,anagencyof theEIB -European InvestmentBank)wasrenewed with the EaSI programme - European Programme for Employment and SocialInnovation.With the support of this European programme, the conditions required forbothentrepreneursandmicro-enterprisesarefurtherenhancedbyincreasingtheiraccesstomicro-credits.

§ Loans for social economy companies: Through the EASI line, providing loans and creditaccountsofupto€500,000tocompanieswithaturnoveroflessthan€30million.Intotal,LABORALKutxawillallocate50million.

§ Secured Cards: Cards that have favourable conditions such as Accident Insurance withLagunAroInsurance.FortheGoldcard,TravelassistancewithCaser.

§ Personalloans:Thereare0%APRloansforspecialsituationsandsalaryadvances.Thereare also loans aimed at young people to finance studies (material, tuition, etc.), forexample, in 2019, agreements with: AEK, University of Navarra, Public University ofNavarra,MONDRAGONUnib.andMONDRAGONLingua.

§ Agreements and Arrangements: with Erkide (financial advantages for its associatecooperative members), with FCTC (Catalan Federation of Workers' Cooperatives), withCEPESforthefinancingofcapitalcontributionsandfinancialadvantagesforcooperativemembers.

§ AgreementsandarrangementswithdifferentcompaniessuchasSEAEmpresasAlavesas,ELKARGIMutualGuaranteeSociety,LUZAROFinancialCreditEstablishmentandSENDOTU.

Index

43

AgreementsandpartnershipswithPublicAuthoritiesAshasbeenexplainedthroughoutthisReport,LABORALKutxaactivelyworkswiththevariousPublic Authorities to open up lines of financing under preferential conditions forentrepreneurs,self-employedpeopleandcompanies,orfortherefurbishmentofhomes,orbyprovidingfinancetoSMEsunderbetterconditionsthroughagreementsorlinesofcreditwithvariousMutualGuaranteeSocieties(MGS).Someofthemcanbeseenonourwebsite:• Forcompanies:https://www.laboralkutxa.com/es/empresas/financiacion/convenios• Businessandprofessionals:https://www.laboralkutxa.com/es/pro-negocios-y-

profesionales/financiacion/convenios• Socialeconomycompanies:

https://www.laboralkutxa.com/es/empresas/financiacion/convenios/easi-economia-social

• Subsidies: https://www.laboralkutxa.com/es/pro-negocios-y-profesionales/apoyos-para-tu-negocio/convenios

AffinitycardsLABORALKutxaassignsaportionoftheincomeobtainedfromtheusemadebycustomersofAffinitycards for theirpurchases, to:MedicusMundi,CaritasandtheConfederationofIkastolas.Theamountoftheyearlyassignmentis:- Foreachcardholderattheendoftheyear:2.5euro/year- 1euro/yearpercardbeneficiary.- Forpurchaseinvoices:20%oftheprofitsobtained.

AmountdonatedforAFINITYCards 2018 2019Totalinvoices(euros) 45,908,906 46,256,939Channelledsocialbenefit(euros) 53,117 52,670

• MedicusMundi 23,743 23,494• Caritas 3,324 3,311• Ikastolak 26,050 25,864

DonationsforinternationalcooperationprojectsThe LABORALKutxa Super55Passbookhas apoints*programme, for incomeandbalances,that customers canexchange forgiftsordonations forprojects indevelopingcountries.Theprojectsandamountsassignedarethefollowing:

Amountdonatedbycustomers(euros)perproject 2018 2019Zaporeak. Project: "Help in the field of nutrition". Cooking and hospitality school in theEthiopiantownofWukroandthefeedingofrefugeesontheGreekislandofChios. 2,606 3,572

MundukideFundazioa.Project:“Openthetap.Mozambiqueneedsmotorisedpumpsforirrigation.” 2,530 4,436

Mundubat."SupportfortherighttohealthoftheSaharawipeople." 3,619 -Savethechildren.Project:“Investineducationtofightchildpoverty” 5,564 -Alboan. Project: "Against discrimination and exclusion in India". Implementation ofprojectsthatpromotethedefenceofrightsandaccesstoeducationfortheDalitpeople. - 3,283

Medicus Mundi. Project: "Promoting sexual and reproductive rights." Supportprogrammes, inPeruandtheD.R.oftheCongo,thatpromotegenuineequalitybetweenmenandwomen,sexeducationandthecommitmentofpublicinstitutionstotheserights.

- 2,543

Totalamount(withVATincluded)donated 14,319 13,834

44

NGOinsuranceLABORALKutxahas an Insurance aimedexclusively atNGOs that provides cover and specialconditionstotheseorganisationsviatwopolicies:

§ Accident policy. It covers volunteers for accidents occurring during the exercise of theNGO'sownactivities,includingtherisk"initinere"(necessarytravel).

§ Civil liabilitypolicy. It covers claims fordamages to thirdpartiesor toproperty thatdoesnot belong to the organisation, resulting from the usual activities carried out by thevolunteers.In2019,theinsurancecovered46associations,with725insuredparties.

Supportforthecreationofacompanycompanies.MondragonGroupApartfromfinancingthroughcreditinvestment,LABORALKutxasupportsthedevelopmentofMondragoncooperativesthroughthecontributionoffundsfromtheirprofits,withtheaimofcreatingnewjobsandconsolidatingexistingones.Thesecontributionsaremadeto:§ MONDRAGÓN Inversiones, which is in charge of partially financing Cooperative

developmentprojects,bothinSpainandabroad.§ MONDRAGONS.COOP.,CorporateGroupCentre.§ MONDRAGONFoundation,inorderto,amongotherdestinations,financethedevelopment

ofthe15researchcentrespromotedbytheCooperatives.

§ MondragonGroupContributionsThousandsofEuros 2018 2019ContributiontoMONDRAGONInvestments 6,014 6,639ContributiontoMONDRAGONS.Coop. 4,338 4,429ContributiontoMONDRAGONFoundation 9,708 10,718Totalcontributions 20,060 21,786InvestmentinMONDRAGONCompanies(1) 702,020 608,000(1) Theinvestmentincludedis:Current,StructuralandFirm.

SociallyresponsibleinvestmentSociallyresponsible investment(SRI) isonethatappliesEnvironmental,Social andcorporateGovernancecriteria(ESGcriteria)whenselectinginvestmentorfinancingprojects.2019wasayear inwhichSRIgainedgreatstrengthwithin the financial sector,withnumerous initiativesandproposalsformakingprogress,bothfromtheindustryandfromregulators.

LABORALKutxahasbeenworkinginthisfieldforanumberofyears,withexclusioncriteriainplacetopreventinvestmentorfundingofactivitiesthatarecontrarytoourprinciples.Theseexclusioncriteriaaffectaspectssuchasgambling,pornography,tobacco,weapons,coal…

As part of the Strategic Plan developed in 2019 for 2020-2022, an objective has beenestablished to apply SRI criteria to 100%of the assetsmanagedby the Fund/PlanManager,Treasuryandintheconcessionofrisks.Inthesameway,theaimistoadvanceanddeepenthecriteriaapplied,movingfromthecurrentexclusioncriteriatoothermoreadvancedconcepts.

In 2019, the responsible Investment Fund, LABORAL Kutxa Konpromiso, FI, wasmaintained,withanethicalandcharitableapproach,sinceitsinvestmentsapplycontrolsbymeasuringtheapplication of environmental, social and good corporate governance criteria. It is charitablebecause LABORAL Kutxa channels a significant part of the management fee it charges itscustomerstothreeNGOsfromamongwhichthecustomercanchoose.

45

Contributions 2018 2019MEDICOSMUNDI €11,866.33 18,533.45MUNDUKIDE €8,883.89 14,490.74CARITAS €8,566.60 €11,130.57TOTAL €29,316.82 €44,154.77

Meanwhile, in theareaof corporate investment,both in thatmanagedby theTreasuryandCapital Markets Department and in that administered by Pension and Investment FundManagers,weareincorporatingnon-financialinformationintotheprocessesofselectingassetissuersinwhichtoinvest.

Thirdly,inrelationtocreditinvestmentincompanies,since2017therehasbeenaprocedurefor requiring additional non-financial information fromcompanies identified ashaving socialrisks,thusextendingthesystempreviouslyappliedtopotentiallyproblematiccompaniesfroman environmental point of view. In 2018 it was decided to reduce the financing to 1 clientcompanythatworksinthefieldofonlinegambling.

EnvironmentallyresponsibleproductsandservicesLABORALKutxa,asafinancialentityfocusedonaspecificgeographicalarea,doesnotforeseesignificantimpactsfortheorganisation,eitherrisksoropportunities,intheshorttermduetoclimatechange.Also,inaccordancewithitsstrategyofcontributingtoabetterenvironment,ithasproductsandservicestohelpslowdownclimatechange.

ElectroniccustomerdeliveryserviceTheLABORALKutxaPosta-mailforsendingstatementsandreceiptstocustomersbye-mailcontinuestogrowsignificantly,helpingtoreducepaperconsumption.Theannualobjectiveisalwaystoincreasethenumberofusersfromthepreviousyearand,tothisend,theNetworkconstantlyexplainsthisservice.ThesectiononOurrelationshipwiththeenvironmentinthisReportshowsthetrendinthenumberand%ofusers.

46

CreditsforrenewableenergiesLABORALKutxaisafinancialentityanditsactivityhasnodirectorsignificantrelationshipwithclimatechange.Companyfinancingorgrantingofcreditsinthefieldofrenewableenergiesorsimilarhasevolvedasfollows:

2018 2019

Loansprovided(thousandsof€) 18,412 20,616

Accessibilitytofinancialservices

SmalltownsDuring the rationalisation process of the commercial network that has been carried out inrecentyearsinresponsetothenewchallengesofthefinancialsector,aneffortisbeingmadeto not financially exclude places with relatively small populations. The aim is to not ceaseservingthoseruralorsparselypopulatedareaswherewehavebeenpresentformanyyears.Therefore, the closure of offices is avoided, despite their reduced profitability, byimplementingmeasuressuchasopeningoncertaindaysoftheweek.

ArchitecturalbarriersInalltheinterventionprojectsundertakeninoffices,theobjectiveistoimproveaccessibility,intermsofbothaccessandinterior layout.Thiseliminatesexistingarchitecturalbarriersandcomplieswith the Accessibility Standard. As these actions have been taking place formanyyears, therearecurrentlyvery fewworkplaces thathaveaccessibilityproblems. In2019, therenovationworkstartedattheHondarribiaoffice.

Accessviainternetandmobilephone.Multi-channelbankingDevelopmentsin2019:• Improvement/expansionofPOSinformationinonlinebanking.• Newonlineportal fortheself-employed:Portalwithexclusiveservices forself-employed

workers,groupedunderasinglesection.• Insurance:

o Pre-priced home insurance: The client receives the price of the home insurance, byprovidingthepostaladdressandthesquaremetersregistered.

o Lagun Aro Postanet: Communications from Lagun Aro Insurance are listed in thecorrespondencesectionoftheOnlineBankingplatform.

o InsurancePostamail:Westartedsendinginsurancecommunicationsbyemail.o Home,businessandcarinsuranceclaimsportal:optiontomanageandtrackprogress

throughSMSmessages.Pushandonlinebanking.• Contractingofretirement/pensionplansinonlinebanking.• Newoptiontotemporarilyactivateanddeactivatethecards.• LKpay. Complete change of design and biometric access with fingerprint and facial

recognition.• Multi-channel signature:Possibilityof initiating thecontractingofa currentaccountata

branchanddeferringthesignatureoftheparticipantstootherbranchesortotheOnlineBankingplatform.

• Contact themanager: This operation allows you to contact themanager from the newOnlineBankingplatform,senddocumentstobesigned,makevideocallsorwrite.

47

• Change of signature system for private individuals and self-employed workers: The themethod for signing and accessing online banking has been changed due to PSD2.SignaturesarecompletedbymeansofanSMSsenttothecustomer'smobilephone.Also,inorder to gain access, every90days the customer is asked toenter the codes sentbySMS.

• Alerts.Noticeofaregularcontributiontoaplannotmadeduetolackofbalance.

FinancialcultureLABORAL Kutxa has continued to use social networks to create financial culture and boostknowledge regarding cooperativism. For example, 67 articles of general interest have beenincludedintheEntity'sblog(blog.LABORALkutxa.com),21ofwhichhavefocusedonhelpingtoimprovethecultureandknowledgeofcurrentfinancialaffairs.Inthisway,withasimpleandaccessible format, contents of financial culture are alternated with others more related tosocialresponsibility,suchas:ethicalfinances,insuranceobligations,taxnews,howtosetupacompany,etc.

During 2019, a Pro Newsletter has been sent four times (March, May, October andNovember). This is an information bulletin in electronic format for Pro and micro-businessclientsintheBasqueAutonomousCommunityandNavarre(morethan60,000).Thisactionispartof theConsultingPro freeguidanceservicetoassistclients in themanagementof theirbusiness, offering information of special interest (grants and subsidies, tax and legal news,salestechniques,etc.)fortheself-employedandotherprofessionals.ThisNewsletterhighlightssomeofthemostrelevantandrecentcontentoftheConsultingProwebsite, which offers content such as news, articles of interest, management tools, andinformationonevents,grantsandsubsidies...952querieshavebeenansweredbytheConsultingProservicein2019,madeeitherinperson,bytelephone(freehotline900100240),orthroughtheformavailableonthewebsite.Pro Seminars are training actions aimed at owners of SMEs and the self-employed. 16seminarswereheld in2019.Themainoneswereheld in thecapitalsof theBasqueCountryandNavarra.Thetopicscoveredwere:• April: What does it mean to be part of the Self-Employed Social Security Regime?

practicalmatters(239attendees/4sessions)• June:Grantsandsubsidiesfortheself-employedandsmallbusinesses(150attendees/

4sessions).• October: Enhance your company's communication with LinkedIn (138 attendees / 4

sessions).• December:Understandthetaxesyoupayandplanforthelatestincometaxrulings(126

attendees/4sessions).Another four seminarswereheld inPamplonaand the surroundingareawithNavarra tradeassociations,attendedby50people,bringingthetotalnumberofpeopleattendingseminarsin2019to853.

• Sakana Merchants Association - Etxarri Town Council: “How to ensure your onlinepresencewithoutdyingintheprocess”

• AssociationofCommerce,Hotel&CateringandServiceBusinessesfromthePamplonaarea-DesignThinkingWorkshop

• AnsoainMerchantsAssociation-Windowdressingforretailers

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A video is prepared on a monthly basis (in collaboration with AFI, International FinancialAnalysts) on the economic climate and the situation of the financial markets. This video isemailedtothePersonalandPremiumBankingcustomersanduploadedtoCLNet.

SupportforinternationalisationThroughout 2018, as part of LABORAL Kutxa's strategy of providing a global service to itscorporatecustomersandsupporting them in their search fornewmarkets, the internationalagreementssignedinrecentyearshavebeencontinuedwithaviewtoprovidingaservicetocustomers.TheagreementsweremainlysignedwithcooperativeorganisationsthatsharethephilosophyofLABORALKutxa:- NationalCooperativeBank(USA).- CréditCoopératif(France).- RaiffeisenBankInternational(Austria).- Banorte(Mexico).- BMCEBanqueMarocainedeCommerceextérieur

3.2.Ourrelationshipwiththeworkforce


In relationtothedirectactivityofLABORALKutxawithrespect to itsownworkers, the legalstatusofco-operativeisanambitiousdevelopmentoftheinspiringprinciplesoftheUniversalDeclarationofHumanRights,namelythatallhumanbeingsareequalindignityandinrights.Indeed, the co-operative method implies that the people who work in the company arepartners with equal rights and obligations, regardless of their knowledge or status in thehierarchy.Requiringallpeopletosharerightsandobligations,astheyallshareintherisksandrewardsofthebusiness.The concept of cooperation also extends to a commitment to our society. We are aCooperative Bank, guided by values and a philosophy that lead us to prioritise the commoninterest over the individual, tomake decisions in a participative and responsibleway and toreinvestourprofitsinsociety.

In theareaofpeople, themost significant risks linked tonon-compliancewithhuman rightsarerelatedtocorruptionandharassmentatwork.

• Withrespecttocorruption,seeCorporateGovernanceinSection1.• Withregardtoharassmentintheworkplace,itshouldbenotedthatthisisaproblem

witha lowquantitative incidence,butapotentiallyseriouseffectonthepeoplewhomightbeinvolvedinasituationofthiskind.Intheprocedures,thereisaProtocolforaction in cases of harassment at work, updated on 31/01/2015. The organisationincorporatesanInvestigationCommittee,whichhasaspecificcomplaintschannel.Thisprotocol includes situations of sexual and gender harassment (known as mobbing).There have been no complaints or enquiries in 2019 and 2018 concerning theaforementionedcomplaintschannel.

Thefinancialactivitywecarryout,thegeographicalscopeofouractivitiesandtheownershipstructure make it impossible for threats of violation of the provisions of the fundamentalconventionsoftheInternationalLabourOrganisationtooccur.

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LagunAroalsohasaprocedureformanagingconflict,harassmentandviolenceatwork.Therehavebeenno complaintsunder thisProcedure. TheProtocol against sexualharassmentandharassment based on sex in the workplace has been defined and approved within theframeworkofthe2ndEqualityPlan.

3.2.2.Mainmagnitudesoftheworkforce

Indicators concerning the people in the Group, both overall and according to differentcategories(gender,age,etc.)areavailableinsection4.Othermagnitudes.

3.2.3.Dialoguewiththeworkforce

Asacreditcooperative,therearemanychannelsfordialoguewithpeople:ü TheInternalCustomerSatisfactionSurvey(ESCI)wascarriedoutsothatthebusiness

network could assess the quality of the services provided by Central Services,makesuggestionsfor improvementandprovideanycommentsitdeemedappropriate.Thequestionnairewas sent to516peopleand therewasa response rateof61.8%.Asaresult of the quantitative and qualitative assessments obtained from the survey,numerousimprovementmeasureshavebeenimplemented.

ü Internal Suggestions System. From 2017 to the end of 2019, 1,038 employeecontributionswerereceived,ofwhich126(12.14%)wereimplemented.

ü Participationanddecision-makingcapacityinthebasicgoverningbodies:OrdinaryandExtraordinaryMeetingsandGoverningBoard,andinthepreparationofStrategicandManagementPlans.

ü Activity of the Social Council, with extensive negotiation and decision-makingcapacities.

ü An appearance by the Chairperson and the Director-General before everyone ingeographical groups, in order to share the assessment of the situation and themeasures being taken. Here, everybody can intervene by making comments orrequestingtheclarificationstheyconsiderappropriate.

ü Staff meeting system: "Giltza-Collaborators Meeting" between managers and theirteams.

CollectivenegotiationThe Cooperative Credit Union Collective Bargaining Agreement is the general framework ofreference, although, in 1996 LABORAL Kutxa adopted a standard for Company CollectiveBargaining,throughwhichaspecificCollectiveBargainingmodelwasestablished.

CollectivebargainingistheprocessbywhichtheemploymentandworkingconditionsofallthepeopleinLABORALKutxa(partnersandemployees)andthecompanyguaranteesthatensureitsapplicationareestablished.Theresultofthisprocessisthesetofrulesandproceduresthatregulatethegeneralconditionsofworkof100%ofthepeopleatLABORALKutxaandbindtheparties(theBoardofDirectorsandtheSocialCouncil)andallpersons.

Index

50

Inadditiontotheusualmattersconcerningcompensationforexpenses,schedules,etc.,whicharenegotiatedeachyear,agreementshavebeenreachedin2019onthefollowingmatters:

• Paidandunpaidleave.• Socialbenefits

Likeeveryyear,attheendoftheannualnegotiationprocess,bothpartiesexchangedthelistofpointstobenegotiatedin2020.

Seguros LagunAromaintains a close relationshipwith the Legal Representation ofWorkers(R.L.T.) with whom the Company Statutory Agreement is negotiated. In 2018, a newagreementwassignedforthefour-yearperiod2018-2021thatcovers100%oftheworkforce.

WithregardtothestaffofCajaLaboralBancasegurosS.L.U(CLBS,acompanywhichiswhollyownedandoperatedbyLABORALKutxa),allofwhomareemployees,theworkingconditionsaresetoutinitsowncollectiveagreement,whichwasrenewedin2016,andingenerallabourlegislation. This agreement,which governs the professional and labour aspects that directlyaffectthegroupofworkers,hasasignificantlevelofconvergencewiththelabourregulationsandproceduresofLABORALKutxa.

3.2.4.StaffDevelopment

Throughout this financial year, we at LABORAL Kutxa have implemented the followingfundamentalactionsinrelationtopeople:• InMay2019webegantheaccreditationprocessinaccordancewiththeRealEstateCredit

ContractLaw(LCCI)and1,589peopleobtainedtheAPTrequiredbytheBankofSpain(94%oftheaffectedstaff),onceagainprovingthecommitmentandknow-howofthepeopleatLABORALKutxa.

• Launch of BIDEAN, the new system for personal development, which seeks continuousimprovement through the reviewof a series of professional, business and digital skills, acultureofcontinuousfeedbackandthedefinitionofqualityIndividualDevelopmentPlans.BIDEANhasinitiatedaprocessofculturalchangeatLABORALKutxathatistransformingthewaypeopledevelop.Bearinginmindthatthisisthefirstimplementation,theassessmentisvery favourable in relation to thedevelopment interviewsheldand theagreed IndividualDevelopmentPlans,aswellaswithregardtotheirmonitoring.

• BetweenAprilandNovember,thefirsteditionoftheLKBusinessDataAnalyticsprogrammewas developedwith the end purpose of providing participantswith new knowledge andskillsinrelationtodata-basedmanagement.o We have worked on the "What", based on the Data Life Cycle, the "Hows", using

techniquesandtoolssuchasMicrostrategyandSAS,butwithaclearframeworkofthe"What for", strongly focused on generating business opportunitieswith and from thedataandforwhichwehavebroughtinhigh-levelexternalspeakers.

In parallel to the sessions on "discovery", concepts and tools, the knowledge acquiredthroughthegroupcompletionofthreerealprojectshasbeenputintopractice.Theprogrammehasbeenverypositivelyrated.Theacademicdirectionoftheprogrammeand the hybrid approach of external and internal speakers, as well as its applicability.Nevertheless,theeditionwewilllaunchin2020willincludesomeimprovements.

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51

• WehaveincorporatedasignificantpartofthestaffofCajaLaboralBancaseguros-CLBSintothecompany,andhaveimplementedthecorrespondingcorporateintegrationplan.

• Definition and launch of the ZAINDUZ programme, a Health Management Plan with apreventive approach, which seeks to raise awareness throughout the organisation andpromoteaculturalchange,providingmanagementtoolsandactionprotocols.

• Within the framework of Financial Education aimed at promoting a financial culture insociety, we have launched various initiatives to improve the understanding of financialproducts and to develop decision-making skills. Special mention should be made of thedesign of the Financial Education skills for first-year baccalaureate students and the"inclusivefinance"courseforthemostdisadvantagedgroups.

• Lastly,withinthedefinitionframeworkoftheEntity'sStrategicPlanfor2020-22,inwhichthe transformative role also encompasses the area of people management, we havedeveloped the "Culture and Talent" programme, which introduces new perspectivesbeyondthemanagementoftheprocessestraditionallyassignedtotherole.Thegoalistoprovide a differential positioning for customers and society through committed peopleandleaderswiththeskillsrequiredintoday'stransformationalenvironment.

Inallthecompaniesinthegroup,theorganisationofworkislimitedtonormalofficehours.

ContinuousEducationProgrammesTrainingactivityatLABORALKutxain2019consistedof456coursesand168,298hours(81.38perperson).Ofthese,88,185hours(52%)wereforwomenand80,113hours(48%)wereformen, compared to 54/46% in 2018. The average score for the training courses in 2019was7.94,whilein2018itwas7.96.

FollowingthepublicationinMarchofLaw5/2019,governingrealestatecreditcontracts,andsubsequentlyinApriloftheRoyalDecreeandMinisterialOrderspecifyingtheknowledgeandskillsrequiredbytheregulatoryauthorities,inJulytheprocessbeganfortheaccreditationofpeoplewho design, inform and commercialise real estate credit products. This is a 50-hourtrainingprocessthatconcludeswithanassessmenttest(exam).

The accreditation of the people affected by this regulation has been carried out on 4occasions: July,October,November andDecember. At the endof the year,we reachedourgoaland99.6%ofthepeoplewhoappliedfortheaccreditationobtainedit.

Furthermore,thegenerallinesfollowedbytrainingmanagementduring2019havebeen:• MiFIDII:Continuoustrainingrequiredbyregulatorsconsistingof30hoursoftraining

perperson.• Insurance, including the training provided for in the Management Plan and that

included in the InsuranceTxokowhichcounts towardsmeeting the triennial traininghoursrequiredbytheInsuranceMediationAct.

• ThetrainingincludedinBIDEAN-PerformanceManagement.• Digitalisation, with a specific programme developedwithMondragon Unibertsitatea

aimedatallADNstaffandconsistingof3modulesThefirstmoduleistheonecarriedoutin2019.Therestwilltakeplaceduring2020.

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Newcommercialmodel-Onenak4.0In 2019, the new model of commercial excellence was deployed throughout the entirecommercial network. Onenak 4.0 aims to expand commercial capacity on the network,evolving the roles and skills of individuals and commercial teams, and empowering them intheiractivity. Inaddition, it seeks toguide theprioritiesof thecommercialnetwork towardsmanagementandoperationsofgreateraddedvalueandtoadaptourrelationalbankingmodeltothedigitalworldandthenewcompetitiveenvironment.TheobjectivesofOnenak4.0canbeoutlinedinfivemaingoals:

1. Totakeadvantageoftheopportunitiesthatdigitalisationofferstobetterunderstandthecustomers'needs.

2. Toredefinetherolesofpeopleandchannelsincustomerrelations.3. Togearthecommercialstrategymoretowardscustomerloyalty.4. Toadaptour relationalbankingmodel todigitalisationand increase theefficiencyof

theplanningaspect.5. Tooptimisemanagementsystemsinordertodrivetransformationandpreparepeople

intheorganisationbydevelopingtheirskillsandcompetencessotheycanrespondtonewchallenges.

Performancemanagement-BideanIn 2019, a new system, called BIDEAN, was launched to manage personal development. Itconsists of a system focused on people and their development, encouraging them to beadaptable,withinitiativeandcapableofconstantlearning,aswellasacultureofself-demand,co-responsibility and collaborative work. It is the evolution of the old PerformanceManagement System (SGD), aligned with business strategy, organisational culture andtransformation.Thissystemhasbeendesignedbasedonthefollowingpillars:• Itisasystemgearedtowardspeopleandtheirdevelopment,• It focusesonongoingconversationsbetweenmanagementandemployees,encouraging

continuousfeedback,• Itpivotsonstrengthsandisfuture-oriented,• Itembodiesacontinuouslearningandself-learningdynamic,• It is agile, simple and flexible, geared towards self-management and co-responsibility,

whichmeansthatwearethemainactorsandresponsibleforourowndevelopment.A systemthatwillmake itpossible to identifyorganisationalpotential, creatinga contextofempowerment and development that contributes to the fulfilment of LABORAL Kutxa'sstrategyandtopeople'ssatisfactionandcommitment.Theimplementationofthisnewsystementailsthedevelopmentofnewknowledgeandskills,and for this purpose, we have designed a specific training plan, which has been deployedacrosstheorganisationthroughouttheyear.

67% of people at LABORAL Kutxa and CLBS have had a development interview with theirmanagerin2019.ThesystemwillbeimplementedinLagunAroin2020.

Traininginanti-corruptionprocedures.All manuals and procedures relating to anti-corruption issues and the code of conduct arepostedontheintranetandavailableto100%ofstaff.

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Similarly, in 2016, the training course "Systems and policies for the prevention of criminalbehaviour"waslaunchedandithasbeencompletedby80.9%ofthestaff.

BasqueThe process of preparing the Basque Strategic Plan, approved by the Board of Directors inJanuary2020,consistedofthefollowingstages:

ü Listeningstage.ü Creationstage.ü Sharingstage.ü Communicationstage.

The people who make up the Language Commission, the Basque Language TechnicalCommission and the process Coordination Group have all participated throughout thedifferentstages. Inaddition,110membersand910clientshavegiventheirhelpandopinionthroughtwosurveys.Therefore,ithasbeenahighlyparticipatoryandcollaborativeprocess.Theapproveddocumentcontains2areasofworkand5mainchallenges:• SERVICELANGUAGE

o 1. To guarantee and encourage the use of the Basque language in the service tocustomers.

o 2.ToshowthattheEntityiscommittedtotheBasquelanguage.• WORKLANGUAGE

o 3.TointegrateBasqueintothedynamicsoftheorganisation.o 4.Toincreasetheworkers'knowledgeoftheBasquelanguage.o 5.ToincreasetheinternaluseofBasque.

Inaddition,withaviewtothecomingyears,thefollowingVISIONhasbeenestablishedwithregard todeveloping theBasque language in our Entity: "May LABORALKutxabe aBasque-speakingentityofreferenceintheBasqueCountry".

3.2.5.Diversityandequalopportunities

LABORAL Kutxa has been and continues to be a pioneering organisation and a point ofreference in thedesign and implementationof activepolicies in favourof equality betweenwomenandmen;anexampleofitscommitmenttocooperativevaluesandthepromotionofequalopportunitiesforall.Wehavebeen committed to equality formore than twodecades. In 1997weobtained thedistinctionofEmakundeCollaboratingEntity,theBasqueInstituteforWomen,thusbecomingthefirstfinancialentitytoachievesuchrecognition.Over all these years, in addition to creating a stable structure for thepromotionof equalitypolicies and activating variouswork groups to address specific issues, we havemanaged toincorporate equality into the entity's strategy, making it a topic that is included in theManagement'sagenda,andwehavethenecessaryeconomicresourcestobeabletodevelopthepoliciesandactivitiesthathavebeendefinedintheEqualityPlansthatwehavedesignedandimplementedcontinuallyinrecentyears.Thankstotheworkcarriedout,anequalrepresentationinboththeGoverningBoardandtheSocialCouncilisnowareality.Asforprivateindividualsofficemanagers,53%intheNafarroanetworkand50%intheGipuzkoanetworkarewomen.

Index

54

However, we still have work to do and there are still great challenges to be faced. Ourambition is to achieve a greater presence of women in leadership positions and decision-making areas, and to move towards a shared leadership model that includes the genderperspective. A model in which the traits and behaviours most associated with femininityacquiregreaterrelevance,whethertheyareexercisedbywomenornot.Inshort,wewanttotakeadvantageofalltheexistingtalentintheEntity,withoutgenderbeinganobstacle.

Inordertoachievethisgoal,wehavedevelopedvariousinitiativesthroughout2019.• Firstly,whenthetermoftheIIIEqualityPlancametoanendlastyear,weworkedonthe

designoftheIVPlanfortheEqualityofWomenandMen.Forthis,westartedbyassessingthelevelofcomplianceandeffectivenessoftheIIIEqualityPlanandthenwecarriedoutthe diagnosticwork. In our approach,we considered both the quantitative informationavailable in the organisation and the qualitative information obtained through thequestionnaire distributed to all employees, in which we surveyed the perception thatpeople in the organisation had of the situation of equality at LABORAL Kutxa. Thisquestionnaire also contributed to raising people's awareness regarding equality issues.Basedontheresultsofthediagnosticworkcarriedoutandthecontributionsreceived,weproceededtodesigntheIVPlanforEquality(2020-2022).

• Secondly,withintheframeworkoftheprojectTowardsshared leadership,weorganisedthree new editions of the School of Empowerment aimed at the women of theOrganisation. This workshop seeks to contribute to the personal transformation of theparticipantsand isdesignedto improvewomen'sperceptionof their leadershipabilitiesandtogeneratecriticalawarenessofgenderrolesandstereotypes.ThesessionswereledbyMaru Sarasola, a leadership expert and coach. In total 40women tookpart and thelevelofsatisfactionwasveryhigh,soin2020weplantoorganisemoreeditions.

• Inaddition,we launchedtheawarenessworkshopformen. Inspringwecarriedoutthepilottestoftheworkshop,withtheinvolvementofLehendakariJuanJoséIbarretxe,andwithwhatwe learned, in autumnwe organised the first edition of theworkshop, alsodirectedbyMaruSarasola.Throughtheworkshopweaimedtoshowtheconnectionsthatexistbetweenthenewstyleofleadershipthatwearepromotingandgenderequality;tostressthevalueof"soft"skillsandgivethemmeaning(activelistening,empathy,capacitytobuildrelationshipsandconnections,etc.);andtoraiseawarenessofthedifference inopportunitiesthatexistbetweenwomenandmentoaccessmanagementpositionsintheentity. A total of 31 men took part in the workshops and rated the initiative veryfavourably,sowewillcontinuewiththeseawareness-raisingsessionsin2020.

• With regard to external dissemination and communication, we developed variousinitiativestopublicisetheworkwearedoinginthefieldofequality.Forexample,wetookpart intheconferenceorganisedbytheLabourInspectorateoftheBasqueAutonomousCommunity on Public control of gender-based wage discrimination; we explained theproject Towards shared leadership in the magazine TULankide; and we took part inEmakunde's BaiSarea network, together with other organisations identified asCollaboratingEntities,sharinggoodpracticesinequalityandlearningtogether.

In addition,we have continued to sponsor various initiatives to encourage the participationandempowermentofwomen,suchastheEuskadiFoundation,EmakumeMasterCup,Lilatón,etc.

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Wemust also highlight the fact that the Provincial Council of Gipuzkoa organised an awardaimed at local companies called Experiencias para la Igualdad de Mujeres y Hombres(Experiences for the Equality of Women and Men) for the first time, and that the workpresentedbyLABORALKutxawasawardedthefirstprizeattheendof2018.Themainpurposeof theaward is to recognise theactions carriedout in favourofequalityandco-responsiblework-lifebalance.WeareawareoftheinfluencethattheEntity'swayshaveontheregionandweareconvincedthatwecanbeadrivingforceforsocialtransformation.Therefore,inthecomingyearswewillcontinuetopromoteinitiativesinfavourofequalityanddiversity.

The Entity meets the requirements regarding diversity policies in compliance with theguidelines and regulations on the assessment of the suitability of the members of thegoverningbodyandtheholdersofkeyfunctions,consideringaspectssuchasacademicprofile,professional profile, gender and age in the Policy for the Selection of Candidates for theGoverningBoardandintheassessmentandsuitabilityprocesses.

Inaddition,asat31December2019,weexceededtheminimumpercentagerequiredfortheleast represented gender, since the gender parity achieved in 2017 in themembers of theGoverningBoard,thehighestgoverningbodyofthecooperative,wasmaintained.

Furthermore, in terms of selection and appointments and renewal of Senior Managementmembers, Caja Laboral has a Succession Plan for key positions, which identifies the criticalpositionsandtheprofessionalpathsandprofilesoforiginfortheirreplacement,establishingprofessionaldevelopmentplansforthepeopleidentifiedandsuccessionplansforeachofthepositions.Theidentificationofthekeypositionseligibleforasuccessionplan,aswellasofthepeople capable of becoming the future replacements for the current occupants of suchpositions, takes into account variables such as training, experience and knowledge,management track record, performancehistory, personal skills andabilities, commitment totheEntity,potential,etc.

Withregardtotheemploymentofdisabledstaff,LABORALKutxahas17peopleundertheseconditions and CLBS has two,while in Seguros Lagun Aro there are none. Also, compliancewiththeLISMIisachievedthroughamonetarydonationtoGUREAKINKLUSIOFUNDAZIOAforthe implementationof labour insertionactivitiesandthecreationofemployment forpeoplewithdisabilities.

Withregardtoanti-discriminationpoliciesthatdonotrefertogender,theCSRpolicyexpresslyreferstodiscriminationonthebasisofsexualorientationandthosearisingfrommaternityandthe assumption of family obligations. In the same way, the Criminal Compliance Policycontemplatesdiscriminationongroundscontrarytoconstitutionalrightsandfreedoms.

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3.2.6.Conciliation

ConciliationmeasuresThe InternalRegulationscontemplatemeasures for theConciliationofpersonalandworkinglife,asawaytoeasethedifficultiesofattendingtothestaff'speremptoryneedsofa familynaturebymeansofspecificpermitsand/orleavesofabsence.Theyrefertoaspectsofworkinghours,non-presentialwork,paidleaveandunpaidleave.

In 2019 these advantageswere extended bymaking the timetable at Central Servicesmoreflexible during the summer (continuous working day) and by expanding the possibilities oftakingpaidandunpaidleave.

FlexibleworkinghoursAll those who regularly work in the Central Services, both at Headquarters and in theTerritorialDirectorates,cantakeadvantageoftheflexibleschedulesystemintermsofarrivingandleaving.In2019,tosimplifythework-lifebalanceandtoencourageparentstotakejointresponsibility, the flexibility of this staff has been increased in terms of timetables. Thecompanyhasnowswitchedtoamonthlycalculationofhours,withadailyminimumof5:15hours of work and flexible entry and exit times. At the same time, members with childrenunder 12 years of age and/or people dependent on them due to age or illness may, uponrequestandapproval,extendtheentrytimeuntil9.30a.m.

Also,therearecurrentlynopoliciesinplaceregardingworkdisconnection.

3.2.7.RemunerationManagement

AtLABORALKutxa,remuneration isreceivedaccordingtoprofessionalcategory.Allpositionsareassignedacategoryandaremuneration(samejobtitle,samesalary,regardlessofwhethermale or female), with salary increases being the same for all staff. There are also nodifferencesaccordingtoage,exceptfortheeffectofthefiveyearsofseniority.

At LagunAro, evenwhen theworkersdonotown thecompany, they still participate in themanagementandthebusinessresults.Theydoso:

- throughauniversalIndividualVariableRemuneration,and- a Collective Variable Remuneration applicable to people with an indefinite contract

(close to 100% of theworkforce) voluntarily joining a company formed precisely toenabletheparticipationofworkersintheresultsofthecompany.

Intermsofpaylevels,thesalaryrangeissubstantiallynarrowerthanintherestofthebankingsector.LKstartingsalary 2018 2019Minimumsalaryuponentryforpartnersin€/no.hoursworkedMinimumsalaryuponentryforpartnersin€/Minimuminter-professionalsalary*

15.002.43%

15.182.01%

(*)Theminimuminter-professionalsalarycorrespondstothatapprovedbytheSpanishGovernmentforeachyear.Thereisnodifferencebysexintherangeofratiosbetweenthestandardstartingsalaryandthelocalminimumwage,therefore,thisdataisnotbrokendownbysex.

ForCLBStheratiosforbothsetsoffiguresisthesameasforLK.

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LagunArostartingsalary 2018 2019Minimumsalaryuponentryin€/no.hoursworkedMinimumsalaryuponentryin€/Minimuminter-professionalsalary

11.191.48

11.301.49

Asregardssalarydispersion,thereisaverynarrowrangeofsalaries,consistentwiththevalueofsolidarityinherentincooperatives,asshownbelow:

2018 2019

TotalpayforbestpaidpersonLK/averagetotalpayIncreaseinannualpayofthebestpaidpersonLK/averageannualpayinc.

3.611.34

3.60.82

TotalpayforbestpaidpersonCLBS/averagetotalpayIncreaseinannualpayofthebestpaidpersonCLBS/averageannualpayinc.

NdNd

2.020.59

Totalpayforbestpaidperson/averagetotalpayLagunAro 2.3 2.1IncreaseinannualpayofthebestpaidpersonLagunAro/averageannualpayinc. Nd 3.33*In LABORAL Kutxa, remuneration is received according to professional category (same job title, same salary, regardless ofwhetheritismaleorfemale),withsalaryincreasesbeingthesameforallstaff.

At the endof the financial year, the achievement attained, linked to the Individual VariableRemuneration (IVR), is reviewed,evaluatingthe financialyearalreadyconcludedwithregardto qualitative or quantitative objectives, as the case may be. This evaluation affects allmembers,with 523 of themhaving individual objectives in 2019 (513 in 2018) and the resthavingobjectivesassociatedwiththeirworkteam.

Theevolutionofwhatvariableremuneration(individual+collective)meansforstaffinrelationtototalremunerationisasfollows:

2018 2019VariableRemuneration/TotalRemuneration(in%) 8.33% Nd(1)

(1) DatanotavailableatthecloseofthisReport

RemunerationtosharecapitalMembers' contributions to the Share Capital have been remunerated in 2019 at the annualrateof4.5%grossforcompulsoryandvoluntarycontributions.RemunerationtoShareCapital(thousandsofeuros) 2018 2019TotalpaymentofinteresttoCapital(toassociatedcompanies,toworkingpartners,etc.)

33,565 34,316

Sharereceivedbyworkingandcollaboratingmembers(1) 11,766 12,189(1) CollaboratingmembersareretiredworkingmemberswhomaintaintheirshareinLABORALKutxa.

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3.2.8.OccupationalHealth&Safety

LABORALKutxahasanOccupationalHealthandSafetyManagementSystem(hereinafterOHS)inaccordancewithOHSAS18001:2007,certifiedbyOndoanAICsince2009.LABORALKutxaisamemberoftheOsartenJointPreventionService.

In 2018 LABORAL Kutxa and CLBS passed the regulatory audit and renewed their OHSAScertification.In2019,thefirstfollow-upauditwaspassed.ToachievetheobjectivesdefinedintheOccupationalHealthandSafetyPolicy(OHS),theactivitiesareplannedannuallyintheOHSManagementPlan:

Managementprogramme:Proposedactionsfor2019andtheirsituation.

1. Perform500medicalcheck-ups(LKandCLBS).Notmet:369

2. Performriskassessmentsthataffect500workers.Completed(537)

3. Implementationofaplanformanagingconflictbetweenworkers.DiscontinuedduetooverlappingwithotherinitiativesunderwayfromSocialM.(BideanandOnenak.4).

4. Reach85%ofstaffwhocomplywithemergencytraining:postponedtothefirstquarterof2020.

5. Adaptthecountersof30officesandreplace150oldmodelchairs:Completed(52desksand675chairs).

ManagementProgram:2020Commitments

1. Implementanewsystemforofficemanagementtoinspectofficelocations.

2. AdaptthemanagementsystemtoISO45001.

3. Perform500medicalcheck-ups(LKandCLBS).

4. Reach85%ofstaffwhocomplywithemergencytraining

5. LinkthebusinessactivitycoordinationsoftwaretoaccesscontrolinCentralServices(CS).

TheHealthandSafetyCommitteeisaJointCommitteewithequalrepresentation,whichisalsoattended by the Director of the Social Management Area and the Company Physician. TheChairmanofthisCommitteeisoneoftheworkers'representatives(PreventionDelegate).ThisCommitteemeetsatleastonceaquarter,andeverythingdiscussedinitsmeetingsisrecordedin minutes, which are made available to everyone on Giltzanet (intranet). All people arecoveredbythisCommittee.

The most relevant indicators regarding occupational health and safety management arepresentedindetailbelow.

Accidentrate 2018 2019Employeeaccidentrate.No.employeeaccidents.No.offatalitiesamongemployees.No.ofrobberies

1.043802

1.074606

Theaccidentrate isestablishedbasedonthefrequencyofaccidents,excludingthosethathavetakenplace"in itinere"(onthewaytoorfromwork)andthosethathavenotresultedinmedicalleave,inordertocalculateonlythemostseriousaccidentsthattakeplaceintheworkplace.Thisindexisdeterminedbasedonthenumberofaccidentspermillionhoursworked.Therearenorecognisedoccupationalillnesses.

TheOHSSystemviewstheriskofrobberyasoneofthespecificrisksarisingfromtheactivityofLABORALKutxa, forwhichaseriesof instructionshavebeen issued,providedtoallstaffand

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publishedontheIntranet,establishingbothpreventivemeasuresandmeasurestobetakenintheeventofsuchsituations.

In 2018, a protocol was developed and approved for situations of external violence thatincludesactionintheeventofaggression,threatsorinsultstoourstaff.Thesesituationshavecometobetreatedasoccupationalaccidents.

Emergency drills are conducted every year in theHeadquarters buildings. Also, all theworkcentres have emergency plans,which are available on the intranet so that each person canrefertotheonethatisapplicabletothem.Noobjectivesareset,butratherforecastsaremaderegardingtheabsenteeismvariables,iftheyaremaderegardingtheoverallrate.

A novelty in 2019 was the launch, in collaboration with Osarten-Psia, of a psychologicalsupport service. It consists of referring any situations that may require psychologicalinterventiontoanexternalservice,whichguaranteesanonymity.SocialManagementandtheMedical Service will be responsible for detecting these needs. In addition, in 2019 theoccupational risk prevention management system was adapted to the new ISO 45001standard.

LagunAroalsohasaHealthandSafetyJointCommitteewithstaffrepresentationcoveringtheentireworkforce.

HealthPlan-ZainduzIn2018,ahealthplanwasdesignedforLABORALKutxastaff.Zainduzisaprogramdesignedtotake care of your health and promote healthy lifestyle habits. It covers aspects such asimprovements in diet, physical activity andhealth atwork, so as to improve thehealth andphysicalandemotionalwell-beingofthepeoplewhobelongtotheLABORALKutxaGroup.Theactionswereimplementedin2019.Themainactionscarriedoutwere:• Creation of amultidisciplinary and transversal work team, and an identifying logo and a

specificspaceontheintranet.• Organisationofaconferenceonhealthyeating.• DistributionofaglasswaterbottlewiththeZainduzlogotoeveryoneasameasuretoraise

awarenessoftheimportanceofhydrationduringtheworkday.• Publication of videos promoting health improvements: managing emotions, for better

sleep,backcare,preventionofcardiovasculardisease,...• Nutritionalcarebyremovingunhealthyproductsfromvendingmachines,aswellassugar,

bydefault,incoffees.• Nutritioninformationpacks,raffleoffruitbaskets,interventioninthecafeteria,...

In2019,SegurosLagunAronhasgivencontinuitytotheHealthPromotionProject"AtSegurosLagunArowetakecareofourown".

Bywayofsummary:

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SocialBenefitsPackageLABORALKutxahasdevelopedthefollowinginitiativesfocusedonimprovingthesocialbenefitsreceivedbyitspeople:

Socialbenefits

Annualcelebrationofadayofgatheringandsocialising(everyone),ElkarteEguna,andparticipationthroughClubLankide(financedbytheEntityitself)inculturalandsportingactivitiesasavehicleforpersonalinteractionoutsideworkinghours.

Advantagesinfinancialproducts(members):Assets: Subsidised loan for primary residence, primary supplementary loan, loan for other domestic use, salaryadvance.Liabilities:salaryaccount.Bankingservices:feewaivers,cardfeeswaivers,discounts.Accidentinsurance.

Otherbenefits(partners):FinancingofprivateandBasquelanguagestudiesFundingforextraordinarypersonalrequirementsSubsidisedcompanydiningroom(everyone).Vehicledamagecover.Extraordinaryexpensesduetothedeathofmembers.FinancialadvantagesforthoseretiredfromLABORALKutxawhomaintaintheirstatusasacollaboratingpartnerandtheirwidows/widowerswhoarealsocollaboratingpartners.Theseadvantagesinclude:salaryaccount,exemptionfromsomefeesandloanswithpreferentialconditions.

Specifically,theEntity'sworkingpartnershavethefollowingsocialbenefits:

LankideClubLABORAL Kutxa believes that joint cultural, sporting and tourist activities, etc. are an idealvehicleforencouragingcontactbetweencolleaguesoutsideworkinghours.Accordingly,ithasagreedtosetupLankideclubsatHeadquartersand ineachof theregions,withtheprimaryaim of promoting interpersonal relations through the enjoyment and implementation ofleisureactivities.

In addition to holding the annual fellowship events (Elkarte Eguna) in 2019, cultural, sports,and leisure activities have also been held, such as: season tickets for theatre and music,

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mountainandcyclingassociationgrants,footballtournaments,footballandbasketballseasonticketsorexcursions.Thetotalbudgetfor2018was€30,532.

Capitalisedcooperativereturns(individualpensionplan)Eachyear, LABORALKutxadistributes12.5%of itsavailableprofitsamong itsmembers,asacooperativereturnorshare intheprofits,which iscapitalisedandaddedtotheshare inthecapitalofeachofthemembers.

ThisshareofthecapitalstockisnotavailableuntiltheworkingpartnerceasestoworkattheEntity, and is practically an individual pension plan after growing throughout the person'sworkinglifeattheEntity.Thissharereceivesanannualremuneration(4.5%in2018and2019)intheformofinterestoncapital.Theindividualannualallocationofthecooperativereturnisbasedontheirtotalgrosssalary.

Cooperativereturnallocatedtoworkingpartners(thousandsofeuros) 2018 2019AnnualoverallamountAverageamountperpartner

11,8565.91

12,915Nd(1)

(1) DatanotavailableuntiltheGeneralMeeting.

MeetingthefinancingrequirementsofasupplementaryhealthcaresystemLABORALKutxa covers, for thebenefitof itsmembersandworkingpartners, co-paymentofthe fees required for the annual financing of a comprehensive health care system,complementary to that of the public social security system, which the MONDRAGONCorporationprovidesforitsparticipatingmembers.In2019,thisco-paymentwas1.85%ontheadvanceofgrossconsumption.

3.3.Ourrelationshipwithsociety


LABORALKutxawasfoundedintheBasqueCountryaspartofabusinessgroupwithastrongcommitment to serving society, whose mission includes the creation of associated andparticipativeworkof a cooperative nature, as an essentialwayof creatingwealth andwell-being,bothamongitsdirectmembersandintheSocietyinwhichitisimmersed.Thecriteriaandmechanismsfortheallocationofsocialassistanceareunique:§ Due to its legal nature and its cooperative vocation, LABORALKutxadirects a significant

partofitshumanitarianaidcontributionstothepromotionofthecooperativeworld.§ InthedistributionofsubsidiesunderoneoftheheadingsoftheEducationandPromotion

Fund,thedistributionofwhichcorrespondstotheinstitutionalbodiesofthecooperative,thesectionknownas"GeneralDistribution",oneoftheorganisationsthattakespartistheSocialCouncil,whichistherepresentativebodyoftheentity'sworkingmembers.

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§ In addition, it also reserves a specific section of the social projects for local assistance(LocalDistribution),bymeansofallocationsthroughthe304branchesofLABORALKutxa,which steer the aid towards their own areas (neighbourhood associations, nearbyeducational centres, parochial social action groups, immigrant social assistance centres,etc.).

ThepurposeoftheEducationandPromotionFund(FEP)is:§ Trainingandeducationoftheworkforceincooperativeprinciplesandvalues.§ The dissemination of cooperativism, as well as the promotion of inter-cooperative

relations.§ Thecultural,professionalandassistentialpromotionofthecommunityingeneral,aswell

as improving the quality of life and the community development and environmentalprotectionactivities.

TheInter-CooperativeSocialFund-FSIaimsto:§ Promote business projects and the expansion of cooperatives through Mondragon

InvestmentsandtheFEC(CorporateExpansionFund).§ Among other uses, support forMONDRAGON co-operatives in difficulty, R&D&I projects

andtrainingthroughtheMondragonFoundationandtheFCD(CohesionandDevelopmentFund).

During2019,LABORALKutxahascontinuedtostrengthenitscommitmenttotheenvironment,biodiversity and sustainable development, thanks to the signing of various agreementswiththemainagentsintheagri-foodsector,andthesupportgiventoinitiativeslinkedtotheruralenvironment.

GaztenpresaFoundationThe Gaztenpresa Foundation is a private, non-profit organisation. It is part of the welfareprogrammeof LABORAL Kutxa and its aim is to support initiatives and develop actions thatfacilitatethecreationandpreservationofemployment,throughprogrammesandservicesthataddvaluetothebusinessandprofessionaldevelopmentofitsusers,andalsotoitsalliesandsocietyasawhole.TheFoundation'stargetgroupincludes:

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• Entrepreneurs,mainlyyoungpeople.• Collectiveswithdifficultiesintheirsocialandlabourinsertion.• Youngmicro-enterpriseswithdevelopmentprojects.• Training institutions that want to encourage the entrepreneurial spirit among their

students.

ThebusinesscreationactivityoftheGaztenpresaFoundation,financedbyLABORALKutxaandCorporaciónMondragón, as well as by the Basque Government (Dept. of Employment andSocialPolicies)throughLanbideandtheEuropeanSocialFund,wasagainsubstantialin2019.The projects supported and which went beyond the feasibility phase generated 405companies,creating787jobs.ItsscopeofactivityistheBasqueCountryandNavarre.The general objective is to promote the creation, development and maintenance of smallbusinesses andmicro-SMEs, identifying employment opportunities through self-employmentforpeoplewhoareunemployedoratriskofbecomingunemployed.The process involves identifying and developing the person who wishes to become anentrepreneurandassessingtheirsuitabilitytotherealityofthemarket,inordertodetermineand suggest the self-employment opportunities best suited to their situation. It offers all-round support, providing a response to the general demand for guidance, training andtechnicalassistance,bothforstart-upandfortheconsolidationandsurvivalofthecompaniescreated.Theintentionisthatpeoplewhodecidetostarttheirownbusinesscandeveloptheirpersonalinitiativeandgettoknowthebusinessframeworktheyarehopingtoenter,andforthistheywillhavequalifiedpeopletoguidethemonthepathtofollow,therebydevelopingtheirownprofessionalplans.

GaztenpresaProjects 2018 2019Viableandopenthebusiness 415 405Notviable/Viablebutdonotopenthebusiness 144 195Consolidation 120 50Derivatives 108 96Consultations 298 295Total 1,085 1,041

Amongtheviableonesthatopenthebusiness,theregionaldistributionisasfollows.Gaztenpresaprojectsin2018 Araba Bizkaia Gipuzkoa Navarra TotalViableandopenthebusiness 65 182 97 61 405

Thesearesmallbusinesses,withservicesandretailbeingthemostcommonsectorsofactivity:- theaverageinvestmentin2019was€81,000,- TheaveragefinanceprovidedbytheBankwas€42,100,49%- employed2peopleattheoutset,- theaverageageoftheentrepreneurwas39yearsoldand,- bygender,thepercentageofwomenentrepreneurswas47%.

Oncethecompanyisupandrunning,theentrepreneurfacesmanypracticaldifficultiesandasense of isolation that often prevents him or her from dealing with them properly.Gaztenpresa runs workshops that provides further support to these entrepreneurs, alsoansweringqueriesonnewinvestments,closuredecisions,changeofmarketorapplicationsfornewsubsidies.

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Businessconsolidation 2018 2019No.workshops 75 50Companiesinconsolidation 120 175

QuerieshandledinPROservice 432 372

Mentoringprogramme 27 20

Also, the mentoring programme offers one-to-one coaching for a year. A volunteer withentrepreneurial experience helps an entrepreneur who is starting his or her first businessventure to improve their skills and competence, enhancing both their personal andprofessional development as well as the consolidation of their business. The Gaztenpresamentoring programme is a structured process designed based on the experience of othermembersoftheYouthBusinessInternationalNetworkandwiththesupportofAccenture.

IndirectcontributionstosocietyThemostsignificantindirecteconomiceffectisthegenerationanddistributionofwealthandemployment,preferablyinacooperativemanner,whichisachievedthroughthecontributionofresourcesfromLABORALKutxatotheMONDRAGÓNgroup.Wealsohavean influenceonsociety through hundreds of sponsorship and promotional activities to which we allocateeconomicresources.

Morethan200 initiativesweresupported in2019:conferences,awards,culturalactivitiesorthepromotionoftheBasquelanguage,sportsorcharitablework.

Theseinclude:

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https://blog.laboralkutxa.com/todos-los-patrocinios-de-laboral-kutxa-en-2019/

Also,thestaffatCentralServicesaregiventheopportunity,twiceayear,todonatebloodforthebenefitof theGipuzkoaAssociationofBloodDonors. In2019,116donationsweremade(121in2018).

BasqueCyclingFoundationAparticularlyimportantinitiativein2019wasLABORALKutxa'ssupportforthecreationoftheBasqueCyclingFoundation.Theprojectgoesbeyondsportsandaimstorelaunchthetrainingworkinordertocreatearegionalstructurethatguaranteesthepracticeofbasiccyclinginthebestpossibleconditions.

It is a cross-cutting project because values such as equality, healthy lifestyle and building amore sustainable future for the environment are promoted through the practice of cyclingamongyoungpeople.

RelationswithGovernmentAgenciesandpoliticalpartiesLABORAL Kutxa defines the management of government agencies in the Public SectorManagementManualasadistinct, integrated,coordinatedanddynamicmanagementbythePublicSectorOfficewithinthenetworkofCompanies.Thisdocumentdefinestheresponsibilityand functions of each Division of LABORAL Kutxa in the management of this segment, ineverything that affects the segmentation, management systems, information systems,commercialstrategiesandriskmanagement.

Inthesameway,theLABORALKutxaRiskManual"CreditRiskPolicy,MethodsandCriteria",considers in Chapter 5 the "Risk Policy to be applied to the Public Sector", establishing adifferentiated policy within the scope of Companies due to their accounting particularities.LABORAL Kutxa does not provide finance to any political association or national orinternational entity, except for the loans and guarantees to political parties listed in thefollowingtable:

2018 2019EuskoAlkartasuna 118 104EAJ-PNV 793 670Loans(thousandsofeuros) 911 774

3.3.2.Mainfigures:Profitsharinginsociety

As explained in the management approach, the main contribution of the LABORAL KutxaGrouptosocietyisthroughthedistributionof25%ofitsdistributableannualprofit.In2019itwasalmost23.5millioneuros.Thedistributionamongheadingswasasfollows:

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Item(thousandsofeuros)Yearsofapplication2018 2019

Charitablecontributiontothelaunchandconsolidationofcooperativecompanies(throughMONDRAGON)

12,887 14,227

Inter-cooperativeSocialFund-FSI(15%ofDistributableprofit) 12,887 14,227CooperativePromotionthroughMONDRAGON(68%FEP)andotherdestinations(UNACC,etc.)

5,841 6,593

FRES,FundforRestructuringandCompanyEmployment 698 0EntrepreneurshipandBusinessandvocationaltraining(FundaciónGaztenpresa) 311 331Culturalactivitiesingeneralandothers 543 845PromotionoftheBasque-languageandBasqueCulture 321 703Welfareinstitutionsanddevelopingcountries 373 630Agri-foodsector 63 105EducationandPromotionFund-FEP(10%ofDistrib.profit). 8,150 9,210SumFSI+FEP 21,037 23,437

3.3.3.Dialoguewithsociety

Thesearethemostrelevantmechanismsfordialoguewithsociety.GroupofInterest:SocietyDialoguemechanismsimplementedin2019:§ Membership of Izaite, Association of Basque companies for sustainability, which focuses on social and

environmentalissues.§ Social network with entrepreneurs to share concerns and propose collaborative actions through the

Gaztenpresa Foundation. And adhesion, as a founding member, to YBI- YBS Youth Business International inSpain,aninternationalnetworkofGoodPracticesandsupporttoyoungentrepreneurs.

§ Participation and dynamisation of virtual communities with a presence in blogs and social networks on theInternettoreinforcecontactandthepoolingofideasandinitiatives:

v Instagram:5,301followersv Facebook:17,545fansv Twitter:5,926followersv Blog:185,160readersv WhatsApp:Morethan1,000usersattendedtopermonth.§ Specificanalysisof theopinionsandexpectationsof theusersofOnLineBanking through theuseof internet

toolstomonitoropinions,forums,socialnetworksandexpertreviews.§ Acknowledgments,incollaborationwithvariousinstitutions,suchas:NavarraPrizeforsolidaritywhichwentto

"Emaus", Humanities Prize (with Eusko Ikaskuntza) which went to Juan Ignacio Pérez Iglesias, EtxepareTranslationPrizewhichwenttoAinaraMunt.

§ Surveyofcustomersfromcompanies,personalbanking,KideandPro-microcompaniesontheirassessmentofCSRactivitiesatLABORALKutxa,whilesendingouttheExecutiveReportonthe2018Report.

§ PublicPresences.RepresentativesofLABORALKutxaattendedforums(universities, interviews,talks)towhichtheywere invited to explain their way of doing things and their commitment to society. These forums alsoenabledialoguewithstakeholders.Amongthepublicappearances,thepresenceinSeptemberofourChairmanatthesigningoftheUnitedNationsPrinciplesforResponsibleBankingisparticularlyrelevant.ThesigningtookplaceinNewYorkandmarkedthelaunchofthisinitiativetogeneratetransformationwithinthefinancialsector.9

In 2019 LABORAL Kutxa continued its line of dissemination of Social Responsibility amongdifferentgroupsofinterest.Inthisrespect,LABORALKutxa:§ HasmadetheReportavailabletothepubliconthewebsitesofGRI,IzaiteandtheEntity.§ IthasdistributedtheCSRReporttoitsstaffviatheintranet(Giltzanet).§ It has sent an email to more than 250,000 clients with the Executive Report with the

general lines of the annual Report, alsomaking the full version available.We have alsomadeuseofthiscontacttoaskforthecustomers'opinionontheestablishmentofCSRatLABORALKutxa.

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3.3.4.InitiativesendorsedbyLABORALKutxa

ThefollowingtableshowsthecurrentinitiativescarriedoutbyLABORALKutxa:Name Purpose When

AgreementwithFIARE,renewedwithBancaPopolareEtica

Commitmenttocollaboratewithethicalbanking.In2017itwasrenewedonceFiarebecameaSpanishbranchofBancaPopolareEtica

2005

AdherencetotheUnitedNationsGlobalCompact.

Commitmentandprogressinthe10PrinciplesoftheCompact.

2006

AffiliationtoIzaite,AssociationofBasqueCompaniesforSustainability.

Toshareexperiencesinbusinesssustainabilityandpromotetraininganddisseminationinthefieldofsustainabledevelopment.

2006

JoinedAutocontrol.AssociationfortheSelf-RegulationofCommercialCommunication.

2007

WorldRuralForumTopromoteruraldevelopmentasanintegralpartofoveralleconomicdevelopment.

2007

EmekinProgramme,withtheProvincialCouncilofGipuzkoaandtheAssociationofWomenEntrepreneurs

Fullcoachingforwomenwithaviewtopromotingabusiness.AdditionalagreementswiththeassociationsofWomenEntrepreneursandDirectorsofBizkaia,Gipuzkoa,AlavaandNavarre:AED,ASPEGI,AMPEA,AMEDNA

2007

EFMAEuropeanforums:SMECouncil,OperationalExcellenceCouncil,SpanishRetailBankingDecisionMakersClub

ExchangeofgoodcommercialandmanagementpracticesbetweenleadingEuropeanbanksandsavingsbanksthroughEFMA-EuropeanFinancialManagementAssociation.

2010

AgreementswithvarioustowncouncilstopromotetheuseoftheBasquelanguageintheirreciprocalrelationships

InitiallywithAndoain,Astigarraga,Hernani,Lasarte-OriaandUrnieta.Expandedin2016toinclude38townsgroupedinUEMA.

2011

Agreementstosupportthesocialeconomy

AnnualagreementswithassociationslinkedtothesocialeconomyintheBasqueCountryandNavarre:Erkide,AsleandAnelAnnualagreementswithCepesatanationallevel.

2012

AgreementswiththeEuropeanInvestmentFund(EIF).

Agreementstosupportthecreationandreinforcementofmicro-enterprisesandrelatedjobs.Progressprogramme.In2015itwascontinuedthroughtheEaSIProgramme.In2016therewasInnovfintosupportinnovativecompanies.In2017EaSIsocialeconomy

2013

LABORALKutxafinancialmanagementprogramme-Cebek

TrainingseminarsandworkshopsforentrepreneursandSMEmanagersinBizkaia.TherearesimilarpartnershipswithSEA-EmpresariosAlaveses,andwiththeChambersofCommerceandIndustryinAlavaandGipuzkoa

2013

LocalfoundingpartnerofYBS-YouthBusinessSpain

ParticipationinYouthBusinessInternational,InternationalNetworktoHelpYoungEntrepreneurs.

2014

AgreementwiththeBasqueGovernmenttosafeguardlinguisticrights

Allowingcustomerstocarryoutalltheiroperationsineitherofthetwoofficiallanguages.

2015

CodeofGoodPracticeforFinancialEducationinitiatives

Educationalprogrammesonfinancialmatters.DevelopedinconjunctionwiththeCNMVandtheBankofSpain,andseparatedfromthebusinessactivity

2016

UnitedNationsPrinciplesforResponsibleBanking

Frameworkforthesustainablebankingsystemofthefuture.Commitmenttothe6Principles.

2019

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LagunAroInsurance:

FinancialeducationThemainactivitiescarriedoutduring2019inthefieldoffinancialeducationwere:• FinantzetanMurgilduzErronka.AgreementwithIkastolenElkarteatocreateresourcesfor

thedevelopmentofFinancialEduc. ineducationalcentres.ProgrammeaimedatA leveland3rd-4thyearsecondarystudents.

• SchoolvisitstoLK.• Finantzargi (University). Basic finance training for university students. Launch of the

projectinMondragonUnibertsitatea.IrunandOñateCampus6groups(March-April-May)and6groupsinNovember-DecemberinBilbaoandIrun.

• 3workshopsoninclusivefinancefordisadvantagedgroups.40peopleinconjunctionwithLantegiBatuakinErandioandDerio.

• CreationofasectiononFinancialEducationwithinthecorporatewebsite.

AwardsreceivedThefollowingawardshavebeenreceivedoverthepastthreeyears:• 1stPrize forExperiencesofEqualitybetweenWomenandMen incompanies inGipuzkoa

2018,awardedbytheProvincialCouncilofGipuzkoa• In2017,theawardfortheeventtosupportentrepreneurshipandinnovationintheBasque

Country, EUSTART Up, as the company having contributed most to supportingentrepreneurship.

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AsforLagunAro,itreceivedrecognitionin2018:

3.4.Ourrelationshipwiththeenvironment


Since2001,LABORALKutxahasbeen implementinganEnvironmentalManagementSystem-EMS inaccordancewith ISO14001, forall itsactivities in the threeHeadquartersbuildings.Although it is not part of the certified system, LABORAL Kutxa transfers themajority of itsenvironmental activities from central services to the other work centres. In 2019 thecertificationwasrenewedforthreeyears.

TheEnvironmentalManagementSystemistheresponsibilityofanEnvironmentalCommitteemadeupofmembersoftheLegalDepartment,InternalAudit,Risks,FixedAssets,SecurityandGeneral Services and Management Planning and Control, with the latter acting as theCoordinator. In accordance with the precautionary principle of the Rio Declaration, itaddresses the possible impacts of the activity with a view to preventing environmentaldamage.Althoughthedirecteffectsofthefinancialandinsuranceactivityontheenvironmentareverylimited,thereareindirecteffects.

SegurosLagunArosharestheenvironmentalmanagementpolicyofLABORALKutxa,theaimof which is the continuous improvement of environmental behaviour, the prevention ofpollutionandtheprotectionoftheenvironment.AswithLABORALKutxa'snetworkofoffices,itisnotintegratedintoitsEnvironmentalManagementSystem.

Due to the very nature of its activity, the environmental impact caused by the insurancecompanyisminimal.

However,itsmanagementfocusesontheissuesrelatedtopaperconsumption.In2019,2,605more printouts were made at Central Services as a result of the internalisation of themanagement of registered letters,which had previously been carried out off-site. The hugeeffortmade in thisareasincetheendof2017has ledtoa reductionofmorethan1millionprintoutsandphotocopiesperyearforthebusiness.

From an environmental point of view, a particularly significant initiative in 2019 was theparticipationofLABORALKutxaintheEKIANsolarplant.Withasurfaceareaof55hectares,anoperating power of 24MW and an estimated production of 40,000MWh per year, it is thelargest photovoltaic plant in the Basque Autonomous Community. The Entity's participationshowsitswillingnesstocontributetothetransitiontoamoresustainableenergymodel.

AdistinguishingfeatureofLABORALKutxa'sSocialResponsibilitypolicyistheimplementationof an extensive concept of Socially Responsible Investment - SRI, whereby environmental,socialandgoodgovernancecriteriaaretakenintoaccountwhendecidingonthecompaniesin

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whichcorporate fundsor those fromcustomersare investedthrough investmentorpensionfunds,butalsoinrelationtocreditinvestment.

The EMS is audited annually by AENOR. In the certification renewal audit report, dated17/10/2019,thestrengthsoftheEMSwerelistedas:

- TheEntity'sinitiativesrelatedtoSociallyResponsibleInvestment.- Participationinthe'Ekian'project,theArasurPhotovoltaicPlant.- ThecompletionoftheworkontheLK1buildingforthecentralservices,withtheuseof

energyfromthegeothermalheatingsystemandtheuseofthebiomassplant.

Italsomentionstwonon-conformities inthesystemrelatedtoemergencypreparednessandresponseandcomplianceassessment.

As stated in the ISO standard followed by the EMS, the success of an environmentalmanagement system depends on the commitment of all the functions and levels of theorganisation,undertheleadershipofseniormanagement.Thus:

- LABORAL Kutxa has an Environment Policy, approved by senior management, withaccess for all its partners and customers, through its publication on the corporatewebsite.

- Everyyear,itcarriesoutplanningtodeterminetherisksandopportunitiesrelatedtoitsenvironmentalissues.

- On thebasisof this, itestablishesobjectives thataremonitoredandcommunicated,bothinternallyandexternally.

- It also plans the appropriate actions to achieve these environmental objectives,determiningwhat is to be done,withwhat resources,whowill be responsible, andwithwhatindicatorsitsachievementandcompliancewithdeadlineswillbeevaluated.

3.4.2.Mainfiguresandinitiativesdeveloped

Intermsofresourcesdedicatedtothepreventionofenvironmentalrisks:

DirectexpenseschargedtotheEMS 2018 2019

MaintenanceoftheEMS(1) 4,106 6,763Wastemanagement(2) 5,220 4,830Environmentalpromotion 3,763 168Measurements(discharge) 1,118 565Totalin€ 14,206 12,326

(1) IZAITE,AENOR,HoraPlaneta,adviceandlegalrequirements.(2) RemovalofPaper,oilandSafetyAdvisor.

These expenses are those directly managed by the Environmental Committee and do notincludecostsmanagedbyspecificdepartmentsoranyinvestmentsmade.LagunAroInsuancedoesnothavespecificheadingsforthispurpose.

With regard to the principle of precaution, as explained above, LABORAL Kutxa has anenvironmentalmanagementsysteminwhichenvironmentalrisksandopportunitiesaretakeninto account and analysed. Within this analysis, no products or technologies have beendetectedthatarebeingimplementedandaresuspectedofposingarisktopublichealthortotheenvironment.

Norisitconsiderednecessarytomakeprovisionsorguaranteesforenvironmentalrisks.

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EnvironmentalriskassessmentAspartofitsEnvironmentalManagementSystem,LABORALKutxahasa“ReviewControlandRiskManagement”procedurethatsetsoutthestepstobefollowedinordertoevaluateandcontrol theenvironmental risks inalloperations involvingcommercial credit investmentandcompanyrisks,assigningeachactivityaHigh,MediumorLowlevelofrisk,excludingtheareasoftreasury,securitiesportfolioandmonetaryassets.WhentheassignedrisklevelisHigh,thisfactor is taken into account as another evaluation factor for deciding whether or not toauthorisethetransaction.

2018Segment OperationNo. Thousandsof€ High Medium Low

Companies 561 723,472 22 80 459Individuals 14 47,480 1 1 12Self-employed 0 0 0 0 0Businesses 10 10,465 0 3 7Developers 121 296,651 0 0 121Institutional 150 415,131 4 30 116Public 32 435,029 0 0 32Fin.Loan 6 10,975 0 0 6Total 894 1,939,203 27 114 753

Year2019Segment OperationNo. Thousandsof€ High Medium Low

Companies 562 878,324 27 87 448Individuals 12 29,699 - - 12Self-employed 1 1,400 - - 1Businesses 12 9,084 - - 12Developers 85 294,990 - - 85Institutional 127 471.016 5 3. 4 84Public 27 392,869 - - 27Fin.Loan 9 7,662 - - 9Total 835 2,085,043 32 121 682

Ifthecompanyinquestionhasseveralproductioncentres,theriskassessment iscarriedoutforeachofthem,withtheriskassignedtothecompanybeingequivalenttothehighestoftherisks obtained. In the last three years, no operation has been rejected on the grounds ofenvironmentalrisk.

Elsewhere, in section 4.2 Socially Responsible Investment, reference is made to otherenvironmental controls carried out from an environmental point of view in both creditinvestmentandinvestmentmanagement.

TransparencyinexposuretofossilfuelsA Communication from the European Commission in March 2018 includes an Action Plan,entitledFinancingsustainabledevelopment,theobjectivesofwhichinclude

- redirectingcapitalflowstowardssustainableinvestments,and- managingfinancialrisksarising,inparticular,fromclimatechange.

Inthesamelineofemphasisontheimportanceofmanagingtherisksofclimatechange,theTaskForceonClimate-relatedFinancialDisclosure-TCFDoftheFinancialStabilityBoard-FSBpublished, in June 2017, some recommendations on climate-related reporting which, in

72

relationtobanking,stressestheimportanceofmeasuringandmanagingtheconcentrationofriskexposuretocarbon-relatedassets, includingthoserelatingtotheindustryproducingandsupplyingenergy fromfossil fuels,excluding renewableenergysources. It therefore includescompaniesinvolvedintheproductionandsupplyofconventionalelectricity,oil,gasandcoalmining.

Exposuretofossilfuelsasat31/12thousands€ 2018 2019ExposuretoCreditRiskCirculatingrisk 16,714.3 46,332.2Structuralriskbalancesandguarantees 6,513.2 7,170Sharesinwholesalerisk 10,839.5 0Totalexposure 34,067 53,502.2

It was confirmed that LABORAL Kutxa's exposure to the incidence of climate risk in theseindustriesisverylimited.

PollutionDuringrecentyears,LABORALKutxahasmadeasignificantinvestmenteffortthathasresultedin the complete renovation of two of the three buildings ofMondragon's Central Services.These actions have involved the introduction of the latest technologies in lighting, airconditioningand insulation,whichhas led toachieving thehighestenvironmental rating (A).The introduction of renewable technologies such as geothermal and biomass for the air-conditioning of the buildings is of particular importance. In addition, when renovating thebranch offices of the business network, these technologies are applied with the aim ofreducing the impact of the activity and minimising emissions. Lastly, a continuous effort isbeingmadetodigitalisethebusiness.Thisistruebothfortherelationshipwithourcustomersandfortheinternalactivity.

Noise is not considered to be a significant issue in the annual assessment of environmentalmatterswithintheenvironmentalprogramme.Withrespectto lightpollution, it isnottakenintoaccountduetothesmallimpactoffinancialbusinessonthismatter.Moreover,therearemechanismstoturnoffthelightingoftheluminoussignsoftheofficesafteracertaintimeatnight.

CirculareconomyandwastepreventionandmanagementWithrespecttoenvironmentalsafety,theCentralServicesbuildingsandfacilitieshaveemergencyplansthatconsiderpossibleeffectsontheenvironmentintheeventofanincident,aswellashowtoacttominimisethisimpact.Therearealsoemergencyplansforalltheworkplaces,although,inthenetworkofoffices,thepotentialenvironmentaleffectsofemergenciesaremuchlower.Forwastemanagement,wasteismanagedcorrectlywithintheframeworkoftheenvironmentalcertification.Inaddition,themostimportantwaste,paperandtoner,aremanagedcentrallyforallworkcentres.Themostsignificantwasterelatedtoouractivityareindicatedbelow:

LABORALK. SegurosLAIndicator Unit 2018 2019 2018 2019Cardboardandpaperwaste Kg 105,994 106,927 132,463(1) 5,652Recycledtonercartridges No. 3,821 6,321

(two)Usedvegetableoil Litres 1,520 2,295

(1) Awarehousewascleanedin2018fromwhichover120tonswereremoved.(2) ThiswasteisnotgeneratedforLagunAro.

73

Attheendof2019,anewwastemanagementsystemwasimplementedintheofficenetwork.Theindividualwastebinsthatexisteduntilnowinalltheworkplaceshavebeenremovedandreplaced by shared bins that differentiate between three types of waste: paper,packaging/plastics andotherwaste. This thereby improves the selective collectionofwaste,makesbothstaffandcustomersawareof the importanceofcaring for theenvironmentandensuresbettermanagementofthepapertobedestroyedandrecycled.

Giventheactivitycarriedout,nomeasuresaretakentocombatfoodwaste.

The water used drains into the municipal sewage network. The wastewater is analysedexternallyeachyeartoverifythatitiswithintheauthorisedlimits.

SustainableuseofresourcesAlthough water consumption is not significant in a financial institution, within ourenvironmental system the consumption by central services is managed, not that of thebranches or Lagun Aro. As part of the refurbishment of the Headquarters buildings, thepipelines have been renewed with the aim of reducing leaks and water losses. The waterconsumptionofLagunAroandthebusinessnetworkislimitedtothetoiletfacilities,soitisnotconsidered significant ormanageable, unlike the Headquarters, where it is also used in thekitchenandforirrigation.

Waterconsumption(m3)atHeadquarters 2018 2019

Waterconsumption 7,447 10,898

Each year, the environmental programme identifies, records and evaluates environmentalfactorsinordertodeterminetheirassociatedenvironmentalimpactsandestablishtheirlevelof significance froma life-cycleperspective.To thisend, the scaleanddegreeofdangeraredetermined,obtainingasignificancelevel.BelowarethemainindicatorsoftheEnvironmentalManagement Programme of LABORAL Kutxa and Lagun Aro based on the results of thisevaluation.

LABORALK. SegurosLA

Paperconsumptionkg 2018 2019(1) 2018Promotionalpaper 106,578 130,785 64,425Officepaper 272,922 282,081 1,052Totalpaperconsumption 379,500 412,866 65,477(1)2019showsthejointdataofLABORALKutxaandLagunAro.

Allthepaperconsumedwasenvironmentallyfriendly,chlorine-freepaper.

Inordertoreducetheamountofpaperusedincustomercommunications,asignificantdrivehas been made in recent years towards the use of new technologies and e-mailcommunications(Postamail)

LagunArokeepstrackofthenumberofprintoutsmadebyemployeesinordertoreducetheirnumberand,therefore,theamountofpaperused.

That iswhy the totalweightof the tonerhasbeenadded,whichshows thesavings thatarebeingproduced.

74

LABORALK. SegurosLA

Tonerconsumptioninunits 2018 2019(1) 2018Totaltonercartridgeconsumption 3,317 3,502 50Cartridgeconsumptionperperson 1.51 1.57 0.30Weightoftonerusedkg 2,438 2,602

(1) LABORALKutxaandLagunAro

TheimpactsoftheLABORALKutxaactivityarelimited.Oneofthemostimportantiselectricityconsumption.Mondragón'scentralservicesarewithinthescopeofISO14001environmentalcertificationandareactivelymanaged:

LABORALK. SegurosLA

Year/Unit 2018 2019 2018 2019

ElectricityconsumptioninKwh/yearCentralServices 3,454,918 3,380,870 360,210 348,851ElectricityconsumptioninKwh/yearTOTALLK 13,277,248 12,915,786

InternalenergyconsumptionAimprovedsignificantlywithrespecttothepreviousyear,exceptforelectricityconsumptionasaresultofworks.

External energy consumption B, the petrol used for travelling, entailed a consumption of20,215GJ(19,728GJin2018).ForLagunAroitwas1,426GJin2019and1,593GJin2018.

Energy intensity,measuredastotalenergyconsumption(including internalAandexternalB)amongthetotalnumberofemployees(LABORALKutxaandCLBS)was32.37in2019comparedto32.82in2018.

As noted above, significant efforts have been made in recent years to improve energyefficiency.Thefollowingisworthmentioning:• Theintroductionofageothermalsystemtoair-conditionthecentralservicesbuildings.• The construction of a biomass plant to meet the heating needs of the biomass. Both

systemshavemadeitpossibletoeliminateclimatecontrolusingfossilfuels.• Refurbishmentoftheinsulation(lowemissionglass),equipment(LED)andmachineryto

increasetheefficiencyofairconditioningandlighting.

ClimatechangeLABORAL Kutxa's concern about the climate crisis is reflected in its adherence to initiativessuch as the Global Compact, the SDGs, its commitment to the Paris agreements and,morerecently, to theUnitedNationsPrinciples forResponsibleBanking.Allof themcommitus tocarryout an analysis of the risks andopportunitiesof climate change, forceus to introducesustainabilityintotheEntity'sstrategyandencourageustomakeeffortstoreducetheimpactofouractivity.Anaspectofparticularrelevanceisthecalculationofourbusiness'scarbonfootprint.

LABORALK. SegurosLABreakdownofemissionsbysource.CarbonFootprint 2018 2019 2018 2019Scope1:Directemissions 356 160 0 0Scope2:Indirectemissions 3,717 3,616 101 98Scope3:Otherindirectemissions 963 1,069 81 70TotalemissionsTonnesofCO2 5,036 4,849 182 168TheBasqueGovernment'sKlima2050calculatorwasusedtoobtainthisdata in2019,sothe2018datahasbeenreformulatedfromthatshowninthepreviousReport.

75

Thefollowingweretakenintoaccount:• Forscope1,consumptionofdiesel,propaneandemissionsofrefrigerationgases.• Forscope2,thetotalelectricityconsumption(CS,theofficenetworkandregionalmanagementbuildings)

wastakenintoaccount.• Forscope3,wehavetakenintoaccountemissionsduetotravelduringworktime,kilometrestravelledby

taxi, the emission resulting frompaper consumption, electricity consumption of customerswhenusingourwebsite,wastemanagementandwatersupply.

Aspreviouslystated,LABORALKutxahasmadeacontinuouseffortinrecentyearstocombatand adapt to the consequences of climate change: investments, digitalisation, actions toimprove energy efficiency… In addition, the following areas of action are planned for thecomingyears:

• Duringthestrategicdeliberationthattookplacein2019,sustainabilitywasintroducedas an across-the-board strategic variable. Multi-year objectives have been set toreduce Co2 emissions and paper consumption, as well as the creation of greenproductsandthefurtherimplementationofSociallyResponsibleInvestment.

• Secondly and in parallel, since the beginning of 2019work has been started on theconceptof sustainablemobility.To thisend,a staffmobility surveyhasbeencarriedout. As a result, some areas for action have been proposed to move towardssustainablemobilityandtoreduceCO2emissions.

• AsaresultoftheadoptionoftheUnitedNationsPrinciplesforResponsibleBanking,ananalysisoftheimpactoftheclimatecrisisonLABORALKutxa'sbusinesswillbecarriedout in 2020. It will analyse the impact of the direct and indirect risks towhich it isexposed in its investment and credit portfolios. To this end, information is alreadybeingcollectedontheenergyratingofhomesandthefuelusedbythevehiclesbeingfinanced.

• Lastly, as mentioned above, in 2020 the Ekian project will be launched, the largestsolar plant in the Basque Country, a project in which LABORAL Kutxa is one of theparticipatingentities.

ProtectionofbiodiversityLABORALKutxa'sfinancialactivitydoesnotaffectbiodiversityorimpactonprotectedareas.

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3.5.Ourrelationshipwithsuppliercompanies


The financial activity that we carry out, as well as the local presence in a very specificgeographicalarea,meansthatthemanagementrisksofsubcontractorsandsuppliersarenotexcessivelyimportant.

Nevertheless, LABORAL Kutxa, aware of the importance of supply chainmanagement in theareaof sustainability,hasdevelopedthe followingareasofactionregardingsuppliersduring2019:1. With regard to occupational risk prevention, progress has been made in coordinating

businessactivities.Therearemorethan300workcentresinLABORALKutxawheremanypeoplebelongingtoothercompaniescometoperformprofessionaltasks:subcontractors,works,maintenance… In 2018, a computer systemwas acquired and implemented thatallows us to establish the controls and exchanges of information and documentationnecessary to ensure that the people who come to our premises to carry out theseactivities meet all the established requirements. In 2019, progress was made in itsimplementationwiththeobjectiveofcoveringallsuppliercompanies.

2. The first phase of the supplier companymanagement project to organise the purchasemanagementof thedifferentdepartmentshasbeen completed.Aspart of this project,the Corporate Social Responsibility Committee approved the following documentationthatfullydemonstratesLABORALKutxa'sdesiretoworkwithitssuppliercompaniesinanethicalandsustainablemanner:

1) ResponsiblepurchasingpolicyofLABORALKutxa.2) Suppliercodeofethics.3) Codeofconductforresponsiblepurchasing.

Giventhecharacteristicsofoursuppliercompanies,itisnotconsiderednecessarytocarryoutaudits on them on aspects not related to the characteristics of the product or service theyprovide.Forthisreason,suppliercompaniesarecurrentlynotevaluatedforenvironmentalorsocialaspects,however,theimpactsoftheiractivityareconsideredtobelow.Incompliancewith the precautionary principle, there are other factors that influence the selection ofsupplier companies, in addition to the origin, such as technical requirements, thecharacteristics of the product or service they provide and the price. At the same time,LABORALKutxaensurescompliancewithsocialandemployment legislation throughaclausethatithasinplace:

§ Compliance with employment, Social Security and occupational health and safetyregulations.

§ The certified Management, Environmental and Occupational Health and SafetySystemsalsohaveproceduresestablishedformanagingpurchasesandsubcontracting,takingintoaccounttherequirementsoutlinedforthesesystems.

Inourareaofactivity,weonlyidentifysignificantriskslinkedtonon-compliancewithhumanrights in relation to corruption risks and with our indirect actions to ensure compliance bycompanies that supply us. The activities related to these two aspects are described in therespectivesections.

Index

77

3.5.2.Mainfigures2018 2019

Purchasevolume(thousandsofeuros) 173,369 166,229

%ofgoodsandservicespurchasedfromlocalcompanies(2) 94.2% 96.4%%oflocalsuppliersoftotal 93.3% 93.4%%ofdomesticpurchases,notimported(1) 98.9% 99.5(1) In2019LABORALKutxahad17suppliercompanies(1.08%ofthetotalandrepresenting0.51%ofthegoodsandservices

acquired),fromoutsideSpain.ThesewereallfromEuropeanUnioncountriesexcept4fromtheUSA.43.7%oftheamountcomesfromwhatisknownastheTraditionalNetwork(CAVandNavarra).

(2) Localaretheoneswhoseaddressisinaprovincewherewehaveapresencethroughournetworkofoffices.

3.5.3.Dialoguewithsuppliers

RegardingthedialoguewithsuppliercompaniesconcerningCSR,aquestionnairewassentto98 supplier companies for the purposes of this Report. Companieswere specifically chosenbecause theirworkers performworkwithin our premises. This included subcontractors andoutsourcingcompanies.Aresponsewasreceivedfrom15ofthem,whoratedtheimportanceofthisReportas8.5.

With regard towhether theyproduceaCSR report,57%said that theydoandanother29%saidthattheydonotbutthattheyplantodoso.

Also,aspartof thesuppliermanagementproject,ane-mailchannelhasbeensetupforoursuppliercompaniestocommunicatewithustoresolveanydoubtstheymayhaveortopassonanycomplaintsorconcerns.

In theareaof suppliers, specialattentionshouldbepaid to themediationchannelof LagunAro. From the perspective of insurance companies, brokers and agents are stakeholders intheirownright,giventheirimportancetothebusiness.AtGroupleveltheyarenotconsideredassuch,butevensotheyaresupplierswithwhomaspecificrelationshiphasbeenestablished:

• Theirsatisfactionandthedegreetowhichtheirexpectationsaremetisanalysed:

Index

78

• Regularchannelsofcommunicationaremaintainedwiththem:RECOGNITIONANDTRAININGFOROURBROKERS

OnMarch7weheldtheBROKERS'CONVENTIONattheAIC(AutomotiveIntelligenceCentre)inBoroa. Our best brokers enjoyed a day of recognition in an environment where we couldwitnessthechangestakingplaceintheautomotivesector.ThemembersoftheSPECIALCLUBreceivedtwotrainingdaysinJulyandOctober.Onthe10thand11ththeconsultant,JulioEloyPaez,offeredaverydynamicpresentationonPlanningandOptimisingTime.On29October, JavierSierra,aspecialistconsultant in the insurancesector,gaveatrainingcourseonhowtobringcommercialvaluetoallthejobsinthebrokeragefirm,allofwhichwasverymuchappreciatedbyourbrokers.

3.5.4.Initiativesdevelopedduringtheyearforresponsiblesuppliermanagement

During 2019, LABORAL Kutxa has developed the following action plans with regard tosuppliers:• With respect to occupational risk prevention, as mentioned above, progress has been

made in implementing thecomputerisedmanagementsystem. Inorder toanalyse theirdegree of compliance, all external personnel who come to Central Services areperiodically checked for compliance with the controls and the necessary exchange ofinformationanddocumentation.For2020,theobjectiveistolinkthesystemtotheaccesscontrol so thatno subcontractor canenterourpremiseswithouthaving theup-to-datedocumentation.Inthesameway,weintendtoimprovethecontrolofthesubcontractorsthathaveaccesstoourbranchoffices.

• Within the supplier companies management project, development of the computerapplicationthatwillnowserveas thebasis forcontractingsuppliers for theentireBankhasbeencompleted.Afteratrialandadjustmentperiodduringthelatterpartoftheyear,ithasbeencompulsorytouseitforpurchasinggoodsandservicessinceJanuary2020.

ThepurchasingprocedurerequiressuppliercompaniestoadopttheSuppliercodeofethics.Bysigning the Code, they are committing themselves to environmental, human rights andequality, anti-money laundering and anti-corruption and data protection principles andobligations.Inaddition,thenewapplicationdistinguishesthreetypesofsuppliercompaniesaccordingtotheirgeographicalorigin:• Closecompanies:thosethatarebasedintheBasqueAutonomousCommunity.• Local Companies: those that are not close but whose headquarters are in a province

whereLABORALKutxahasaphysicalpresence(branchoffice).• Others.During2020theobjectivesofthisprojectare:• Toensurethefullimplementationoftheprocedure.• Toevaluatethisimplementationbydetectingpossibleareasforimprovement.• To consider a second phase of the procedure. Among other possible steps forward,

evaluate the possibility of implementing sustainability criteriawhen selecting suppliers:localpurchase,environmentalcertifications,equality,etc…

Index

4.OTHER FIGURES

Index

80

4.1.CustomersBasedonthekeybusinessareas(CreditandInsurance),eachportfolio isdetailedbelow.Theprofileofcreditcustomersisasfollows:

Loansbysector(Mofeuros) 2018 2019Publicsector 201.4 773.2OtherResidentSectors 13,344.2 13,444.8

NationalEconomies 10,433.2 10,470.0- Mortgages 9,837.7 9,818.3- Consumerfinancing 362.1 410.6- Others 233.4 241.2Companies 2,422 2.379OtherLoans 488.9 595.8

Non-ResidentCredit 41.8 30.6TotalCredittoGrossCustomers 13,587.4 14,248.7Valueadjustmentsduetoassetimpairment -352.8 -289.6TotalCredittoNetCustomers 13,234.6 13,959.1

ThegeographicaldistributionofLKcustomersisasfollows:

GeographicalareaCreditinvestment Deposits

2018 2019 2018 2019

Bizkaia 30.90% 25.06% 34.31% 33.02%

Gipuzkoa 18.35% 15.43% 29.27% 27.98%

Araba 11.46% 8.03% 14.41% 11.31%

Nafarroa 12.22% 9.75% 10.19% 9.63%

Burgos 2.68% 2.49% 1.08% 1.66%

Madrid 3.53% 3.30% 1.01% 1.01%

Valladolid 4.15% 3.91% 2.21% 2.11%

Zaragoza 6.71% 5.05% 1.76% 1.65%

Others 5.43% 26.98% 5.77% 11.63%

TOTAL 100% 100% 100% 100%

TheCLBSCustomerprofileasat31/12/2019isasfollows:

CategoryInsuredmen Insuredwomen

No.PoliciesAveragecapital

AverageAge

No.PoliciesAveragecapital

AverageAge

LifeRisk 44,794 46,567 46 40,592 45,536 45EarlyPartialRedemption 30,768 4,528 45 15,158 4,279 47EarlyPartialRedemption 5,302 62,164 40 5,010 59,218 40

Homeowner 62,302 - 54 46,469 - 54Landlord/Landlady 6,672 - 56 5,486 - 56

Tenant 3,064 - 48 3,259 - 47

CustomerServiceCustomerService-Amountsclaimed(thousandsofeuros) 2018 2019AmountsforcasesresolvedinfavouroftheCompany 1,627 1,150Amountsforcasesresolvedinfavourofthecustomer 44 69IndemnitiespaidbytheCompany 44 68AmountsreturnedtoCustomersbytheCompany,nopaymentdue 0 1Amountscompensatedorrefundedbythirdparties 0 0

Total 1,671 1,218

Index

81

Meanwhile,during2019,thelarge-scalelegalactionsagainsttheEntitywerereceivedforthefollowingthreemainreasons:• Those due to the trading of Eroski and Fagor's Subordinated Financial Contributions,

whichbetween2014and2016werethelargestnumber,continuedtofall,settlingat13in2019(0inthelastthreemonths),whichrepresents56%ofthefewthatenteredin2018,11%for2017and1%for2016.

• Thoseduetothefloorclauses inmortgageloanshavefallento177,being19%ofthosethatenteredin2018and39%for2017.

• Andthosearising fromthecosts incurred in the formalisationofmortgage loans,whichamountedto2,252in2019,areductionof10%comparedto2018.

• Lastly,68otherclaimshavebeenreceivedforothercauses.

Reasonforopeningcases(SAC) 2018 2019Centralisedcustomerservices 3% 3%Commissionsandexpenses 71% 73%Economicterms 16% 14%Missingorinaccurateinformation one% 0%Coverageofneeds 0% one%Informationmissingorincorrect two% 3%Aspectsofcustomerrelations one% two%Campaignsingeneral 0% 0%ATMs one% two%Amountoftheclaims 2018 2019≤€100 28.03% 24.43%> €100≤€250 4.95% 3.62%> €250≤€1,000 32.91% 54.76%> €1,000 34.11% 17.19%

Theclaimspresentedthroughthevariousavailablechannelshavebeen:2018 2019

No.ofclaimssubmittedtotheClaimsServiceoftheBankofSpaininrelationtoproductsafety(1) 2 0No.ofclaimsinwhichBoShaspronouncedinfavourofLABORALKutxa 1 0

Claimsrelatedtothefraudulentuseofmeansofpaymentandphishing.

2018 2019No.ofclaimssubmittedtotheClaimsServiceoftheBankofSpain,DGS,CNMVandUNACCregardinginformationonproductsandservices(1)

12(2) 23

No.ofclaimsinwhichBoSandCNMVhavepronouncedinfavourofLK 9 10(1) Claimsrelatedtoincorrectinformationorbadadvice,mainlyinformationaboutalltypesoffeesandcosts(accountmaintenance,overdraft,etc.).(2) 290claimsreferringtoformalisationcostsand/orarchivedfloorsinfavourofLABORALKutxamustbeaddedtothisfigure.

2018 2019No.ofclaimssubmittedtotheClaimsServiceoftheBankofSpainandtheCNMVinrelationtotheadvertisingofproductsandservicesandprivacy.

3 0

No.ofclaimsinwhichBoSandCNMVhavepronouncedinfavourofLABORALKutxa 3 0Costoffinesfornon-compliancewithregulationsontheprovisionanduseofservices. 0 0

2018 2019PenaltiesimposedontheGroup(euros)fornon-compliancewithlawsandregulations 14,400 40.001

BothamountscorrespondtopenaltiesfromtheDataProtectionAgency(DPA).

82

LagunAro 2018 2019Opencases(claimsandcomplaints) 721 695No.ofclaimssubmittedtotheInsuranceandPensionFundsD.G.ClaimsService 23 30%ofclosedcasesestimatedorpartiallyestimated 46.2% 49.9%Averageresponsetime(days) 9.86 10.35Amountofpaymentsinfavourofthecustomer€ 123,100 115,758%finalreportsreceivedfromsupervisor(totalorpartial)infavouroftheclaimant 18.4% 3.2%CLBS 2018 2019Opencases(claimsandcomplaints) 16 10(1)%ofclosedcasesestimatedorpartiallyestimated 15.8% 0%Averageresponsetime(days) 2.47 0.44Amountofpaymentsinfavourofthecustomer€ 0 0

(1) The10claimssubmittedwereaddressedtootherEntities,sotheywereinadmissible.

Mainfiguresforresponsibleproductsandservices

2018 2019No. Thousand€ No. Thousand€

Micro-credits 1,447 22,709 1,127 17,795PersonalLoan 356 1,765 283 1,032MortgageLoan 0 0 0 0InsuredCards 291,794 - 273,147 - ErkideLoan 0 0 1 1.3FCTCLoan 0 0 0 0CEPES/ASLELoan 1 5 0 0SocialEcon.EaSILoans 103 9,563 282 25,297

Thevolumeoftheseagreementsin2018and2019wasasfollows:

PublicOrganisation(thousandsofeuros)

No.ofoperationsformalised AmountformalisedBalanceavailableasat

31/122018 2019 2018 2019 2018 2019

ICO 0 0 0 0 9,999 7,559BasqueGovernment 11 11 1,797 4,635 101,234 90,409GovernmentofNavarra 0 0 0 0 105,080 94,981GovernmentofCastilleandLeon

0 0 0 0 7,291 6,572

CentralGovernmentArabaProvincialCouncil

00

00

00

00

53,341359

48,082235

GipuzkoaProvincialCouncil 0 0 0 0 547 465SPRI-AFI 0 0 0 0 18,233 13,959OtherAgreements 314 267 1,348 981 3,230 2,817Sum 325 278 3,145 5,616 299,313 265,080MGS 270 570 38,893 41,643 149,809 153,073

Customersusingnewchannels 2018 2019No.ofCLNetcontracts 650,120 677,920CustomersactiveonCLNet 395,930 430,504%activecustomersbasedoncontracts 60.9% 63.5%MobileBanking(userswhohaveaccessedviamobile) 299,334 342,528Alerts(activecontracts) 360,980 377,360Bizum 94,308 160,014

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4.2.People

PartnerworkforceofLKbysexandprofessionalcategory*

2018 2019Men Women Men Women

No. % No. % No. % No. %Directors 22 1.3% 5 0.3% 17 1.0% 6 0.4%Managers 246 14% 121 6.9% 236 14% 120 7.1%Technicians 316 17.9% 359 20.4% 307 18.1% 356 21.0%Clericalstaff 144 8.2% 280 15.9% 122 7.2% 248 14.6%Others 161 9.1% 108 6.1% 167 9.8% 116 6.8%Total 889 50% 873 50% 849 50% 846 50%Activepartners 1,762 1,695*ThecategoriesincludedinthedifferentProfessionalGroupsarethefollowing:• Directors:Dir.General,AreaDir.,RegionalDir.andDept.Directors.• Managers:SectionManagers,AreaManagersandBranchManagers.• Technicians:CSTechs.,OfficeManagersandTechnicians(SalesManagers).• Clericalstaff:1stOfficers,2ndOfficers,AdministrativeAssistantsandOperators.• Others:D.D.O.P.V.

LKworkforcebyage2018 2019

Partner RemainderPartner Remainder

Men Women Total Men Women TotalUpto30 14 89 1 3 4 43 73 116Between31and40 410 49 122 218 340 17 43 60Between41and50 853 8 430 428 858 8 4 12Between51and60 453 3 273 189 462 2 1 3Over60 32 0 23 8 31 0 0 0Totalworkforce 1,762 149 849 846 1,695 70 121 191

CLBSworkforcebysex,prof.categoryandbusinessarea

2018 2019Men Women Men Women

No. % No. % No. % No. %Directors 1 0.6% 0 0% 1 0.6% 0 0%Managers 8 4.5% 2 1.1% 8 4.7% 2 1.2%Technicians 0 0% 6 3.4% 0 0% 6 3.5%Salesmanagers 29 16.4% 131 74% 30 17.5% 124 72.5%Totalworkforce 38 21.5% 139 78.5% 39 22.8% 132 77.2%CentralServ. 2 1.1% 7 4% 2 1.2% 6 3.5%CommercialNetwork 36. 20.3% 132 74.6% 37 21.6% 126 73.7%Totalworkforce 38 21.5% 139 78.5% 39 22.8% 132 77.2%Totalworkforce 177 171

CLBSworkforcebyage 20182019

Men Women TotalUpto30 0 1 0 1Between31and40 3. 4 3 21 24Between41and50 96 21 76 97Between51and60 47 14 35 49Over60 - 0 0 -Totalworkforce 177 39 132 171

LagunArostaffbysexandprof.category2018 2019

Men Women Men WomenNo. % No. % No. % No. %

Directors 5 3% 1 one% 4 8% 2 4%

Managers 14 8% 11 7% 14 26% 122.3%

Technicians3.4

twenty% 53 32% 31 58% 50 94%

Index

84

Clericalstaff 4 two% 44 27% 4 8% 46 87%Totalworkforce 57 33% 109 67% 53 33% 110 67%

StaffofLagunArobyage2018 2019

M W M W

Upto30 0 1 0 1

Between31and40 7 14 5 11

Between41and50 21 59 18 59

Between51and60 29 3. 4 29 38

Over60 0 1 1 1

Sum 57 109 53 110

Totalworkforce 166 163

AllofLagunAro'sworkersareindefinite.

TheentireCLBSworkforce,exceptone,hasapermanentcontract,beingdistributedbetweentheLABORALKutxaHeadOfficeandthebusinessnetwork.There isa temporaryman,under30,whoisabusinessmanager.TheentireworkforceinLagunAroispermanent.ContractualrelationshipLK(situationasat31/12)

2018 2019

Total Men Women Total Men Women

Activepartners 1,762 889 873 1,695 849 846Leaveofabsence 28 8 20 27 2 25

Secondment 15 6 9 15 5 10

Earlyretirees 161 120 41 161 110 51

Companycontracts 1,967 1,023 943 1,898 966 932

Temps.Full-time 142 44 98 182 63 119

Temps.Part-time 1 0 1 3 1 2

TemporaryContracts 143 44 99 185 64 121

IndefiniteContracts 6 6 0 6 6 0

Totalworkforceasat31/12 2,116 1,073 1,042 2,089 1.036 1,053

LagunArocontractualrelationship 166 57 109 163 53 110

LKcontractsbyageasat12/31

2018 2019

TotalUpto30

31-40

41-50

51-60

>60

TotalUpto30

31-40

41-50

51-60

>60

Activepartners 1,762 14 410 853 453 32 1,695 4 340 858 462 31Leaveofabsence 29 1 16 8 2 2 27 1 20 5 1 -

Secondment 15 - 5 7 3 - 15 1 6 4 4 -

Earlyretirees 161 - - - 143 18 161 - - - 121 40

Companycontracts 1,967 15 431 868 601 52 1,898 6 366 867 588 71

Temps.Full-time 142 88 49 4 1 - 182 113 50 10 8 1

Temps.Part-time 1 1 - - - - 3 3 - - - -

TemporaryContracts 143 89 49 4 1 - 185 116 50 10 8 1

IndefiniteContracts 6 - - 4 2 - 6 - - 1 3 2

Totalworkforce 2,116 104 480 876 604 52 2,089 122 416 878 599 74

85

Workforcebylocation(LKandCLBS)

2018 2019

Partners Employee Women Men Partners Employee Women Men

CentralServices 398 37 219 216 401 42 227 216Individuals 30 0 13 17 27 0 12 15Insurance 30 0 9 21 28 0 10 18Company 90 1 24 67 91 1 24 68Reg.Network1 578 69 384 263 546 95 383 258

Reg.Network2 636 42 323 355 602 53 311 344

Total31/12 1,762 149 972 939 1,695 191 967 919

TheentireworkforceofLagunAroworksincentralservices.

Terminations/leaveandannualturnoverofworkingpartnersinLK 2018 2019Terminations/leaveintheyear: 124 117VoluntaryandPublicOfficeLeave 6 2LeaveCaringforchildren/family 37 43Retirement 8 6DeathorDisability 4 4VoluntaryResignation 2 5Onsecondment 0 2Earlyretirees 67 55TerminationsofWomenintheyear 63 45TerminationsofMenintheyear 61 72Totaldeparturerate(*) 6.70% 6.64%Directorsdeparturerate 16.7% 18.52%Managersdeparturerate 5.7% 5.18%Techniciansdeparturerate 6.2% 7.56%Clericalstaffdeparturerate 7.5% 6.06%Womendeparturerate 6.76% 8.13%Women<30departurerate 0% 0.23%Women>30departurerate 6.76% 7.90%Men’sdeparturerate 7.09% 5.06%Men<30departurerate 0% 0.00%Men>30departurerate 7.09% 5.06%(*)Thedeparturerateiscalculatedbasedonthenumberofpeopleleavingduringtheyearandthetotalnumberofactive members at the end of the previous year. Neither departures or turnover of members by area areconsidered,insteadtheyaredealtwithinanaggregatemanner.In2018and2019therewerenoinvoluntarydepartures.

TerminationsandannualturnoverinCLBS 2018 2019Terminations/leaveintheyear: 22 8LeaveCaringforchildren/family 5 1Retirement 1 0Disability 0 1Agreedendofcontract 11 0VoluntaryResignation 3 5Endofcontract 0 0Dismissals 2 1TerminationsofWomenintheyear 15 6TerminationsofMenintheyear 7 2Totaldeparturerate 12.02 4.68%Womendeparturerate 10.48 4.32%Men’sdeparturerate 17.5 5.13%*Alldepartures,bothmenandwomen,areover30years.

86

TerminationsandannualrotationofWorkingPartnersinLagunAro 2018 2019Terminations/leaveintheyear: 8 5VoluntaryResignation 0 0Others 8 5TerminationsofWomenintheyear 4 2TerminationsofMenintheyear 4 3Totaldeparturerate* 4.82 3.07%Womendeparturerate 3.67 1.82%Men’sdeparturerate 7.01 5.66%**Totaldepartures,forbothmenandwomen,arepeopleover30.

InLABORALKutxatherehavebeennodismissalsinthelasttwoyears.

DismissalsinCLBS:2018 2019

Sex Age Category Sex Age CategoryM 59 GES W 58 GESM 61 GES - - -

DismissalsatSegurosLagunAro:2018 2019

Sex Age Category Sex Age CategoryW 47 Administrativestaff M 58 DirectorM 59 Director M 58 ManagerM 62 Director W 60 SpecialistM 60 Specialist W 60 Administrativestaff- - - M 46 Administrativestaff

TraininginLABORALKutxaandCLBS 2018 2019Numberofcourses 415 456Hoursoftraining 87,333 168,298Hoursoftraining/person 41.71 81.38Partner 41.85 83.27Temporary 40.26 62.15Averagetraininginhoursbycategory(individually)Directors 71.12 71.83OfficeManagersandDirectors 39.13 93.90

Technicians 44.35 82.26

Clericalstaff 35.99 73.70

73,5886,3840,4847,5245,8853,8637,2343,70

0

100

Directors

FemaleDirectors

Officemanagersanddirectors

Hoursoftraining2018

119,2

24,5

126,5

61,3 70,693,9

58,988,5

0

200 Directors

FemaleDirectors

Officemanagersanddirectors

TrainingHours2019

87

TraininginSegurosLagunAro 2018 2019Hoursoftraining 4,752.4 3,737.3Women 2,608.5 2,567.8Men 2,143.9 1,169.5Hoursoftraining/person 28.6 20.31Directors 964.3 620

OfficeManagersandDirectors 1,385 643

Technicians 2,378.6 2,311.3Clericalstaff 24.5 163

The proportion between participants on courses by sex (women / men) in 2019 was 1.1comparedto1.61in2018.Thepercentageofdifferentpeopletrainedwas99%in2019and2018.Regardingthepromotionindex,understoodasanimprovementinthestructuralwageindex,in 2019 itwas 7.09%. Includingother non-structural concepts such as seniority, this rises to28.21%(5.45%and36.61%in2018).

LKaverageemploymentindex 2018 2019Women 2.19 2.21Men 2.51 2.50DifferenceM/W 14.5% 13.2%*Theaverageemploymentindexwas2.36,whichwasequivalentasat31/12/19to€2,937.47grosspermonth.

LKaverageemploymentindex2018 2019

M W M WDirect. 4.83 3.95 4.80 3.95Manager 2.84 2.70 2.84 2.72Specialist 2.37 2.20 2.36 2.20Admin. 2.07 1.93 2.10 1.95

LKpaybyage2018 2019

Man Woman Man WomanUpto30 42,711 33,420 - (1) 36,147Between31and40 40,792 34,251 41,218 35,604Between41and50 47,327 40,240 47,171 40,378Between51and60 52,991 43,495 50,664 44,691Over60 56,217 41,640 51,581 43,149

(1) Therearenomenunder30.

AverageemploymentindexCLBS 2018 2019Women 2.07 2.12Men 2.70 2.68DifferenceM/W 30.4 26.4%

AverageemploymentindexCLBS2018 2019

M W M WDirect. 3.33 - 3.34 - (1)Manager 3.18 3.37 3.46 3.39Specialist 2.83 2.60 0.00 2.66Mngr. 2.51 2.03 2.45 2.07

(1) Therearenofemaledirectors.

88

RemunerationatCLBSbyage2018 2019

Man Woman Man WomanUpto30 -* -* 1.27 -*Between31and40 2.12 1.99 1.95 2.08Between41and50 2.51 2.06 2.47 2.12Between51and60 3.24 2.09 3.25 2.14Over60 -* 2.15 -* -**Therearenopeopleinthisrange.

LagunAroaveragesalary 2018 2019Women 47,141 47.294Men 65,554 64,517DifferenceM/W 39.06% 36.42%

Salarybysexandprofessionalcat.(€thou.)2018 2019

Men Women Men WomenDirectors 100.6 81.3 99.5 79.63Managers 74.1 67.3 74.5 68.66Technicians 60.6 51.51 59.27 50.13Clericalstaff 37.42 36.25 45.3 37.5

RemunerationatLABORALARObyage2018 2019

Man Woman Man WomanUpto30 0 37,448 0 38,106Between31and40 50,693 38,926 48,012 34,465Between41and50 62,569 47,350 64,954 47,200Between51and60 71,302 50,723 67,467 50,977Over60 0 61,913 91,874 63,216

ThedatarelatingtoabsenteeismintheGrouparepresentedbelow.Hoursandabsenteeismrate 2018 Men Women 2019 Men Women

AccidentandIllness 117,184 42,384 74,800 111,443 41,856 69,587Maternity 22,918 - - 20,653 - -Paternity 3,998 - - 4,858 - -Other* 5,669 - - 2,874 - -

TotalHoursAbsenteeismLK 149,769 - - 139,828 - -AbsenteeismRateLK 3.85 2.76 4.96 3.80 2.83 4.79

AbsenteeismRateLagunAro 4.57 4.03 0.55 3.89 0.36 4.01TotalhoursabsenteeismLagunAro nd - - 1,607 - -

AbsenteeismrateCLBS 5.65 3.68 6.19 4.99 3.40 8.24TotalhoursabsenteeismCLBS nd - - 16,281 - -

* Careofsickchildren

ThefollowingisinformationregardingaccidentsintheGroup.

LKandCLBSworkaccidents 2018 2019

Accidents 38 46Accidentfrequency(1) 4.49 3.22Accidentseverity(2) 0.23 0.05AccidentsLagunAro 0 0

(1) Accumulatedno.ofaccidentswithsickleave*1,000,000/h.worked(2) hourslostduetoaccident*100/h.theoreticaltobeworked

89

Outoftheaccidents in2018,17arewomenandofthose in2019,18.Mostoftheaccidentstakeplacetravellingtoorfromwork.Thereisnodataonfrequencyandseveritydisaggregatedbysex.TherearenooccupationalillnessesinouractivityfortheGroup.

4.3.Environment

PostamailUsers 2018 2019Numberofusers. 543,231 568,282

%Usersfromtotalcustomerbase 47.33% 50.62%

LABORALK. SegurosLA

Paperconsumptionkg 2018 2019(1) 2018Promotionalpaper/customer 0.093 0.116 0.18Officepaper/customer 0.238 0.251 0.003Totalconsumption/customer 0.331 0.323 0.368 0.18Totalpaperconsumption/person 181.75 184.56 394.44The2019dataincludesLABORALKutxaandLagunAro

Energy(Gj) 2018 2019SegurosLA

2018SegurosLA

2019Electricity 47,798 46,497 1,297 1,256Diesel 54.2 20.9 0 0Propane 0.49 0.47 0 0EnergyconsumptionA 47,853 46,518 1,297 1,256Energyconsumption/pers. 22.92 22.43 7.8 7.7ThedatapresentedcorrespondstoallLABORALKutxa,aswellasallthestaff.

The intensityof thegreenhousegasemissions,measuredas the totalCO2emissionsamongtheLKworkforcewouldbe2.55inthiscase,comparedto2.69in2018.

Index

5.INFORMATION ON THE REPORT

Index

91

ReportProfile

The2019ReportisthesixthCSRReportpresentedbytheentityresultingfromtheintegrationin2012ofCaja Laboraland IparKutxaand refers toa full year. Since2005, the formerCajaLaboralpublishedannualCSRreports.

LABORALKutxawishestocontinuepublishingitsCSRReportonanannualbasis,inaccordancewith the guidelines laid down by the GRI. The LABORAL Kutxa CSR Report for 2019 waspreparedfollowingthe"comprehensive"optionoftheGRIStandardsandtheFinancialSectorSupplement,bothfromtheGRI.Whenchoosingthecomprehensiveoption,allthe indicatorsrelatedtothematerialaspectsidentifiedshouldbeanswered.

ThisreportalsocomplieswiththeprovisionsofLaw11/2018of28Decemberonnon-financialinformation and diversity, also taking into account the Communication from the EuropeanCommission2017/C215/01onGuidelinesforthepresentationofnon-financialreports.

It concerns the consolidated Group and includes both banking and insurance activities.Information regarding the two insurance companieswill be given jointly. For the restof thecompanies, due to their organisation and activity, the information is included with that ofLABORALKutxa,unlessthereisaspecificaspectthatrequiresseparatereporting.

In addition, LABORAL Kutxa maintained significant information in terms of sustainabilityrelatingto:

• Real estate asset management companies, which are companies through whichLABORALKutxamanages the real estatebusiness. Theyare instrumental companies,sotheirdataandimpactsareintegratedintothoseofLABORALKutxa.

• CajaLaboralBancaSeguros(CLBS)isanindependentbroker,100%ownedbyLABORALKutxa, theunderlyingpurposeofwhich is to integratethe insuranceactivity intothebusinessandcommercialstrategyofLABORALKutxa.Itsworkersarehiredemployees.

TheservicethatLABORALKutxaprovidestoCLBSisthecessionofthedistributionnetworkforthe mediation of insurance products. As it is integrated in LABORAL Kutxa, many of theindicators of its activity are integrated. Those aspects for which there are independentindicatorsarelistedthroughouttheReport.

LABORALKutxaisamemberofMONDRAGON.MONDRAGONismadeupof266autonomousandindependentcompaniesandco-operativesthatusetheirownreportingsystems.

92

ScopeofGRIindicatorsandaspectsIn accordancewith the established cover, there are no limitations in LABORAL Kutxa's 2019CSRReporttothescopeestablishedbyGRI,exceptfor:

§ Forindicatorsthatcouldnotbecoveredduetothelackofameasurementsystem,inwhichcasetheyhavebeenidentifiedintheReportandintheGRIIndicatorTable,andaneffortwillbemadetomeasuretheminfutureReports.

§ For the indicators that do not apply due to their scarce or even null relevance ormateriality in the activity of a financial entity and the economic, political and socialcontext of the Entity and the limitations of which are specified in each of theindicators.

Allindicatorsforwhichithasnotbeenpossibletoprovidedetailedinformationfortheabove-mentionedreasonswillbeindicatedintheReport.

Startingwiththe2014Report,amaterialityanalysisisincludedinordertodeterminethemostrelevantissuesinthefieldofSocialResponsibility.ThisanalysishasbeencarriedoutwiththeadviceofCegosDeployment, a companywithwhich LABORALKutxa cooperates regularly toguarantee the correct understanding of theGlobal Reporting Initiative - GRI guidelines. TheresultsofthisanalysisaredescribedintheMaterialityAnalysissectionofpart2.

PolicyregardingtheverificationoftheReportAENOR has been carrying out the verification of CSR Reports prepared by the former CajaLaboralsince2005.Giventheknowledgethattheverifyingorganisationhasacquiredoverallthese years of relations, LABORALKutxa, through the Financial Area, plans to continuewiththisverificationsysteminthefuture.

ContactAccesstheLABORALKutxawebsitewww.LABORALkutxa.comonthecorporatewebsite, in itsReportsandrelevantfactssection,thefollowingareavailable:

§ FinancialReport§ IndividualandConsolidatedAnnualStatements§ CorporateGovernanceReport§ TransparencyInformation§ CSRReports§ Non-FinancialInformationStatement

IntheContactsection,youcansendanytypeofsuggestion,complaint,claim,opinion,etc.Toaccess additional information or topics related to this Report, please send an e-mail to thefollowingaddress:[email protected]

6.ANNEXES

Index

94

6.1.TableofequivalenciesNon-financialinformationtobereported:

Chapters/sectionoftheAnnualReport_Page

Correspondence/GRIIndicators

Briefdescriptionofthegroup'sbusinessmodel(includingitsbusinessenvironment,organisationandstructure,themarketsinwhichitoperates,itsobjectivesandstrategies,andthemainfactorsandtrendsthatmayaffectitsfuturedevelopment).

Aboutus_PresentationoftheGroupAboutus_Businessmodel

GRI102-1GRI102-2GRI102-3GRI102-4GRI102-6GRI102-7GRI102-14GRI102-15

Adescriptionofthepoliciesappliedbythegroupthatwillinclude:theduediligenceproceduresappliedfortheidentification,evaluation,preventionandmitigationofsignificantrisksandimpacts,andverificationandcontrolprocedures,includingthemeasuresinwhichtheyhavebeenadopted.

Aboutus_PrinciplesandgovernmentGRI103-2GRI103-3

Theresultsofthesepolicies,whichshouldincluderelevantnon-financialkeyperformanceindicatorsthatallowprogresstobemonitoredandevaluatedandthatallowcomparisonstobemadebetweencompaniesandsectors,inaccordancewiththenational,Europeanorinternationalreferenceframeworksusedforeacharea.

ResponsibleManagement_ScorecardCustomerManagement_MainFiguresOurrelationshipwithstaff_MainfiguresOurrelationshipwithsociety_MainfiguresResponsibleenvironmentalmanagement_MainfiguresResponsiblemanagementofsuppliers_Mainfigures

GRI103-2GRI103-3

Themainrisksrelatedtoissueslinkedtogroupactivities(businessrelationships,productsorservices)thatmayhaveanadverseeffectontheseareas,andhowthegroupmanagestheserisks,explainingtheproceduresusedtodetectandevaluatetheminaccordancewiththenational,Europeanorinternationalreferenceframeworksforeacharea.Informationshouldbeincludedontheimpactsthathavebeenidentified,brokendown,andespeciallyonthemainrisksintheshort,mediumandlongterm.

Aboutus_RiskManagementandStrategyResponsibleManagement_MaterialityAnalysisResponsibleManagement_CommitmenttoSustainabilityResponsibleManagement_Scorecard

GRI102-15GRI102-30

Detailedinformationonthecurrentandforeseeableeffectsofthecompany'sactivitiesontheenvironmentand,whereappropriate,onhealthandsafety,theevaluationproceduresorenvironmentalcertification;theresourcesdedicatedtothepreventionofenvironmentalrisks;theapplicationoftheprecautionaryprinciple,theamountofprovisionsandguaranteesforenvironmentalrisks.

Aboutus_RiskManagementandStrategyAboutus_PrinciplesandGovernmentResponsibleenvironmentalmanagement_Managementapproach

GRI102-29GRI102-31GRI201-2

GRI103-2(GRIoftheenvironmentaldimension)

GRI102-11GRI102-29GRI102-11

Pollution:

Measurestoprevent,reduceorremedycarbonemissionsthatseriouslyaffecttheenvironment,takingintoaccountanyactivity-specificformofpollutionoftheatmosphere,includingnoiseandlightpollution.

Responsibleenvironmentalmanagement_PollutionResponsibleenvironmentalmanagement_Useofresources

GRI103-2(GRI302and305)

Circulareconomyandwastepreventionandmanagement:

Measuresforprevention,recycling,reuse,otherformsofwasterecoveryanddisposal;actionstocombatfoodwaste.Responsibleenvironmentalmanagement_Circulareconomyandwastepreventionandmanagement

GRI103-2(GRI306)GRI301-2GRI306-1

Sustainableuseofresources:Waterconsumptionandsupplyinaccordancewithlocallimitations

Responsibleenvironmentalmanagement_Useofresources

GRI303-1

Consumptionofrawmaterialsandthemeasuresadoptedtoimprovetheefficiencyoftheiruse.GRI103-2(GRI301)

GRI301-1GRI301-2

Energy:Consumption,directandindirect;Measuresadoptedtoimproveenergyefficiency,useofrenewableenergy.GRI103-2(GRI302)

GRI302-1GRI302-3

Climatechange:

Importantelementsofthegreenhousegasemissionsgeneratedaspartofbusinessactivity(includinggoodsandservicesproduced)

Responsibleenvironmentalmanagement_Climatechange

GRI103-2(GRI305)GRI305-1GRI305-2GRI305-3GRI305-4

Measuresadoptedtoadjusttotheconsequencesofclimatechange.GRI103-2(GRI305)

GRI201-2ReductiontargetssetvoluntarilyforthemediumandlongtermtoreduceGHGemissionsandthemeansimplementedtothisend.

GRI103-2(GRI305)

Protectionofbioiversity:Measuresadoptedtopreserveorrestorebiodiversity Theimpactscausedbythedirectactivitiesof

theLABORALKutxaconsolidatedGrouponbiodiversityarenotmaterialduetothefinancialandinsuranceactivitiesperformedbytheGroup.

GRI304-2GRI306-5Impactscausedbyprotectedareaactivitiesoroperations

Employment:

Totalnumberanddistributionofemployeesbygender,age,countryandprofessionalcategoryOurrelationshipwithstaff_MainworkforcefiguresOtherfigures_workforce.

GRI103-2(GRI401)GRI102-8GRI405-1

Totalnumberanddistributionofcontractmodalitiesandannualaverageofindefinitecontracts,temporarycontracts,andpart-timecontractsby:gender,ageandprofessionalcategory

OurrelationshipwithMembers_MainworkforcefiguresOtherfigures_workforce.

GRI102-8GRI405-1

Numberofdismissalsby:gender,ageandprofessionalcategory.Ourrelationshipwithstaff_Mainworkforcefigures.Otherfigures_Members

GRI401-1

Averageremunerationanditsevolutiondisaggregatedby:sex,ageandprofessionalclassification.OurrelationshipwithSlatemplate_MainmagnitudesofPartnersOtherfigures_workforce.

GRI405-2

SalarygapandcompensationforequaloraveragejobsinsocietyOurrelationshipwithstaff_Mainworkforcefigures.Otherfigures_workforce.

GRI103-2(GRI405)GRI405-2

Averageremunerationofdirectorsandexecutives(includingvariableremuneration,allowances,compensation,paymenttolong-termsavingsforecastingsystemsandanyotherpaymentbrokendownbygender

Aboutus_PrinciplesandGovernmentGRI102-35GRI102-36

GRI103-2(GRI405)

ImplementationofworkdisconnectionpoliciesOurrelationshipwithstaff_Mainworkforcefigures.

GRI103-2(GRI401)

EmployeeswithdisabilitiesOurrelationshipwithstaff_Mainworkforcefigures

GRI405-1

Workorganisation:

OrganisationofworkingtimeOurrelationshipwithstaff_Personaldevelopment

GRI103-2(GRI401)

Numberofhoursofabsenteeism Ourrelationshipwithstaff_Mainworkforce GRI403-2

Index

95

figuresOtherfigures_workforce

Measurestofacilitatetheenjoymentofwork-lifebalanceandtoencourageparentstopracticejointresponsibilityOurrelationshipwithstaff_Work-lifebalance

GRI103-2(GRI401)

Healthandsafety:

OccupationalhealthandsafetyconditionsOurrelationshipwithstaff_OccupationalHealthandSafety

GRI102-41

Workaccidents,particularlytheirfrequencyandseverity,aswellasoccupationalillnesses.Dividedbygender.Ourrelationshipwithstaff_MainworkforcefiguresOtherfigures_workforce

GRI403-2GRI403-3

Socialrelations:Organisationofsocialdialogue(includingproceduresforinforming,consultingandnegotiatingwithstaff)

Ourrelationshipwithstaff_Dialoguewithworkers

GRI103-2(GRI402)

PercentageofemployeescoveredbycollectiveagreementbycountryOurrelationshipwithstaff_Mainworkforcefigures

GRI102-41

Balanceofcollectiveagreements(particularlyinthefieldofoccupationalhealthandsafety)Ourrelationshipwithstaff_OccupationalHealthandSafety

GRI403-1GRI403-4

Training:

Thepoliciesimplementedinthefieldoftraining

Ourrelationshipwithstaff_DevelopmentOurrelationshipwithstaff_MainworkforcefiguresOtherfigures_workforce

GRI103-2(GRI404)GRI404-2

Accessibility:

UniversalaccessibilityforpeopleOurrelationshipwithstaff_Diversityandequalopportunities

GRI103-2(GRI405)

Equality:Measuresadoptedtopromoteequaltreatmentandopportunitiesbetweenwomenandmen;equalityplans(ChapterIIIofOrganicLaw3/2007,of22March,fortheeffectiveequalityofwomenandmen),measuresadoptedtopromoteemployment,protocolsagainstsexualandgender-basedharassment,integrationanduniversalaccessibilityofpeoplewithdisabilities;apolicyagainstalltypesofdiscriminationand,whereappropriate,diversitymanagement.

Ourrelationshipwithstaff_Diversityandequalopportunities

GRI103-2(GRI405and406)

ApplicationofduediligenceproceduresinthefieldofHumanRights

Ourrelationshipwithstaff_Workforcemanagementapproach

GRI102-16GRI102-17

GRI103-2(GRI412)GRI410-1GRI412-1GRI412-3

Preventionofrisksofhumanrightsviolationsand,whereappropriate,measurestomitigate,manageandremedypossiblemisconduct

Complaintsrelatedtotheviolationofhumanrights GRI406-1PromotionofandcompliancewiththeprovisionsoftheInternationalLabourOrganisation'sfundamentaltreatiesrelatingtorespectforfreedomofassociationandtherighttocollectivenegotiation.

GRI103-2(406,407,408and409)

Measuresadoptedtopreventcorruptionandbribery

1.Aboutus_PrinciplesandGovernment

GRI102-16GRI102-17

GRI103-2(GRI205)GRI205-1GRI205-2GRI205-3

Measurestocountermoneylaundering

Contributionstonon-profitorganisationsandfoundations GRI413-1Thecompany'scommitmenttosustainabledevelopment

Theimpactofthecompany'sactivityonlocaldevelopmentandemploymentOurrelationshipwithsociety_ManagementApproach

Theimpactofthecompany'sactivityonterritorialandlocalpopulationsOurrelationshipwithsociety_ManagementApproach

TherelationsmaintainedwiththeactorsofthelocalcommunitiesandthemethodsofdialogueestablishedtherewithOurrelationshipwithsociety_Dialoguewithsociety

AssociationorsponsorshipactionsOurrelationshipwithsociety_Dialoguewithsociety

Subcontractingandsuppliers:

Inclusionofthepurchasingpolicyregardingsocial,genderequalityandenvironmentalissuesResponsiblemanagementofsuppliers_Managementapproach

GRI103-2(GRI204,308and414)

ConsiderationintherelationswithsuppliersandsubcontractorsoftheirobligationsResponsiblemanagementofsuppliers_Managementapproach

GRI102-9SupplyChainGRI103-2(GRI204,308and

414)GRI204-1GRI308-1GRI414-1

SupervisoryandauditsystemsandresolutionthereofResponsiblemanagementofsuppliers_Managementapproach

GRI103-2(GRI204)

Consumers:

MeasuresforthehealthandsafetyofconsumersCustomermanagement_Responsiblecustomermanagement

GRI103-2(GRI416,417and418)

GRI416-1GRI417-1G4-FS15

Claimssystemsandcomplaintsreceivedandresolutionthereof

CustomerManagement_MaincustomerfiguresCustomermanagement_DialoguewithcustomersOtherfigures_Customers

GRI102-17GRI103-2(GRI416,417and

418)GRI416-2GRI417-2GRI418-1

Taxinformation:Profitsobtainedcountrybycountry

1.Aboutus_MainGroupFiguresGRI103-2(GRI201)

TaxesobtainedonbenefitspaidPublicgrantsreceived GRI201-4Anyotherrelevantinformation:

96

6.2.TableofGRIindicatorsAny indicators that directly affect those areas that according to the materiality matrix areconsideredtobeofhighormedium-highrelevancearedisplayedwithabluebackground.

ORGANISATIONPROFILE102-1 Nameoftheorganisation. CajaLABORALPopularCoop.deCrédito

102-2 Activities,brands,productsandservices.8-9PresentationoftheGroup38-39ResponsibleproductsandservicesRefertoWebsite www.LABORALkutxa.com

102-3 Locationoftheorganisation'smainoffices.JoséMªArizmendiarrietas/n.20500Arrasate-Mondragón(Gipuzkoa)

102-4 Statethenumberofcountriesinwhichtheorganisationoperates. LABORALKutxaoperatesexclusivelyintheSpanishState102-5 Propertyregimeandlegalform. CajaLaboralPopularCoop.deCrédito

102-6Specifywhichmarketsareserved(withageographicalbreakdown,bysectorandtypeofcustomersandrecipients).

12Geographicdistribution36managementapproachandMaincustomerfigures80-81-82Othercustomerfigures

102-7

Determinethescaleoftheorganisation,indicating:NumberofpeopleemployedNumberofoperationsNetsalesornetincomeCapitalisation,brokendownintermsofdebtandequityQuantityofproductsorservicesoffered

13-14MainFiguresoftheGroup

102-8

Determine:Numberofpeopleemployedbycontracttypeandgender.NumberofpermanentemployeesbycontracttypeandregionStaffsizebyemployedpersons,contractedworkersandgender.Indicatewhetherasubstantialpartoftheorganisation'sworkiscarriedoutbylegallyrecognisedself-employedpersonsorbypersonswhoareneitheremployeesnorcontractworkers,suchaspersonsemployedandsub-employedhiredbycontractors.

83-89Otherfigures-People

102-9 Describetheorganisation'ssupplychain. 76Ourrelationshipwithsuppliercompanies

102-10Reportanysignificantchangesduringtheperiodunderreviewinthesize,structure,shareholdingorsupplychainoftheorganisation.

5-6Letter9-10Operatingstructure14-17Riskmanagementandstrategy9InvesteeCompanies76Ourrelationshipwithsuppliercompanies

102-11 Describehowtheorganisationaddresses,ifapplicable,theprecautionaryprinciple.

14-17Riskmanagementandstrategy17-20PrinciplesandGovernment26-27ManagementApproachRisksaregenerallymanagedbytheGoverningBoard'sRiskCommitteeandtheRiskAppetiteFramework,andarereportedannuallyintheInformationwithPrudentialRelevance.EnvironmentalrisksaremanagedwithinasystemcertifiedwithISO14001:2015.RisksforcustomersofnewproductscomeunderthescopeoftheProductsCommittee

102-12Preparealistofletters,principlesorotherexternalinitiativesofaneconomic,environmentalandsocialnaturethattheorganisationendorsesorhasadopted. 67-69InitiativesendorsedbyLABORALKutxa

102-13Preparealistofnationalandinternationalassociationsandorganisationstowhichthecompanybelongs.

STRATEGY

102-14Statementfromtheorganisation'schiefdecision-maker. 5-6Letter

102-15Mainimpacts,risksandopportunities.

14-17Riskmanagementandstrategy31-33Materiality28-29CommitmentsandAchievements30-31CSRScorecard

ETHICSANDINTEGRITY

102-16 Describethevalues,principles,standardsandregulationsoftheorganisation.11-12Values,principles,standardsandcodesofconduct

102-17

Describetheinternalandexternaladvisorymechanismsforethicalandlawfulconduct,andforconsultingonmattersrelatedtotheintegrityoftheorganisation.Describetheinternalandexternalmechanismsforreportingunethicalorillegalconductandmattersrelatedtotheintegrityoftheorganisation.

21-22-23Corruptionandbribery38CustomerService

GOVERNANCE

102-18Describetheorganisation'sgovernancestructure,includingthecommitteesofthehighestgoverningbody.Identifythecommitteesresponsibleformakingdecisionsoneconomic,environmentalandsocialissues

9-10OperatingStructure17-20CorporateGovernance36-37Dialoguewithcustomers31-32MaterialityanalysisRefertoCorporateGovernanceReport

102-19Describetheprocessbywhichthehighestgoverningbodydelegatesitsauthoritytoseniormanagementandcertainemployeesoneconomic,environmentalandsocialmatters.

102-20 ProcessforsubmittingaccountstotheBoard102-21 Processesforconsultingwithstakeholders102-22 Describethecompositionofthehighestgoverningbodyanditscommittees.102-23 Executiveornon-executivenatureofthehighestgoverningbody.

102-24Describetheappointmentandselectionprocessesforthehighestgoverningbodyanditscommittees,aswellasthecriteriaonwhichtheappointmentofthemembersoftheformerisbased.

RefertoCorporateGovernanceReport

102-25Describetheprocessesthehighestgoverningbodyfollowstopreventandmanagepotentialconflictsofinterest.Indicatewhetherthestakeholdersareinformedinthisregard.

15-18CorporateGovernanceRefertoCorporateGovernanceReport

Roleofthehighestgoverningbodyintheselectionofobjectives,valuesandstrategy102-26 Describetherolesofthehighestgoverningbodyandseniormanagementinthedevelopment,approval, 17-20CorporateGovernance

Index

97

andupdatingoftheorganisation'spurpose,valuesormissionstatements,strategies,policies,andobjectiveswithrespecttoeconomic,environmental,andsocialimpacts.

11-12Values,principles,standardsandcodesofconductRefertoCorporateGovernanceReport

Collectiveknowledgeofthehighestgoverningbody

102-27Specifythemeasuresadoptedtodevelopandimprovethecollectiveknowledgeofthehighestgoverningbodyinrelationtoeconomic,environmentalandsocialmatters.

21Developmentofthegoverningbodies

102-28

Describetheprocessesforevaluatingtheperformanceofthehighestgoverningbodyinrelationtothegovernanceofeconomic,environmentalandsocialaffairs.Statewhethertheevaluationisindependentandhowoftenitiscarriedout.Specifywhetheritisaself-evaluation.Describethemeasuresadoptedasaresultoftheperformanceassessmentofthehighestgoverningbodyinrelationtothemanagementofeconomic,environmentalandsocialaffairs;amongotheraspects,specifyatleastwhethertherehavebeenchangesinmembersorinorganisationalpractices.

17-20CorporategovernanceRefertoCorporateGovernanceReport.102-29

Describetheroleofthehighestbodyinidentifyingandmanagingeconomic,environmentalandsocialimpacts,risksandopportunities.Alsooutlinetheroleofthehighestgoverningbodyinimplementingtheduediligenceprocesses.Indicatewhetherthestakeholdersareapproachedforinputintheworkofthehighestgoverningbodyintheidentificationandmanagementofeconomic,environmentalandsocialimpacts,risksandopportunities.

102-30Describetheroleofthehighestgoverningbodyinanalysingtheeffectivenessoftheorganisation'sriskmanagementprocesseswithrespecttoeconomic,environmentalandsocialissues.

102-31Indicatethefrequencywithwhichthehighestgoverningbodyanalyseseconomic,environmentalandsocialimpacts,risksandopportunities.ROLEOFTHEHIGHESTGOVERNINGBODYINTHEPREPARATIONOFTHESUSTAINABILITYREPORT

102-32IdentifythemostimportantcommitteeorpositionthatreviewsandapprovestheSustainabilityReportandensuresthatallsignificantaspectsareaddressed.

17-20Corporategovernance

ROLEOFTHESENIORBODYINTHEEVALUATIONOFECONOMIC,ENVIRONMENTALANDSOCIALPERFORMANCE102-33 Describetheprocessforbringingimportantconcernstotheattentionofthehighestgoverningbody. 17-20CorporateGovernance

102-34Statethenatureandnumberofsignificantconcernsthatweretransmittedtothehighestbody,includingadescriptionofthemechanismsthatwereusedtoaddressandassessthem.

49DialoguewithstaffIntheannualreporttotheGoverningBoardregardingCSRactivities,therelevantactivitieswereidentified

REMUNERATIONANDINCENTIVES

102-35Describetheremunerationpoliciesforthehighestgoverningbodyandseniormanagement.Listtheperformancecriteriathataffecttheremunerationpolicywiththeeconomic,environmentalandsocialobjectivesofthehighestgoverningbodyandseniormanagement.

21RemunerationoftheGoverningBodiesRefertoConsolidatedAnnualStatementp.33

102-36Describetheprocessesusedtocalculateremuneration.Specifywhetherconsultantsareusedtodetermineremunerationandwhethertheyareindependentwithrespecttothemanagement.Indicateanyothertypeofrelationshipthatsuchcompensationconsultantsmayhavewiththeorganisation.

56-57Remunerationmanagement21RemunerationoftheGoverningBodiesSeeprudentialrelevancereport

102-37Explainhowstakeholders'viewsonremunerationaresoughtandtakenintoaccount,including,whereappropriate,theresultsofvotesonpoliciesandproposals

17-20Corporategovernance56-57Remunerationmanagement

102-38

Calculatethecorrelationbetweenthetotalannualremunerationofthehighestpaidpersonintheorganisationandtheaveragetotalannualremunerationoftheentireworkforce(notincludingthehighestpaidindividual).

56-57Remunerationmanagement

102-39Calculatethecorrelationbetweenthepercentualincreaseofthetotalannualremunerationofthehighestpaidpersonandthepercentualincreaseoftheaveragetotalannualremunerationoftheentireworkforce(notincludingthehighestpaidindividual).

PARTICIPATIONOFSTAKEHOLDERS

102-40

Createalistofstakeholdersrelatedtotheorganisation.

28-29CommitmentsandachievementsThestakeholdersareexaminedannuallyinthematerialitystudy.31-33Materiality36-37Dialoguewithcustomers49DialoguewithPeople49JointNegotiation66DialoguewithSociety

102-41

Percentageofemployedpersonscoveredbycollectiveagreements.

102-42

Indicatethegroundsforthechoiceofstakeholderswithwhichtheorganisationworks.

102-43

Describetheorganisation'sapproachtostakeholderengagement,includingthefrequencyofcollaborationwithdifferenttypesofstakeholders,orwhetheragroupwasspecificallyinvolvedinthereportingprocess.

102-44

Identifykeyissuesandproblemsthathavearisenfromstakeholderengagementanddescribetheorganisation'sassessment,includingthroughitsReport.Specifywhichstakeholderswereinvolvedineachofthekeyissuesandproblems.

MATERIALASPECTSANDCOVERAGE

102-45

Preparealistoftheentitiesappearingintheorganisation'sconsolidatedfinancialstatementsandotherequivalentdocumentsIndicatewhetheranyoftheentitieslistedintheorganisation'sconsolidatedfinancialstatementsandotherequivalentdocumentsarenotincludedintheReport.

9InvesteeCompanies

102-46DescribetheprocessfollowedtodeterminethecontentoftheReportandthescopeofeachAspect.ExplainhowtheReportingPrincipleshavebeenappliedtodeterminetheContentoftheReport.

91ReportProfile31-33Materiality

102-47 PreparealistofmaterialAspectsthatwereidentifiedwhiledefiningthecontentsoftheReport. 31-33Materiality

102-48 DescribetheconsequencesofthereformulationsoftheinformationprovidedinpreviousReportsandtheircauses.ThechangesthathavetakenplacearedescribedthroughouttheReport

102-49 MentionanysignificantchangeinthescopeandcoverageofeachaspectwithrespecttopreviousReports. 91ReportProfile

102-50 PeriodcoveredbytheReport. Year2019102-51 DateofthelastReport(ifapplicable). Reportfor2018publishedinMay2019102-52 Reportingcycle(annual,biennial). 91ReportProfile

102-53 ProvideapointofcontacttoresolveanydoubtsthatmayariseregardingthecontentsoftheReport.OntheWebpage:www.LABORALkutxa.com ormail:[email protected]

GRIINDEX

102-54102-55

Indicatewhichoptionyouhavechosen“inaccordance”withtheGuide.ProvidetheGRIindexofthechosenoption.GivereferencetotheExternalVerificationreportifthishasbeenperformed.

1Cover94-101GRIIndicatorsLastpage.AENORVerificationandreportinglevel

VERIFICATION

98

102-56

Describetheorganisation'spolicyandcurrentpracticeswithregardtoexternalverificationoftheReport.IfnotmentionedintheverificationreportattachedtotheSustainabilityReport,pleaseindicatethescopeandbasisoftheexternalverification.Describetherelationshipbetweentheorganisationandthecompaniesprovidingtheverification.Indicatewhetherthehighestgoverningbodyorseniormanagementhavebeeninvolvedintherequestforexternalverificationoftheorganisation'ssustainabilityReport.

91ReportProfileTheDirectoroftheFinancialAreaapprovedtherequestforverificationoftheReport.

MANAGEMENTAPPROACH

103-1 Specifythecoverageoftheorganisationforeachsignificantaspect.31-33Materiality14-17Riskmanagementandstrategy

103-2103-3

ManagementapproachanditscomponentsEvaluationofthemanagementapproach.

13-14Mainfigures26-27/36/48-49/61-62/69-70Managementapproach31-33Materiality14-17Riskmanagementandstrategy

CATEGORY:ECONOMYAspect:economicperformance

201-1 Directeconomicvaluegeneratedanddistributed. 14-15MainFigures

201-2Financialimplicationsandotherrisksandopportunitiesfortheorganisation'sactivitiesduetoclimatechange

38-41EnvironmentallyResponsibleProductsandServices.71-72Transparencyinfossilfuelexposure74-75Climatechange

201-3 Scopeofobligationsarisingfromthebenefitsplan.56-57Remunerationmanagement61Coop.ReturnsCapitalised

201-4 Financialaidgrantedbygovernmententities. 14GrantsAspect:marketpresence

202-1 Correlationbetweentheinitialsalarybrokendownbygenderandthelocalminimumwage. 56-57Remunerationmanagement202-2 Percentageofseniormanagersfromthelocalcommunity 17-20Corporategovernance

Aspect:indirecteconomicimpacts

203-1 Developmentandimpactofinvestmentininfrastructureandtypesofservices69-70OurrelationshipwiththeEnvironment62-64Gaztenpresa14Taxesandduties

203-2 Significantindirectfinancialimpactsandtheirscope. 64-65IndirectContributionstoSocietyAspect:Acquisitionpractices

204-1Percentageoftheexpenditureinplaceswithsignificantoperationsthatcorrespondstolocalsuppliers.

77Mainfigures-suppliers

Aspect:thefightagainstcorruption

205-1NumberandpercentageofcentreswhereRisksrelatedtocorruptionhavebeenassessedandrisksidentified.

21-23Corruptionandbribery

205-2 Anti-corruptioncommunicationandtrainingpoliciesandprocedures53TraininginAnti-CorruptionProcedures21Developmentofthegoverningbodies21-23Corruptionandbribery

205-3 Confirmedcasesandmeasurestaken21-23Corruptionandbribery24Regulatorycompliance

Aspect:unfaircompetitionpractices

206-1 Numberofclaimsofunfaircompetition,monopolyoranti-competitivepracticesandtheiroutcomeTherewerenoclaimsorlegalactionsintheyearscoveredbytheReport

CATEGORY:ENVIRONMENTAspect:materials301-1 MaterialsUSEDbyweightorvolume. 73-74Sustainableuseofresources301-2 Percentageofthematerialsusedthatarerecycledmaterials. 73-74Sustainableuseofresources

301-3Percentageofproductssoldandtheirpackagingmaterialsthatarerecoveredattheendoftheirusefullife,byproductcategory.

Thephysicalcomponentoffinancialproductsisnotsignificant.

Aspect:energy

302-1 Internalenergyconsumption. 73-74Sustainableuseofresources

302-2 Externalenergyconsumption73-74Sustainableuseofresources74-75Climatechange

302-3 Energyintensity 73-74Sustainableuseofresources302-4 Reductioninenergyconsumption. 73-74Sustainableuseofresources

302-5Reductionsintheenergyrequirementsofproductsandservices.

38-41EnvironmentallyResponsibleProductsandServices.

………………Aspect:water303-1 Totalwaterharvestingaccordingtothesource. 73-74Sustainableuseofresources303-2 Watersourcesthathavebeensignificantlyaffectedbywaterharvesting. Therewerenoaffectedwatersourcesdetected303-3 Percentageandtotalvolumeofrecycledandreusedwater. Waterisnotrecycledorreused………………Aspect:biodiversity

304-1Own,leasedormanagedbusinessunitsthatareadjacentto,containorarelocatedinprotected(orunprotected)areasofhighbiodiversityvalue.

LABORALKutxa'sfinancialactivitydoesnotaffectbiodiversityorimpactonprotectedareas.

304-2Descriptionofthemostsignificantimpactsonthebiodiversityinprotectedareasorinunprotectedhighbiodiversityareas,derivedfromtheactivities,productsandservices. LABORALKutxa'sfinancialactivitydoesnot

affectbiodiversityorimpactonprotectedareas.

304-3 Protectedorrestoredhabitats.

304-4NumberofspeciesincludedintheIUCNRedListandinnationalconservationlistswhosehabitatsareinareasaffectedbythebusiness,accordingtothelevelofdangerofextinctionofthespecies.

Aspect:emissions305-1305-2

Totaldirectandindirectgreenhousegasemissionsbyweight 74-75Climatechange

305-3 Otherindirectgreenhousegasemissions,byweight. 74-75Climatechange305-4 Intensityofgreenhousegasemissions 89Otherfigures-Environment

305-5 Reductioningreenhousegasemissions.69-70OurRelationshipwiththeEnvironment74-75Climatechange

99

305-6 Emissionsofozone-depletingsubstancesNoozone-depletingsubstancesareproduced,importedorexported.

305-7 NO,SOandothersignificantatmosphericemissions.Emissionsofthistypearetheresultofairconditioningsystemsandarenotconsideredtobesignificant.

Aspect:effluentsandwaste

306-1 Totalwastewaterdischarge,accordingtoitsnatureanddestination.72-73Circulareconomyandwastepreventionandmanagement

306-2 Totalweightofmanagedwaste,accordingtotypeandmethodoftreatment.72-73Circulareconomyandwastepreventionandmanagement

306-3 Numberandtotalvolumeofsignificantaccidentalspills Nosignificantaccidentalspillsweredetected306-4

Weightoftransported,imported,exportedortreatedwastedeemedhazardousunderAnnexesI,II,IIIandVIIIoftheBaselConventionandpercentageofthewastetransportedinternationally

Wedonotworkwiththetypeofwastedefinedintheindicator

306-5Identification,size,protectionstatusandbiodiversityvalueofwaterbodiesandrelatedhabitatssignificantlyaffectedbydischargesandrunofffromtheorganisation.

Noeffectonbiodiversityfromwaterdischargesorrunoffwatershasbeendetected

Aspect:regulatorycompliance

307-1Costofsignificantfinesandnumberofnon-monetarysanctionsfornon-compliancewithenvironmentalregulations.

ThecostoffinesandpenaltiesintheyearscoveredbytheReportwas0.

Aspect:environmentalassessmentofsuppliercompanies308-1 Percentageofnewsuppliercompaniesthatwereexaminedbasedonenvironmentalcriteria

76Ourrelationshipwithsuppliercompanies308-2

Significantactualandpotentialnegativeenvironmentalimpactsinthesupplychainandmeasurestaken

CATEGORY:EMPLOYMENT Aspect:employment

401-1Numberandrateofrecruitmentandaverageturnoverofpeopleemployed,brokendownbyagegroup,sexandregion.

83-89Otherfigures-Workforce

401-2Socialbenefitsforfull-timeemployeeswhicharenotofferedtotemporaryorpart-timeemployees,brokendownbykeyactivitylocations.

60SocialBenefits

401-3 Returntoworkandretentionratesaftermaternityorpaternityleave,brokendownbysex. 83-89Otherfigures-Workforce…………….Aspect:management-employeerelations

402-1Minimumnoticeperiodforoperationalchangesandpossibleinclusionoftheseincollectiveagreements.

Thereisnocollectiveagreementinthecooperative.AlthoughneithertheInternalRegulationsnortheinternalemploymentregulationsexpresslyestablishaminimumperiodofnoticeforinformingworkingpartnersofjoborworkplacechanges,majororganisationaloroperationalchangesmustbesubmittedtotheSocialCouncil.

Aspect:occupationalhealthandsafety

403-1Percentageoftheworkforcethatisrepresentedonformaljointhealthandsafetycommitteesformanagementandstaff,establishedtohelpmonitorandadviseonH&Sprogrammes

58-59OccupationalHealthandSafety

403-2

Typeandrateofinjuries,occupationalillnesses,dayslost,absenteeismandnumberofwork-relatedfatalitiesbyregionandbysex

58-59OccupationalHealthandSafety

403-3 Personnelwhoseprofessionhasahighincidenceorriskofillness.Giventhefinancialnatureofthebusiness,therearenooccupationalillnessesorhighrisksofillness.

403-4 Healthandsafetyissuescoveredinformalagreementswithtradeunions. 58-59OccupationalHealthandSafetyAspect:trainingandeducation404-1 Averagehoursoftrainingperyearperemployee,brokendownbysexandbyprofessionalcategory 83-89Otherfigures-Workforce

404-2Skillsmanagementandcontinuingeducationprogrammesthatpromoteemployabilityandhelpmanagetheendoftheirprofessionalcareers.

51-52Continuingeducationprogrammes

404-3Percentageofpeoplewhoreceiveregularperformanceandcareerdevelopmentreviews,brokendownbysexandbyprofessionalcategory

52-53PerformanceManagement-Bidean

Aspect:diversityandequalopportunities

405-1Compositionofthegoverningbodiesandbreakdownoftheworkforcebyprofessionalcategoryandsex,age,membershipofminoritygroupsandotherdiversityindicators.

83-89Otherfigures-Workforce17-20CorporateGovernance

405-2 Ratioofbasicsalaryofmentowomen,brokendownbyprofessionalcategoryandkeybusinesslocations.

56-57Remunerationmanagement83-89Otherfigures-WorkforceEqualpayforequalwork,regardlessofwhethermaleorfemale

Aspect:non-discrimination

406-1 Numberofcasesofdiscriminationandcorrectivemeasurestaken.NoincidentsofdiscriminationoccurredduringtheperiodcoveredbytheReport

Aspect:freedomofassociationandcollectivebargaining

407-1Identificationofsignificantcentresorsuppliercompanieswherefreedomofassociationandtherighttoenterintocollectiveagreementsmaybeviolatedorunderthreat,andmeasurestakentodefendtheserights.

BothLABORALKutxaandpracticallyallitssuppliercompaniesarebasedinSpain.Thismeansthat,bylaw,humanrightsmustberespected,includingthefreedomofassociationandcollectivebargaining.

Aspect:childlabour

408-1Identificationofcentresandsuppliercompaniesthatentailapotentialriskofincidencesofchildexploitation,andthemeasuresadoptedtocontributetotheabolitionofsuchexploitation.

BothLABORALKutxaandpracticallyallitssuppliercompaniesoperatesolelyinSpain.Thismeansthat,bylaw,humanrightsmustberespected,includingthenon-exploitationofchildren.

Aspect:forcedlabour

409-1CentresandSupplierCompanieswithasignificantriskofbeingthesourceofincidencesofforcedlabour,andthemeasuresadoptedtocontributetotheeliminationofallformsofforcedlabour.

BothLABORALKutxaandpracticallyallitssuppliercompaniesoperatesolelyinSpain.Thismeansthat,bylaw,humanrightsmustberespected,includingforcedlabour

Aspect:securitymeasures

410-1Percentageofsecuritystaffwhohavereceivedtrainingontheorganisation'shumanrightspoliciesorproceduresastheyapplytothebusiness.

LABORALKutxahiresitssecuritystaffthroughauthorisedexternalcompanies,whoguaranteethat100%ofthepeopleemployedforthejobareproperlytrained.

Aspect:rightsoftheindigenouspopulation

411-1Numberofcasesofviolationoftherightsofindigenouspeopleandthemeasurestaken

Thisindicatorisnotapplicable,asthegeographicalareaofLABORALKutxaisSpain

Aspect:assessment

100

412-1Numberandpercentageofcentresthathaveundergonehumanrightsimpactassessmentsorreviews

Therehavebeennoreviewsofactivitiesinaspectsrelatedtohumanrights,sincetheriskoftheirviolationisverylowornon-existent.

Aspect:localcommunities

413-1Percentageofcentreswhereprogrammesfordevelopment,impactassessmentandlocalcommunityparticipationhavebeenimplemented

65-66Profitsharing31-33Materiality

413-2Businesscentreswithsignificantactualorpotentialnegativeeffectsonlocalcommunities

Noactivitieswithanegativeorpotentialimpactonlocalcommunitieshavebeenidentified.

Aspect:assessmentofsuppliercompaniesinrelationtohumanrights

414-1Percentageofnewsuppliercompaniesthatwereexaminedbasedonsocialcriteria

Therewerenohumanrightsassessmentsofthevarioussuppliersandsubcontractorsbecause,apriori,nosuppliercompanieswereidentifiedthat,duetothevolumeofpurchasesinquestion,thetypeofbusinesstheywereengagedinortheirlocation,mightposeasignificanthumanrightsrisk.Nevertheless,asalreadystated,LABORALKutxaaimstomakeprogressindefiningasystemforevaluatingsuppliersfromasocialandenvironmentalpointofview,inlinewiththeprinciplesoftheGlobalCompact

414-2Significantactualandpotentialnegativesocialimpactsinthesupplychainandthemeasurestaken.

Aspect:publicpolicy415-1 Valueofpoliticalcontributions,bycountryandrecipient 65RelationswithGovernmentAgenciesandPoliticalParties

Aspect:healthandsafetyofcustomers

416-1Percentageofsignificantproductandservicecategoriesforwhichhealthandsafetyimpactshavebeenassessedtopromoteimprovements

36-48Ourrelationshipwithcustomers42-43Responsibleproductsandservices

416-2Numberofincidentsarisingfromnon-compliancewithregulationsorvoluntarycodesconcerninghealthandsafetyimpactsofproductsandservicesduringtheirlifecycle,brokendownbytypeofoutcome

81Sanctions80-82CustomerService

…………………..Aspect:labellingofproductsandservices

417-1Typeofinformationrequiredbytheorganisation'sproceduresrelatingtotheinformationandlabellingofitsproductsandservices,andpercentageofsignificantproductandservicecategoriesthataresubjecttosuchrequirements

AlltheproductsandservicesofLABORALKutxaaresubjecttotheregulationsoftheBankofSpainandtheSpanishNationalSecuritiesMarketCommission(CNMV)withregardtoinformationaboutthemandtheirformofmarketing,whichguaranteestransparencyintheseprocedures.Furthermore,theMIFIDregulationsareappliedtoprotectthecustomer(classification,test,information,etc.).36-48OurRelationshipwithCustomers

417-2Numberoffailurestocomplywithregulationsandvoluntarycodesconcerningproductandserviceinformationandlabelling,brokendownbytypeofresult.


417-3Numberofcasesofnon-compliancewithregulationsorvoluntarycodesinrelationtomarketingcommunications,suchasadvertising,promotionandsponsorship,brokendownbytypeofresult


Aspect:customerprivacy

418-1 Numberofsubstantiatedcomplaintsaboutviolationofprivacyandleakingofcustomerdata81Sanctions80-82CustomerService

Aspect:regulatorycompliance

419-1Costofsignificantfinesduetonon-compliancewithregulationsandlegislationconcerningthesupplyanduseofproductsandservices

81Sanctions80-82CustomerService24RegulatoryCompliance

PRODUCTPORTFOLIO

FS1Descriptionofthepolicieswithspecificenvironmentalandsocialcontentappliedtothebusinessareas

28-29Commitmentsandachievements62-64GaztenpresaFoundation44-45SociallyResponsibleInvestment69-75Ourrelationshipwiththeenvironment

FS2Descriptionoftheproceduresforevaluatingandselectingthesocialandenvironmentalrisksineachofthepoliciesdescribedaboveandappliedtothebusinessareas.

53-56DiversityandEqualOpportunities44-45SociallyResponsibleInvestment69-75Ourrelationshipwiththeenvironment

FS3

Descriptionoftheproceduresforensuringandcontrollingcompliancewiththesocialandenvironmentalrequirementsbythecustomersincludedinthecontractsortransactions

Thereisnosystemformonitoringandcontrollingourcustomersaftertheevent,duetothelocationofouractivitiesandtheprojectswefinance

FS4Descriptionoftheprocess(es)toimprovetheskillsofemployeesforimplementingenvironmentalandsocialpoliciesandproceduresastheyapplytobusinessareas

63-56OurrelationshipwiththeEnvironment

FS5Descriptionoftheinteractionswithcustomersandotherstakeholdersintermsofriskmanagementandenvironmentalandsocialopportunities

36-37DialoguewithCustomers49DialoguewithPeople66DialoguewithSociety

FS6Percentageoftheportfolioforeachofthebusinessareasbrokendownbyregion,sizeandbusinesssector

12Geographicdistributionofoffices36Maincustomerfigures80-82Otherfigures-Customers

FS7Monetaryvalueofproductsandservicesdesignedtoprovideaspecificsocialbenefitineachofthebusinessareasandbrokendownbysocialobjectives

42-48SociallyResponsibleProductsandServices

FS8Monetaryvalueofproductsandservicesdesignedtoprovideaspecificenvironmentalbenefitineachofthebusinessareasandbrokendownbyenvironmentalobjectives

46LoansforRenewableEnergies

FS9Auditcoverageandfrequencyforassessingthedegreeofimplementationofpoliciesandproceduresforsocialandenvironmentalriskmanagement.

91ReportProfile53-56Ourrelationshipwiththeenvironment

FS10PercentageandnumberofcompanieswithintheOrganisation'sportfoliowithwhichtheOrganisationhasinteractedonsocialandenvironmentalmatters.

36-37Dialoguewithcustomers76Ourrelationshipwithsuppliercompanies

FS11Percentageofassetssubjecttopositiveand/ornegativeenvironmentalandsocialscreening

71Environmentalriskassessment44-45SociallyResponsibleInvestment

FS12Votingpoliciesappliedtosocialorenvironmentalissueswherethereportingorganisationholdstherighttovotingactionsorvotingrecommendations

NotapplicableduetothetypeandlegalformoftheOrganisation

FS13 Accesstofinancialservicesindepopulated/disadvantagedareasbytypeofaccess. 46AccessibilitytoFinancialServicesFS14 Initiativestoimproveaccesstopeoplewithdisabilities 46ArchitecturalbarriersandaccessviaInternetandmobilephone.

FS15 Policiesregardingthefairdesignandmarketingoffinancialproductsandservices

LABORALKutxafollowsstrictregulationswhendesigningandmarketingproducts.ItalsohasaCodeofConduct.36-37OurRelationshipwithCustomers38-41Responsiblemanagementwithcustomers

FS16 Initiativestoexpandfinancialculture,brokendownbytypesofbeneficiaries

47-48FinancialCulture68Financialeducation62-64GaztenpresaFoundation64-65Indirectcontributionstosociety

101

6.3.ReportingleveloftheReport

LABORALKutxadeclares thisReport tobe comprehensive in termsof theapplicationofGRIStandards, according to the table above, given that this is confirmed by the results of theexternalverificationbyAENOR.ThelocationofeachofthebasiccontentsoftheGRIStandardsGuideisdetailedbelow.

6.4.AENORverification

Index

6.5. PRINCIPLESFORRESPONSIBLEBANKING

ReportingandSelf-AssessmentRequirements High-level summary of

bank’sresponseReference(s)/Link(s) to bank’sfull response/ relevantinformation

Principle1:AlignmentAlign the business strategy to be consistentwith and contribute to individuals’needs and society’s goals, asexpressed in the Sustainable Development Goals, the Paris Climate Agreement and relevant national andregionalframeworks.1.1. Describe (high-level) the bank's business

model, including the main customersegments served, types of products andservices provided, the main sectors andtypes of activities, andwhere relevant thetechnologies financed across the maingeographiesinwhichyourbankoperatesorprovidesproductsandservices.

We provide answers tothesequestionsthroughoutthe 2019 SustainabilityReport and Non-FinancialInformation Statement,which follows GRIstandards and has beenauditedbyAENOR.

1.1 GroupPresentation(P.7)1.3.Cooperativism(P.10)1.5. Geographical BranchDistribution(P.12)1.6Group'sMainFigures(P.13)3.1.2. Main Customer Figures(P.36)3.1.6.ResponsibleProductsandServices(P.42-48)4.1Customers(P.80)Main figures of ResponsibleProductsandServices(P.82)

1.2. Describe how the bank has aligned and/oris planning to align its strategy to beconsistentwith and contribute to society'sgoals, as expressed in the SustainableDevelopment Goals (SDGs), the ParisClimate Agreement, and relevant nationalandregionalframeworks.

In LABORAL Kutxa'sstrategic reflection for theperiod 2020-2022 we haveintegratedthePrinciplesforResponsibleBanking.

1.7. Strategy and RiskManagement(P.14-17)2.6. United Nations GlobalCompact and SustainableDevelopmentGoals(P.33-34)

Principle2:ImpactandTargetSettingContinuously increase positive impacts while reducing the negative impacts on, and managing the risks to,people and environment resulting from activities, products and services. To this end, set and publish targetswherewecanhavethemostsignificantimpacts.2.1 ImpactAnalysis:Showthatthebankhasidentifiedtheareasinwhich it has its most significant (potential)positive and negative impact through animpact analysis that fulfils the followingelements:

a) Scope: The bank’s core business areas,products/services across the maingeographies that the bank operates in asdescribed under 1.1. have been consideredinthescopeoftheanalysis.

b) Scale of Exposure: Where its corebusiness/its major activities lie in terms ofindustries,technologiesandgeographies.

c) Context & Relevance: most relevantchallenges and priorities related tosustainabledevelopment.

d) Scale and intensity/salience of impact:social,economicandenvironmentalimpactsresulting from the bank’s activities andprovisionofproductsandservices.

Show that building on this analysis, the bank

• Identified and disclosed its areas of mostsignificant (potential) positive and negativeimpact.

To prepare theSustainability Report, wecarried out an analysis ofimpacts, risks andopportunities, as well as amaterialitystudy.For2020wewillcarryoutaspecific analysis, using thetool launched by UNEP FI,for which we participatedin the development. Thetool is designed to analysethe impact of banks'portfolios, helping toanalyse the impactsassociated with their retailand wholesale portfolios.The analysis will enable usto set targets where it isimportant to boostcontribution to society'sgoals, as required by thePrinciples for Responsible

1.7. Strategy and RiskManagement(P.14-17)1.8. Principles and Governance(P.17-20)2.5. Materiality Analysis (P.31-33)3.16. Responsible Products andServices(P.42-48)3.4. Our Relationship with theEnvironment(P.69-75)

102

Index

• Identified strategic business opportunities inrelation to the increase of positive impacts /reductionofnegativeimpacts.

Banking.

Pleaseprovidethebank’sconclusion/statementifithasfulfilledtherequirementsregardingImpactAnalysis.

Thisyearwehaveconductedtheanalysisinthesamewayasinrecentyears,butingreaterdepthaftersigninguptothePrinciplesforResponsibleBanking.Wewillsoonconductamorein-depthanalysisusingthetoolproposedbyUNEPFI.Thisanalysiswillbeincorporatedinnextyear'sreport.2.2. TargetSettingShow that the bank has set and published aminimum of 2 specific, measurable (qualitativeor quantitative), achievable, relevant and time-bound targets, which address at least 2 of theidentified"areasofmostsignificantimpact".Show that the targets are linked to and drivealignment with and greater contribution toappropriate SDGs, the goals of the ParisAgreement, and other relevant international,nationalorregionalframeworks.Identifyandsettargetsagainst thisbaseline (assessedagainstaparticularyear).Show that the bank has analysed andacknowledged significant (potential) negativeimpacts of the targets and that it has set outrelevant actions to mitigate them as far asfeasibletomaximizethenetpositiveimpact.

In 2019, LABORAL Kutxamadeastrategicreflection,in which it set 10measurable targets thatcontribute to society'sgoals. To set these targets,the Principles ofResponsible Banking havebeen taken into account,aligning them with thebank'stargets.


Pleaseprovideyourbank’sconclusion/statementifithasfulfilledtherequirementsregardingTargetSetting.AsaresultofsigninguptothePrinciplesforResponsibleBanking,wehaveset10measurabletargetsinour2020-2022strategicperiod.2.3. Plans for Target Implementation and

MonitoringShow that the bank has defined actions andmilestonestomeetthesettargets.Showthatthebankhasputinplacethemeanstomeasureandmonitorprogressagainstthesettargets.Definitionsofkeyperformanceindicators,anychangesinthesedefinitions,andanyrebasingofbaselinesshouldbetransparent.

In addition to the StrategicPlan,thetargetshavebeenintegrated into the AnnualManagement Plan, withpartial targets, managersand lines of action. Forexample, one action for2020 is to change theelectricity consumed toelectricity exclusively fromrenewablesources.Throughout2019weperformedactionsfortheimplementationofthePrinciples.TheyareallmentionedintheSustainabilityReport.Tothisend,LABORALKutxahasestablishedaseriesofinitiativesandactionplans.ExamplesofthesearetheEqualityPlanandGaztenpresa.

2.6. United Nations GlobalCompact and SustainableDevelopmentGoals(P.33-34)3.2.5. Diversity and EqualOpportunities(P.53-56)GaztenpresaFoundation(P.62-63)

Please provide your bank’s conclusion/statement if it has fulfilled the requirements regarding Plans for TargetImplementationandMonitoring.

IntheManagementPlanwehaveputinplaceplansandlinesofactiontomeetthetargets.Theseareconstantlymonitoredandevaluatedattheendofeachperiod.

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2.4.ProgressonImplementingTargetsForeachtargetseparately:Show that you have implemented the actionspreviouslydefined.Explain why actions could not beimplemented/needed to be changed and howthe bank is adapting its plan to meet its settarget.Report on the bank’s progress over the last 12months towards achieving each of the settargets and the impact its progress resulted in(Where feasible and appropriate, includequantitativedisclosures)

In 2019, the Principles forResponsible Banking weresignedandtargetsweresetas part of the strategicreflection made. Actionshave also been set out toachieve these objectives.The progress made will beexplained in the 2020report.


Please provide your bank’s conclusion/statement if it has fulfilled the requirements regarding Progress onImplementingTargetsInthe2019financialyear,plansweremadetoimplementthetargetssetforthe2020-22strategicreflection.The2020reportwillexplaintheprogressmade.Principle3:ClientsandCustomersWorkresponsiblywithclientsandcustomerstoencouragesustainablepracticesandenableeconomicactivitiesthatcreatesharedprosperityforcurrentandfuturegenerations.3.1. Provide an overview of the policies andpractices the bank has in place and/or isplanningtoputinplacetopromoteresponsiblerelationships with its customers. Include high-level information on any programmes andactions implemented (and/or planned), theirscaleandtheresultsthereof.

We describe the practicesimplemented by LABORALKutxa to promoteresponsible relations withcustomers.Weareconvincedthat,asacreditcooperative,thiswayof acting responsibly hasbeen a constant from thebeginning.

3.1. Our relationship withCustomers(P.36-48)

3.2. Describe how your bank has worked withand/or is planning to work with its clients andcustomers to encourage sustainable economicactivities. Include information on actionsplanned/implemented, products and servicesdeveloped,andtheimpactsachieved.

This section describes theactions carried out toimplement responsiblecustomerrelations.

3.1. Our relationship withCustomers(P.36-48)3.1.3. Dialoguewith Customers(P.36-38)

Principle4:StakeholdersProactivelyandresponsiblyconsult,engageandpartnerwithrelevantstakeholderstoachievesociety’sgoals.4.1. Describe which stakeholders you haveconsulted, engaged, collaborated or partneredwith for the purpose of implementing thePrinciples and improving the bank’s impacts.Describe how the bank has identified relevantstakeholders and what issues wereaddressed/resultsachieved.

TopreparetheCSRReport,we have identified thestakeholders andestablishedmechanismsfordialoguewiththem.

2.5. Materiality Analysis (P.31-33)

Principle5:Governance&CultureImplementthecommitmenttothesePrinciplesthrougheffectivegovernanceandacultureofresponsiblebanking5.1. Describe the relevant governancestructures,policiesandproceduresthebankhasin place/is planning to manage significantpositive and negative (potential) impacts andsupport effective implementation of thePrinciples.

LABORAL Kutxa hasmechanisms for managingimpactsandrisks,aswellasa CSR Committee. The CSRCommittee is responsibleforand leadsthe initiativesrelated to sustainability,includingthePrinciples.

1.8. Principles and governance(P.17-20)

5.2. Describe the initiatives and measures thebankhasimplementedorplanstoimplementtofosteracultureofresponsiblebankingamongitsemployees. This should include a high-leveloverview of capacity building, inclusion inremuneration structures and performance

LABORAL Kutxa is a creditcooperative in which theworkers are the owners ofthe company, andtherefore they take partdemocratically in

1.3.Cooperativism(P.10-11)1.10. Remuneration of theGoverningBodies(P.21)3.2.4.StaffDevelopment(P.50)3.2.7. CompensationManagement(P.56-57)

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management and leadership communication,amongstothers.

management and decision-making.Our cooperative banking isa social economy and theculture of responsiblebanking is part of ouroperation.

5.3. Governance Structure for ImplementationofthePrinciplesShow that thebankhasagovernancestructureincludinga) target-setting and actions to achieve

targets.b) remedial action in the event they arenot

achieved or unexpected negative impactsaredetected.

As mentioned above, thePrinciples have beenintegrated into theStrategic Plan and theManagementPlan.The CSR committee leads,promotes and monitorseverything related tosustainability.

In the specific case of theenvironmental targets,weholdenvironmentalcertificationUNEENISO140013.4.1.Management Approach -Environment(P.69-70)

Please provide your bank’s conclusion/statement if it has fulfilled the requirements regarding GovernanceStructureforImplementationofthePrinciples.LABORAL Kutxa maintains a suitable structure for sustainability management, including the Principles forResponsible Banking. This structure stems both from our configuration as a credit cooperative and from thecontinuousefforttoimproveandadaptourorganisation.Principle6:Transparency&AccountabilityPeriodically review the individualandcollective implementationof thesePrinciplesandbe transparentaboutandaccountableforpositiveandnegativeimpactsandcontributiontosociety’sgoals.6.1. Progresson Implementing thePrinciples for

ResponsibleBankingShow that the bank has progressed onimplementing the Principles over the last 12months and has set and implemented thetargetsinminimumtwoareas(see2.1-2.4).Showthatthebankhasconsideredexistingandemerging international/regional good practicesrelevant for the implementation of thePrinciples and has defined priorities andambitions to align with good practices.Showthatthebankhasimplemented/isworkingonimplementingchangesinexistingpracticestoreflectandbeinlinewithexistingandemerginginternational/regional good practices and hasmade progress on its implementation of thesePrinciples.

Forthefirst6monthssincethe signing of thePrinciples, LABORAL Kutxahas incorporatedsustainability into thestrategic reflection for thenext three years,establishing 10sustainability targets inaddition to the businesstargets.

Since the signing of thePrinciples,wehaveparticipatedin the initiatives carried out byUNEP FI to advance theirimplementation. This allows usto be at the forefront of thegood practices that are beingcarried out at internationallevel.

Providethebank’sconclusion/statement if ithas fulfilled therequirements regardingProgresson ImplementingthePrinciplesforResponsibleBankingSincethesigningofthePrinciples,wehaveworkedintensivelytodevelopinitiativestoimplementtheobjectivesandtointroducethemintoourstrategyandobjectives.

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