from words to - bncr.fi.cr

SUSTAINABILITY REPORT 2018

From Words To

2

W E D R I V E C O S T A R I C A ’ S S U S T A I N A B L E P R O G R E S S

Banco Nacional de Costa RicaBanco Nacional’s headquarters is located in San José, Costa Rica, between streets 2 and 4, and 1rst and 3rd avenues. The bank has operations in the 7 provinces of Costa Rica.

Contact for questions about this report:Social Responsibility Office, phone: (506) 2212-2000Margarita Murillo Vargas, Executive / [email protected] www.bncr.fi.cr

3

S U S T A I N A B I L I T Y R E P O R T 2 0 1 8

IND

EX

Introduction...................................................................................................4Notes from the CEO................................................................................................6Organizational Profile............................................................................................16Ethical and Sustainable Banking.......................................................................25A Bank for Everybody......................................................................................31

Employee Development..............................................................................33Transforming Communities Program..........................................................38Together We Can Achieve More....................................................................40Financial Freedom........................................................................................42Sustainability Advertising.............................................................................44

Green Bank......................................................................................................47Productive Bank...............................................................................................52

Business and Institutional Banking........................................................55Development and Retail Banking.........................................................56BN Mujer (Women entrepreneur).............................................................61Trust Funds for Sustainability.....................................................................64Sustainable Value Chain..............................................................................66

Annexes............................................................................................69GRI index.........................................................................................................81

4


INTRODUCTION

1. 2. 3. 4.ETHICAL AND SUSTAINABLE

BANKING

A BANK FOR EVERYBODY GREEN BANK PRODUCTIVE

BANK

The basis of the sustainability strategy

Social Dimension EnvironmentalDimension

EconomicDimension

Banco Nacional’s 2018 Sustainability Report corresponds to the period from January 1 to December 31, 2018. The publication of this report has an annual periodicity.

This report was prepared in accordance with the standards of the Global Reporting Initiative (GRI), in its core option. The report coverages the operations of Banco Nacional in Costa Rica. It includes the profile of the organization and the four dimensions of sustainability, which in the organization have been named:

With the presentation of this report, Banco Nacional makes public its commitments and hopes that year after year its clients, collaborators and other strategic partners follow up on this evolution and also participate in the construction of progress with a vision of sustainability.

Throughout the document you will find links to expand the information of the report or to have access to audiovisual material about our programs.

5


WE WORK TO GENERATE

VALUE FOR OUR STAKEHOLDERS

Message from the President of the Board of Directors

María Jeannette Ruiz Delgado

Dear Friends,

It is a great satisfaction to present the first Sustainability Report of the Banco Nacional Financial Conglomerate, designed following international indicators of the Global Reporting Initiative. In it, we show the growth that the institution has achieved in terms of sustainability, its achievements, failures, and the objectives that we will have to accomplish in the next few years.

Since its creation in 1914, the purpose of Banco Nacional has been to work for the economic progress of the country, consolidating as a development bank firmly committed to the generation of economic, social, and environmental value. The Sustainability and Business Strategy based on these three dimensions is the way to take responsibility for the decisions and impacts caused by the activities of the Conglomerate on the environment, society, economy, and its public interests.

Ethical and transparent behavior is the starting point of Sustainability, complemented by continuous improvement management, which seeks to optimize the operation of the Conglomerate.

The aim is to strengthen the level of competitiveness of the institution, reinforcing its commitment to sustainability, while contributing to development and promoting a more prosperous economy in the country, leveraging our customers and generating a multiplier effect of responsible practices between collaborators, the value chain and interest groups.

For those unaware of the indelible mark of Banco Nacional, it is only necessary to take a look at history, the best evidence of its sustainable management. For the bank and its triple usefulness goal, it is essential to remember other institutions that were conceived at Banco

Nacional and are vital for the socio-economic development of Costa Rica. The Central Bank, the National Production Council, the Institute of Agrarian Development, the National Institute of Housing and Urban Development and the National Institute for Cooperative Development, which are convincing examples of the mark left by Banco Nacional along with its 105-year history.

These organizations originated in Banco Nacional, as our institution aimed to satisfy the needs of our target audiences. The work is done considering the maximization of resources and adequate risk management to avoid compromising the wellbeing of future generations. Along the same lines, the Banco Nacional conglomerate is currently working to guarantee a balance between economic growth, care for the environment, and social welfare.

Costa Rica needs to count on a robust, stable and secure bank, but, above all, one that is aware of the needs of our stakeholders, the protection of the environment, an adequate and efficient use of our resources, the strengthening of our collaborators, and the empowerment of micro, small and medium-sized enterprises. We keep ethics at the heart of the business and are committed to the country. To improve the quality of life of the most significant number of people, the Banco Nacional Conglomerate will strive to become Carbon Neutral by 2021 while maintaining its leadership in the financial sector.

Banco Nacional works for a common goal, making Costa Rica great. Thank you very much for your trust.

https://youtu.be/qVK5UW8czT4



6


WE CONTRIBUTE WITH PROGRESS TO COSTA RICAS’S

SUSTAINABLE ROUT

Gustavo Vargas Fernández General Manager

2018 was a very tough year for the national financial system, with a challenging economic environment for banking; however, the robustness of Banco Nacional allowed the indicators to be kept at adequate levels ensuring the stability of customers and employees.

An effective business management generates profits that allow responding to a demanding economy, financing major projects, and supporting companies and individuals that need Banco Nacional to be present and capable of lending. From the perspective of sustainability called Productive Bank, this document reports data that demonstrate management’s commitment at all levels.

Clients comprise a very dynamic audience, and in pursuit of responsible indebtedness we have implemented financial education initiatives to avoid the unwanted impacts of inadequate money management. Banco Nacional does not see its clients from a solely commercial relationship perspective; the organization is inclusive and adapts its services to be accessible -digital applications for blind people and automatic tellers in indigenous language have democratized our services.

The highest award an organization can receive is to know that its actions generate a positive impact, and having absolute clarity that sustainability is the ability to be profitable,

https://youtu.be/lAOOgVxcEtg



7


meeting current needs without compromising the resources of future generations. In 2018 Banco Nacional received seven awards for making responsible and inclusive banking, through which thousands of people benefitted.

The route towards sustainability is drawn, and covers three dimensions: 1) Economic, which means that Banco Nacional promotes the creation of jobs and wealth to meet the needs of the stakeholders. 2) Environmental: Takes care of institutional resources, decreases its carbon footprint and waste, invests in environmentally friendly technologies; and 3) Social: Looks after its employees, human rights, and the most vulnerable communities through specific programs or working with grassroots organizations.

We continue to make efforts to achieve carbon neutrality plus; we joined the country’s initiative, and we are confident that, in 2021, we will reach the goal. Social investment moves local economies that have been depressed, and Banco Nacional remains a role model in the regional economy.

The pillar of our employees is critical, and their commitment is evident in the implementation of actions, from the development of innovative technology products, credit counseling and the safeguarding of securities and efficiency, but also the volunteer hours that have transcended the operation. I sincerely appreciate this effort.

I am convinced that we have moved in the right direction to consolidate an efficient and responsible management for all our stakeholders. I invite all partners and customers to join our sustainability actions, because that’s a relationship where everyone wins. This achievement is the result of rigorous and committed work in different areas of Banco Nacional.

Banco Nacional is clear about this premise, and from it we have decided to support the construction of a more successful, productive, just and responsible society. To move towards this aspiration, the Board and General Management have defined we want to be a preeminent bank, a bank that stands out by offering services and products that meet, with excellence, the financial needs of our customers, but with a different view, a sustainable vision.

8


THE ACCOMPLISHED PROGRESS ALONG 105 YEARS OF HISTORY

BN FONDOS (Investment Funds):

BN VITAL (Pension Funds):

BN CORREDORA DE SEGUROS (Insurance Broker):

Websites of Banco

Nacional and its subsidiariesBN VALORES (Securities):

Banco Nacional of Costa Rica (BNCR) was established by Executive Decree No. 16 on October 9, 1914, during the beginning of the First World War. Faced with the threat of decreased exports in the country, the government began to stimulate domestic demand by putting cash in the hands of Costa Rican families, but currency emission was in the hands of private banks. Therefore, then President of the Republic, Alfredo González Flores, decided to create the first state bank under the name Banco Internacional de Costa Rica (International Bank of Costa Rica). In 1936, a decree transformed it into the International Bank, It had three departments: Issuer, Commercial and Mortgage. It was then that the institution changed its name to Banco Nacional de Costa Rica (National Bank of Costa Rica).

Banco Nacional is subject to the Law on Government, in accordance with Articles 188 and 189 of the Constitution. Its legal and material endeavors as a commercial bank are defined by the Organic Law of Banco Nacionaling System, No. 1644, of September 26, 1953.

With 105 years of experience, Banco Nacional and its 5294 employees currently serve over 2 million customers in locations across the country, including 4 subsidiaries:

It was founded on April 29, 1998, in order to manage investment funds registered with the General Superintendence of Securities (SUGEVAL). It is authorized by the National Council of Supervision of the Financial System at meeting 61-99, held on December 17, 1998.

In 1993, Banco Nacional of Costa Rica launched a “trust” for voluntary pensions called BN VITAL. It was established in 1998 as BN Vital Operadora de Pensiones Complementarias Sociedad Anónima.

It began operations in October 2009, authorized by the General Superintendence of Insurance (SUGESE) under license number SC-09-102.

It was incorporated as a limited company in 1998. It is a founding member and concessionaire of the National Stock Exchange for over 40 years.

Banco Nacional(National Bank):

BN Valores:https://www.bnvalores.com

BN Fondos: www.bnfondos.com

BN Vital:http://www.bnvital.com

BN Corredora de Seguros:https://www.bncr.fi.cr/CorredoraSeguros

9


OUR STRATEGY

Changethe business mix

(products and segments)

Improvecustomer

experiencethrough digital

leadership

Operate as an integrated conglomerate

Grow with a sense of social responsibility

Driveproductivity

and efficiency

MISSION: VALUES:VISION: Integrity, creativity,

perseverance, teamwork, service quality.

I II IVIII V

ASPIRATION:

RETAIL BANKING

DEVELOPMENBANKING SUBSIDIARY ORGANIZATIONAL

HEALTHFINANCIAL

SOUNDNESSSUPPORT

FUNCTIONSCORPORATE

AND ENTERPRISE

BANKING

Be the preeminent Bank of Costa Rica, strengthening their critical role in the development and welfare of the country, with a significant boost to profitability, by offering customers superior service at a price in line

with the market and with exemplary organizational health and financial strength.

To be the country’s best bank in terms

of customer service.

Improve the quality of life of the largest possible number of people,

offering financial serviceswith excellence that foster

sustainable wealth creation.

10


WE ARE ALL OVER NATIONAL TERRITORY

Banco Nacional has a network of 173 branches and over 400 ATMs located throughout the country. There are 1,200 commercial establishments affiliated to the BN Services system, providing over 200 payment options with public and private companies. This system also offers the possibility of making cash withdrawals, card payments, and credit operations.

SUBSIDIARIESBanco Nacional owns 100% of the shares of BN Valores (Stock Brokerage), BN-Vital (Pension Fund Operator), BN-SAFI (Investment Funds) and BN Corredora de Seguros (Insurance Broker).

Office locations: https://www.bncr.fi.cr/Documents/Sucursales%20BN.pdf

Banco Nacional has a 49% stake in the International Bank of Costa Rica Limited (BICSA), a company located in the Republic of Panama.

1

2

7

3

8

4

9

5

10 6

11

GEOGRAPHICAL BREAKDOWN

1

2

7

3

84

95

106

11

Liberia Commercial Zone: Offices 19

Ciudad Quesada Commercial Area: Offices 15

Perez Zeledon Commercial Area: Offices 15

Alajuela Commercial Area: Offices 12

Puntarenas Commercial Area: Offices 13Heredia Commercial Area: Offices 14

Eastern Commercial Area: Offices Limon Commercial Area: Offices 12

Central Commercial Area: Offices 1Cartago Commercial Area: Offices 20

Western Commercial Area: Offices 20

https://www.bncr.fi.cr/Documents/Sucursales%20BN.pdf



11


PRODUCTS OFFERED BY BANCO NACIONAL

Banco Nacional has a list of sustainable (green)products and services, which are detailed in the Banco Verde (Green Bank) section of this report.

SERVICES

SERVICES AND PRODUCTS OFFERED BY BANCO NACIONAL

PRODUCTS

BN DerivativesBN Internet Banking

BN Corporate Internet BankingBN Mobile Banking

BN Corporate MobileBN PAR (Scheduled Payments)

BN Integrated Custody ServicesNight mailboxSecurity boxes

Credit lettersFit Deadlines

Check CertificationCDP Time Deposit Certificate

International bank checkCashier’s Check

CollectionsE-commerce

ATM DepositsDigital signature

International WarrantiesInter-currency

Pension payments of the US GovernmentPreparation, transport and delivery of remittances at the customer’s home

Receipt of check deposits from banks domiciled abroadRemittances abroad

BN PAS (Automatic Payment of Wages) Deposit collection service at the customer’s home

Withdrawal service from PayPal accountsQuick Pass Service

SWIFT ServiceTransfer CheckATM Transfers

International transfersSINPE Transfers

BN Savings CreditBN Scheduled SavingsBN ConnectivityBN CustodyBN EducationBN Earn moreBN MortgageBN SolutionsBN VehiclesBalance PurchaseGrowth FundChecking accountClassic e-accountSalary e-accountSmart AccountMoney fundTrustDeposit fundDemand Investment fundDemand investments at agreed rateRedifundSelf-issued insuranceSuper fundSuper fund plusCredit CardsDebt Unification

12


BOARD OF DIRECTORS OPERATION

According to the provisions of the Organic Law of National Banking System (Law No. 1644), state commercial banks -and, therefore, Banco Nacional- operating under the direction of a Board of Directors composed of seven members appointed by the Governing Council . The period of work of this Board is eight years, period in which the President of the Board of Directors may not hold any executive position within the Banco Nacional de Costa Rica conglomerate.

From left to right: Marvin Arias Aguilar,Rodolfo González Cuadra,Víctor Hugo Carranza Salazar, Mario Carazo Zeledón,Ana Isabel Solano Brenes, Jeannette Ruiz Delgado,Ruth Alfaro Jara

13


The committees in which the members of the Board participate in are:

• Corporate Audit Committee• Corporate Compliance Committee• Compensation, Nomination and Governance Committee of

Banco Nacional Conglomerate.• Corporate Risk Committee• Special Committee on Budget Analysis

Documents that guide the Board

• Code of Conduct and Ethics of Banco Nacional Conglomerate (includes regulations for conflicts of interest)

• Corporate Governance Code.• Article 38 regulates the Corporate Governance and Conflicts

of Interest policies.• The Organic Law of National Banking System (Article 32

details the issue of conflicts of interest)

The General Board is responsible for the approval of purpose, mission, values, strategies, and policies, and the organization’s objectives relating to economic, environmental and social impacts, as appropriate, according to proposals presented by management.

Members of the Board of Directors• Mrs. Jeannette Ruiz Delgado. President• Mrs. Ruth Alfaro Jara, Vice-president• Mr. Rodolfo González Cuadra, Secretary• Mr. Marvin Arias Aguilar. Director• Mr. Mario Carazo Zeledón. Director• Mr. Víctor Hugo Carranza Salazar, Director• Mrs. Ana Isabel Solano Brenes. Director

More information on our Board of Directors in the Transparency Portal:https://www.bncr.fi.cr/transparencia/Paginas/Junta-Directiva.aspx

The General Board is constantly monitoring processes regarding the timely and appropriate care given to actions designed to influence the development of the country, through the knowledge and approval of reports, like the following:

• Presentation on advancing the strategy of the Directorate of Social Responsibility.

• Financial report on overall and economic performance • Comprehensive Risk Assessment Report and Statement

of Placements• Evaluation report of the Strategic Plan• Verbal report on Minae’s recognition for the Bank’s

environmental management and environmentally sustainable strategies.

• Report on resource placement results of the Development Banking System.

• Document: We drive the sustainable progress of CR

In 2018, issues related to the macroeconomic environment of the country were dealt with. The Bank supported the Government, as far as possible, to funds its liquidity needs. Also, work was done to promote credit growth, despite the difficult economic situation, which was intended to achieve economic recovery.

https://www.bncr.fi.cr/transparencia/Paginas/Junta-Directiva.aspx

https://www.bncr.fi.cr/transparencia/Paginas/Junta-Directiva.aspx

14


CORPORATE GOVERNANCE STRUCTURE

General Board of Directors(Shareholders Assembly)

Representation on the BICSA General Board

Internal Audit

Internal Audit

External Audit

External Audit

Subsidiary Boards of Directors

Management

Support Committees

BN Fondos

BNVital

BN Valores

BN Corredora

Seguros

Audit CommitteeNomination and Compensation

Committee

Risk Committee

Corporate Committees

Compliance Committee

BN General Management

The annual reports of Corporate Governance and committees, as well as the CorporateGovernance Code, are available on the Transparency Portal at Banco Nacional’s website.

https://www.bncr.fi.cr/transparencia/Paginas/GobiernoCorporativo.aspx



15


Member of:

Partnerships:

• Costa Rican Banking Association• Chamber of Banks of Costa Rica.• National Advisory Council on Social Responsibility• National Partnership for Development• Latin American Association of Development Financing

Institutions (ALIDE)• Latin American Banking Federation (FELABAN)

• Chamber of Investment Funds (CAFI)

• Costa Rican Association of Pension Operators (ACOP)• International Federation of Pension Fund Administrators (FIAP)

• BN Sociedad Corredora de Seguros S.A. is incorporated into the Chamber of Insurance Intermediaries Costa Rica.

• Costa Rican Chamber of Industries

• Development Banking• Central American Bank for Economic Integration (CABEI)• Claro• National Council on Indigenous Affairs• National Council of People with Disabilities (CONAPDIS)• National Directorate of Community Development (DINADECO)• Ecolones• National Forestry Financing Fund (FONAFIFO)• Environmental Bank Foundation (FUNBAM)• Dehvi Foundation• Omar Dengo Foundation• Government of Costa Rica• Water and Sewage Institute (AyA)• National Women’s Institute (INAMU)• Ministry Of Environment And Energy (MINAE)• Ministry of Science & Technology (MICIT)• Ministry of Economy, Industry and Trade (MEIC)• Ministry of Education (MEP)• Ministry of the Presidency• Ministry of Labor and Social Security (MTSS)• United Nations• OMIN• Foreign Trade Promotion Office (COMEX).• University of Costa Rica• Universidad Latina

PARTNERSHIPS

W E F O R G E

SUSTAINABLE PROGRESS

17


In 2008, the Bank incorporated the triple dimension vision (social, environmental, and economic) in their management, and since 2016 this vision at a strategic level was formalized by establishing growth with a sense of social responsibility as the fifth pillar of organizational strategy .

From this guideline, in 2017 the strategy was established regarding

BN SUSTAINABILITY POLICY

Banco Nacional Conglomerate is committed to economic, social and environmental development, adopting the best practices of sustainability in its strategy, value chain and immediate environment, in line with the country initiatives (approved at Bard meeting No. 12.190 of September 11,2017).

SUSTAINABILITY STRATEGY OF BANCO NACIONAL

2018-2021 Strategic Sustainability Plan

8 Material IssuesA committed bank

Eco-efficiency :

Sustainable productsand services

1

2

6

7

3

4

5

Ethical and Sustainable Banking

Incorporation in 100% of the conglomerate and environmentally efficient services.

SustainableGrowth:Guarantee it.

Employees:Strike a balance betweenwork life and personal life.

Education,financial inclusionand social investment:Promote banking penetration and social investment.

Customers:Enhance their experience

Supply chain:Add best practices

Development of products, services and processesthat are environmentally conscious

GREEN BANK PRODUCTIVE BANK A BANK FOR EVERYBODY

the sustainability of Banco Nacional, considering a materiality analysis, stakeholder consultations, and commitment with the Sustainable Development Goals and country targets.

A cross-cutting axis of Ethical, Sustainable Bank was defined, with three dimensions: Productive Bank, Green Bank, and A Bank for Everybody.

18


A BANK FOR EVERYBODYGREEN BANKPRODUCTIVE BANK Ethical and sustainable BANK

97.8% 100.0% 94.3% 98.0%

SUSTAINABLEGROWTH SUPPLY CHAIN BN ECOBANKINGECO-EFFICIENCY COLABORADORES

FINANCIAL INCLUSION AND

EDUCATIONCORPORATE

GOVERNANCECLIENTS

95.3% 98.0% 89.9% 99.6% 98.0%100.0% 100.0% 100.0%

Work conditions

Social dialogue

ProfessionalDevelopment

On-the-job Training

Employee well-being

Act as a conglomerate95.0%

Ethics 100.0%

Corporate100.0%

Operational Risks thataffect sustainability

100.0%

Corporate volunteeringprogram

95.0%Work from home

Occupational healthand safety

Due process andperformance

evaluation

0.0%

Respect for humanrights and

non-discrimination

Investment for Development

Financial solutionsfor women (Women's Banking)

97.1%

Financial Education100.0%

Financial inclusion100.0%

Inclusion and accessibilityto the services for people

with disabilities

99.4%

Program for communityventures

100.0%

Financial support andsolutions for women

in poverty

100.0%

Financial supportand solutions for

youth and children

100.0%

Financial support andsolutions for

indigenous populations

100.0%

100.0%

Water consumption100.0% 100.0% 100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Fuel consumption

Power consumption

Paper consumption

Financial management96.9%

Productivityand efficiency

95.7%

Fair Competition100.0%

Analysis of social andenvironmental risk incredit and investment

operations

100.0%

Digital transformation98.4%

Purchases withsustainability criteria

- Environmental impactson purchases

98.4%

Promoting socialresponsibility

in SME suppliersand customers

98.4%

Informationto consumers and fairmarketing practices

100.0%

Customer Experience95.6%

Data security andconsumer privacy

100.0%

Support for SMEsand ventures

96.1%Renewable Energy

Waste Management

Climate changemitigation

Financial products thatpromote environmental

protection

OUR SUSTAINABLE PROGRESS IN 2018To promote the advancement of the sustainability strategy, a management model consisting of 63 indicators and targets has been established to measure, every month, the performance of Banco Nacional in each of the material issues.

Note: In Bank for Everyone, the indicator “Due process and performance evaluation” has a score of zero because there is the model and referenced incentive, but on the reporting date the annual reviews were still closing.

In early 2019, an update of the Institutional Strategic Plan was made, ratifying the fifth strategic objective of growth with sustainability, which Banco Nacional maintains and strengthens its commitment to economic, social and environmental development of Costa Rica, with a view to the targets for 2021 and in accordance with the National Development Plan.

Responsibility for meeting the goals is distributed across different areas of the organization, ensuring the cross-cutting aspect of the sustainability strategy.

The following chart shows the fulfillment of the goals set for 2018:

19


Banco Nacional has a comprehensive management process, categorizing risks as follows:

All the risks mentioned in the table above have economic and social impact, given the driving role the BNCR plays regarding development in the country. In addition, proper risk management at the BNCR contributes to the stability of the financial system, because of its systemic importance.

With respect to the portfolio of sustainability risks, the area of Social Responsibility and the Risk and Internal Control Directorates defined a methodology for identifying the risks associated with the topic of sustainability. The SR area as a specialized technical area defines the specific guidelines to affected process owners for the adequate management of the identified risks.

The process of identifying and monitoring Social Responsibility in coordination with Risk Management is based on the following aspects:

• The baseline on the portfolio of the 10 BNCR sustainability risks was defined together with the Social Responsibility Directorate.

RISK MANAGEMENT WITH A SUSTAINABILITY VISION

• Institutional processes in which these risks could cause impairment were identified.

• SR as a specialized area managed, with each process, guidelines, internal rules, guidelines, and tools, among others, to address these risks.

• The Directorate of Operational Risk updated the process risk mapping included in the 2018 operating plan.

Methodologically speaking, if after the analysis the risks are not of a high correlative evaluation, the design of a control activity will not be required. More recently, there is an improvement in the risk mapping methodology to incorporate the criteria of impact, eventual effects on institutional image regarding social responsibility and sustainability topics, which would give a more cross-cutting coverage to the analysis.

The Bank’s precautionary approach in managing risks includes:

• Process Governance: clear delineation of lines of defense• Risk appetite statement: the Board defines the risk appetite

that wants to take in pursuit of the objectives of the organization.

• Continuous risk monitoring: periodic risk measurement is performed, comparing the profile with the limits approved by the Board, with results reported to the Risk Committee and Board of Directors.

In this process, the existence of a strong risk culture that allows deep understanding of the exposures of the organization is essential for risk elements to be present in decision-making at all levels of the organization.

Financial Non-Financial Cross-cutting

Market(rates, prices, exchange rate)

Strategic

Capital

Operating (legal and information technology)

ReputationalCredit

Liquidity

20


THE 10 SUSTAINABILITY RISKS MANAGED BY BANCO NACIONAL OPERATIONAL AREAS:

1

6

2

7

3

8

4

9

5

10

Inefficient or inappropriate use of

resources fromthe perspective of

sustainability

Lack of adequate and efficient support and advice systems to consumers (after-

sales service)

Consumers not educated about the

proper use of the financial products

they acquire

Non-compliancewith legal guidelines

relating to the environment

Providers performing practices against

sustainability (technologies,

processes, relationships with

their employees and BN customers)

Not taking measures to reduce pollution within its control influence

(recoverable waste management,

consumption of paper, ink, water and electricity)

The team (Social Responsibility and Operational Risk Management directorates) made the decision to initiate the full assessment of the portfolio starting in 2018.

Sustainability risk analysis and management apply to the entire Banco Nacional Conglomerate.

Practices that do not promote

fair opportunities for minority groups

to hold positions at all levels of the

organization

Lack of interaction channels with stakeholders

Non-compliancewith international

human rights standards

Non-compliance with laws and

regulationsregarding

competition aspects

The Annual Risk Report of Banco Nacional can be found at:https://www.bncr.fi.cr/BNCR/Transparencia/InformeAnualRiesgo.aspx

https://www.bncr.fi.cr/transparencia/Informes/Informe%20Anual%20de%20Riesgos%202018.pdf



21


WE BUILD PROGRESS WITH THEM

GovernmentSuppliersCommunities Regulatorybodies Competition

STAKEHOLDERS

Written press,Radio stations and

Television

Press Providersof funds AlliesClients Employees

Corporations andinstitutions, large, medium and small

businesses, preferential customers (individuals),

and mass customers.

Development Banking (FINADE), IMAS (FIDEIMAS), IDB, CABEI, KFW.

SUGEF, SUGESE, SUGEVAL, SUPEN,

Central Bank

Immediate community,

surrounding towns and public opinion.

Strategic, critical,basic and

replaceable.

Central GovernmentLegislative Assembly

and Ministries

State-owned banks,private banks and

cooperatives.

Union andstaff associations,

seasonal personnel and permanent

staff.

State-owned enterprises,

privatecompanies, and

non-governmental organizations.

Elderly

Youth andChildren

IndigenousPopulation

Employees

People withdisabilities

Women and women livingin poverty

BN SOStenibilidad

As part of its SustainabilityStrategy, and

considering the challenges of the country, Banco

Nacional has identified the following priority

segments inThat will focus their

programs:

22


AWARDS AND HONORS

Costa Rica Incluye (Costa Rica Includes)

Banco Nacional is aware that disability is not a matter of others, nor of a few. We must all get involved to understand that what we have in mankind are differently abled people. The commitment to this understanding, translated into action, is made public and sealed with the awards given by the Costa Rica Includes program to Banco Nacional in seven different categories for its implementation of best practices in social and workplace inclusion.

Among the Bank’s best inclusion practices, the activities called BN Dialogues with people with disabilities are highlighted. Officials from Social Responsibility and Institutional Relations developed dynamic meetings to obtain feedback on experiences and expectations with specific customers, visually impaired persons and even athletes, with the aim to meet and respond to the demands of these groups.

In addition, of note were the information campaigns and communication actions seeking to promote the rights of persons with disabilities, to dignify their image, demystifying beliefs about disability and promoting social and workplace inclusion.

The distinction of Costa Rica Includes is promoted by the Office of the Second Vice-President, the Business Alliance for Development (AED), the Ministry of Labor and Social Security (MLSS), and the National Council of Persons with Disabilities (CONAPDIS), in partnership with the United Nations Program for Development (UNDP) and the International Labor Organization (ILO).

The prizes awarded are:

• Inclusive hiring• Accessibility in new and remodeled physical

spaces• Access to websites• Inclusive customer service• Accessible products• Community and inclusion• Inclusive journalism

23


• Blue Flag award with distinction of an additional star.

• Awards from the NATIONAL INSURANCE INSTITUTE for first place in premium growth in 2017 in General Insurance and Labor Risk Insurance, first place in greatest production of Commercial Insurance in 2017, and second place in greatest total production in 2017.

• Award from ASSA COMPAÑÍA DE SEGUROS SA, for second place in LIONS TO EXCELLENCE 2017, BUSINESS.

• Award by MAPFRE to BN Corredora (broker), PLATINUM CLOVER FOR EXCELLENCE IN PERFORMANCE 2017.

• Recognition by the National Power and Light Company (CNFL) for Energy Efficiency.

• Environmental Blue Flag with five stars and a green star, the highest honor awarded for the category.

• ISO 14001:2015 Certification of the Environmental Management System, ISO 9001:2015 of the Quality Management System, and Carbon Neutral since 2014.

• With the new version of the “Carbon Neutrality 2.0” Country program, BN Fondos obtained the maximum category, called “Carbon Neutral Plus”.

• Energy Efficiency Award from the CNFL for efforts to make virtual communities, CNFL neighbors and technical services.

• ISO 9001:2015 Certification on Quality Management Systems. Requirements

• G30:2008 Certification National standard on principles for investment and management of operational and financial risks of the funds managed by entities regulated by the Superintendence of Pensions. Requirements.

• INTE B5:2016 certification on Standard to demonstrate

• Carbon Neutrality. Requirements

• Environmental Blue Flag Program, Climate Change category.

• Great Place to Work Certification.

• Environmental Blue Flag Program, Climate Change plus four stars.

• It also earned score over 90 in the Institutional Environmental Management Program of MINAE.

• Recognition from the National Power and Light Company for its commitment to energy saving.

• BN Valores was recertified in ISO 9001-2015 for its Quality Management System.

24


OUR COMMITMENT TO SDGS

The sustainability agenda of Banco Nacional is aligned with the global aspirations set out in the Sustainable Development Goals (SDGs). The Bank has programs that have an impact on specific objectives

The annexes to this report provide details about our contribution to the SDGs, broken down by target.

for each of the 17 SDGs; however, it has prioritized its work on the following goals, considering their impacts and the opportunities provided by its line of business, to make a significant contribution to these challenges.

25


26


They are responsible for implementing and maintaining the Code of Conduct and Ethics, and include: Article 14 of the Corporate Governance Code, and section 1.4 of the Code of Conduct and Ethics.

ETHICS AS A CROSS-CUTTING AXIS

According to Article 13 of the Code of Corporate Governance, the Financial Conglomerate of Banco Nacional de Costa Rica is committed to both sustainable development, the comprehensive well-being of the country, and of their employees, by applying the highest ethical and behavior standards in each of its activities.

To achieve this goal, Banco Nacional has a Code of Conduct and Ethics which aims to:

• Facilitate formal communication, stating expected behaviors that its employees must show in accordance with the organization’s values, ethical principles, strategic corporate plan, and the laws that govern Banco Nacional.

• Define guidelines on the expected relationship regarding each of the stakeholders (employees, heads, suppliers, customers, community, government and regulatory bodies, among others) as well as its commitment to the environment.

It is mandatory for members of the steering and management bodies of Banco Nacional Financial Conglomerate. The Conglomerate’s staff is required to know and comply with the Code and must facilitate its implementation, including the report of any known infringement.

PeriodicRevision and

Updating of the Code of Ethics

Adoption of the Code and start its

implementation

Communication and Training

Implementation of Mechanismsfor control

Monitoring compliance

with the Code

Corporate Compliance Committee

General Board of Directors and Boards

of Directors of Subsidiaries

Directorate Humanand Occupational

Health

Conglomerate Heads

ETHICS MANAGEMENT PROCESS

1

2

3

4

27


The Code of Conduct is available at https://www.bncr.fi.cr/transparencia/Paginas/Gente-BN.aspxThis document was updated and approved by the General Board of Directors session 12.205 held on December 4, 2017.

Loyalty

Respect for individual

dignity and their inherent

rightsEquitable

respect for all people and their

diversity

Law compliance

Professional Objectivity

Honesty

Responsibilityduty

Correct use ofpowers and

authorization

ETHICAL PRINCIPLES OF BANCO NACIONALOF COSTA

RICA

https://www.bncr.fi.cr/transparencia/Paginas/Gente-BN.aspx


28


TOOLS AND CHANNELS OF BANCO NACIONAL TO GUARANTEE ETHICAL AND LAWFUL CONDUCT:

MANAGEMENT TOOL FOR OPENING INVESTIGATIONS:

This may include requests to investigate regarding ethical matters, unlawful conduct and regulatory breaches. The final result, which is established in procedural framework, is an input with recommendations for managing the opening of administrative or criminal proceedings, and recommendations to the organization’s management in order to mitigate risks or future events. Meanwhile, the tool shows open information content for the internal public on different topics, including those related to ethics and integrity. This tool is managed by the risk area.

E-MAIL:

It can be used both by officials and customers to file complaints about irregular acts in Banco Nacional. Also, by specialized bodies internalized to provide advice and recommendations to the

CONFIDENTIAL REPORTS TOOL:

Access mechanism for all institution personnel. Its main function is to file complaints of illegal or fraudulent conduct, with the guarantee of absolute confidentiality of whoever complains, because the tool itself does not display information about the complainant. Once the report is made, by procedure it has a set time to be solved.

SERVICE COMPTROLLER:

In response to the provisions of Law No. 9158 “Law Regulating the National System of Service Comptrollers” in accordance with Law No. 9097 “Law Regulating the Right of Petition”, the Service Comptroller is established as a communication mechanism between the Bank, customers, and any person using the services of Banco Nacional Conglomerate. Various mechanisms and channels have been created for reporting any unethical and / or illegal conduct, including: social networks, e-mail, phone calls, contact center, and the institution’s internet home page. Also, customers can make their complaints in person at different bank branches, at the main office of the Service Comptroller, the Ombudsman Office, and the General Superintendence of Financial Institutions.

various management levels in the organization in different aspects, including ethics and integrity, as well as to provide answers to customer questions or incidents that are submitted.

29


Banco Nacional performs evaluations on the controls implemented by the offices to ensure proper use of resources and to comply with Law 82-04 (“Law on narcotics, psychotropic substances, illegal drugs, money laundering, related activities and financing of terrorism”.

The following table shows the number and percentage of offices where risk assessments related to corruption were performed, and how many significant risks have been detected.

Note: Significant risks are those whose residual risk assessment is equal to or greater than 12. Both cases according to the internal methodology of Banco Nacional, justified in AN01-PR225GR02.

OFFICES EVALUATED DURING 2018

# Processes evaluated

in 2018

# Processes with risks

classified as Internal Fraud

% of processes with Risks

classified as Internal Fraud

Relevant Risks

24 11 45.83% 17

Visit Type Scheduled Completed Progress

Tier 1: Support 67 65 97%

Tier 2: Support and Evaluation

63 51 81%

Tier 3: Support, assessment and diagnosis

10 20 200%

Special Reports 6 6 100%

30


NATIONAL TRANSPARENCY NETWORK

Banco Nacional is the first and only bank in national banking system to join the Institutional Transparency Network, an initiative promoted by the Ombudsman Office of Costa Rica. The objective of this network is to strengthen the accountability of public institutions and ensure the human and constitutional right of access to information. In 2018, Banco Nacional strengthened its transparency portal in compliance with the guidelines established by the Institutional Transparency Network, Regulatory Entities, and the provisions of the Code of Corporate Governance.

Transparency Portal: https://www.bncr.fi.cr/BNCR/Transparencia/Intro.aspx

The ITSP (Index on transparency in the public sector) score for Banco Nacional improved in 2018. This is a sign of more transparent management that involves the entire conglomerate, considering that transparency is an essential element in the accountability process, which strengthens the credibility of organizations, improves efficiency, and contributes to better markets performance.

The Transparency Portal was

strengthened

According to the Sustainability Strategy, the

Transparency Portalresponds to

public policies on Accountability

Improved ITSPscore

29,02 42,3 45,1

Banco Nacional was the first bank to join

the network

Enhances the potential of the

public value the Bank is called to generate

201820172016NOTA

https://www.bncr.fi.cr/transparencia/Paginas/default.aspx

https://www.bncr.fi.cr/transparencia/Paginas/default.aspx

31


32


INTERNAL SOCIAL DIMENSION

OUR WORK TEAM

PERSONNEL BY GENDER AND AND JOB CLASSIFICATION NUMBER OF EMPLOYEES

NEWHIRINGS

All over the country

0% 10% 20% 30% 40% 50% 60%

47%

47%

48%

20%53%

53%

52%

23%

33%67%

77%

80%BN Corredora de

Seguros S.A.

BN Fondos

BN Vital

BN Valores

41

39

96

36

48

41

74

33

89

80

170

69

70% 80% 90%

5294

259 212

TOTAL

TOTAL

2918 2780 52.51%

2521

TECHNICIAN

SUPERIOR AUDIT AND TRUST REGIME

TOTAL EMPLOYEES

EXECUTIVE

EXECUTIVE MANAGEMENT

ADMINISTRATIVE

5439 5294 100.00%

2517 47.54%

2018

EMPLOYEES

2018

2018

2018

%20182017

2017

99% of employees are covered by the collective agreement.66% of senior executives hired come from the local community.

33


EMPLOYEE DEVELOPMENT

ENGÁNCHATE PROGRAM

ENGÁNCHATE is Banco Nacional’s strategy to recognize the value of people and their work, promote a healthy work environment, and increase motivation, satisfaction, and employee performance. ENGÁNCHATE is developed around 5 axes fully addressing the personnel development of the Conglomerate.

I’M BN

Your Future

Breaking the Mold

Key To Success

Celebrate

People with quality of life, who care for physical, mental and

emotional well-being, to be happy and

have high jobperformance.

People motivated and proud of their

achievements, working with passion

to achieveextraordinary

results.

People identifiedand committed with their desire to make

a difference from their new job.

People open to change, creative and innovative, ready to reinvent themselves and find new ways

of doingthings.

People with the desire to learn and grow, who visualize and take advantage

of opportunities at a personal and

professionallevel.

34


SUCCESSION

The Succession Program allows the organization to have trained personnel to assume critical positions. For 2018, 17 positions of high relevance to the organization were defined, involving 26 people.

NUMBER OF EVENTS PER QUADRIMESTER, 2018:

I Quadrimester II Quadrimester III Quadrimester

19

12

DRIVING OUR TALENT

The Talent program has the objective of providing the Bank with a high-potential talent base to ensure the business’s continuity and effectiveness over time.

In 2018, 11 training events took place for this group of people, as part of their development plan that is defined for a 3-to-5-year term.

NUMBER OF PARTICIPANTS FOR 2018:

Participant distribution per axis

Future Leaders Talent

38

16

INTEGRATION OF PEOPLE WITH DISABILITIES

There are currently 45 persons with disabilities working at Banco Nacional, which represents 0.5% of total payroll:

TYPE OF DISABILITY NUMBER

Hearing 2 4

Cognitive 1 1

Degenerative Disease 1 1

Motor

Sensitive

Visual

Total

15

4

7

30

26

3

10

45

20182017

35


TRAINING

Banco Nacional promotes the professional development of its employees through a training program covering the different levels and areas of the organization.

1 For 2018, BN Fondos did not count training hours; in 2019, an adjustment was made in the way trainings are recorded.

790

1,481 44 4,446 875

11 4645,429 29

161,013 46,985 EVENTSEXECUTED

TRAINING HOURS

TRAINING HOURS

PARTICIPATIONS

Training hoursin subsidiaries

PARTICIPANTS

RESULTS OF THE TRAINING PROGRAM

TRAINING HOURS BROKEN DOWN PER SCALE

INTERNATIONAL TRAINING SPECIALIZATIONS CARRIED OUT

BN CORREDORADE SEGUROS

BN FONDOS

BN VITAL

BN VALORES

SCALE MEN WOMEN TOTAL HRS INDEX HRS / PEOPLE

Administrative

Senior management

Coordinator

Technical

Fiscal Supervision

Trust Regimen

Total

19.581

344

11.168

49.224

1.544

4

81.864

23.316

84

3.948

50.984

818

0

79.149

42.897

428

15.116

100.207

2.362

4

161.013

28

71

33

31

1.181

1

30

36


TELECOMMUTING RESULTS 2018

PARENTAL LEAVE

842 450

281 2.06 6.72

REGISTERED TELEWORKERS

Newapplications

for telecommuting

Average days of telecommuting

per week

Tons of CO2compensated

per week

76

105 128

2018

2018

2017

2017

In the case of subsidiaries, during 2018 they showed a 100% return rate of the staff that enjoyed parental leave.

Of employees who took parental leave in 2018, 2 men and 4 women left the institution

NUMBER OF EMPLOYEES WHO TOOK PARENTAL LEAVE

37


PERFORMANCE EVALUATION REMUNERATION OF WOMEN VERSUS MEN

CASES OF DISCRIMINATION AND CORRECTIVE ACTIONS UNDERTAKEN

SOCIAL BENEFITS

OCCUPATIONAL HEALTH & SAFETY

RESULTS 2018 OCCUPATIONAL HEALTH AND SAFETY

1. Work-related insurance2. Medical insurance3. Labor capitalization fund4. Family benefit fund5. Christmas bonus6. School salary7. Guarantee and retirement fund8. Unemployment contribution to the Association by the employer9. Article 26, payment of holidays10. Solidarista Association11. Retirement and guarantee fund12. Decreased workday13. Vacations in additions to those mandated by law14. Company doctor

100% of the active staff of Banco Nacional undergoes an individual performance evaluation. The assessment consists of an attitudinal measurement, a group evaluation (which measures the Bank’s management) and a measurement of individual goals.

There is no difference between the base salaries of men and women. They are defined by category, both for base salary and bonuses as market wages (single salary).

During this period, no cases of discrimination based on age, gender, ethnicity, social status, religion, appearance or economic status were reported.

Regardless of the type of contract the employee has with Banco Nacional, all employees receive the following benefits:

Banco Nacional has an Occupational Health Committee made up of two union representatives and 2 members of management (the company doctor and an occupational health professional).

The subsidiaries have established formal occupational health and safety committees in each of the offices, attached to the Occupational Health Council under the Ministry of Labor and Social Security.

INDICADOR Resultado 2018

Number of employees who reported a work-related injury to the INS

Accident rate percentage(assuming an average payroll of 5500 employees)

Average duration of annual accident rate

Total work-related injury days reported

85

1.55%

33.48

2846

At the website: https://www.bncr.fi.cr/transparencia/Paginas/Gente-BN.aspxUpdated information on pay scales, breakdown of staffing and performance evaluation can be found.



38


EXTERNAL SOCIAL DIMENSION

TRANSFORMING COMMUNITIES PROGRAM

ALLIANCE: Banco Nacional and AyA(National Institute of Aqueducts)

ALLIANCE: : Banco Nacional and DINADECO (National Direction for Community Development)

The Transforming Communities Program has been operating for nearly 10 years at Banco Nacional as a mechanism to support community-based productive projects by providing seed capital. Its aim is to promote entrepreneurial development or strengthen initiatives from existing businesses to transform them into community SMEs, thereby generating productive chains, new jobs and better opportunities for improving the quality of life of the community’s inhabitants.

The program operates primarily with Integrated Development Associations or Cantonal Unions under Law 3859. In 2018, the Administrating Associations of Community Water Supply and Sewerage Systems, also known as ASADAS, were incorporated into the program. They work as non-profit organizations to manage drinking water and sewerage services, as well as taking care and conserving water resources in the communities.

The incorporation of ASADAS into the Transforming Communities Program was a response to Storm Nate, which left behind a large number of damaged aqueducts and families without access to drinking water. The cooperation agreement between Banco Nacional and the

Declaration of Public interestOn September 29, 2018, the expanded Governing Council signed the Declaration of Public Interest for the work done by Banco Nacional and Dinadeco with the only program that transforms community-based associations in SMEs. This accomplishment was achieved through public partnerships and public-private partnerships in coordination with community-based organizations.

National Network of Community EnterprisesJointly drove the creation of the first national network of community enterprises, which brings together Integrated Development Associations and Cantonal Unions working on productive projects that are -or are becoming- the first enterprises whose owners are the communities themselves.

Costa Rican Institute of Aqueducts and Sewers was signed to support the reactivation of several aqueducts, which were selected by the AyA and funded through a financial contribution by Banco Nacional

https://youtu.be/UqeTG5DnMhs

https://youtu.be/UqeTG5DnMhs

39


2018 RESULTS Community Business ExpoAs part of the annual celebration of community servants, the first community business expos was held, with the participation of grassroots organizations that have a community enterprise as well as other actors such as Banco Nacional, Dinadeco, Procomer, which are an important part of the machinery that drives the development and growth of community enterprises.

Total number of projects executed

Investment made

Projects by Development Associations

Projects by ASADAS

Total people affected

Number of faucets

12

CRC 250.000.000

11

1

92.592

0

35

CRC 450.000.000

11

24

104.284

8.007

20182017

40


To achieve this, there was implementation of collaboration and knowledge transfer activities associated with the dimensions and programs of the sustainability strategy of Banco Nacional.

49,915

17,242

19,633

13,040

114.8% of the targetDISTRIBUTION OF HOURS PER DIMENSION

2018 RESULTS

BANK FOR EVERYONE

GREEN BANK

PRODUCTIVE BANK

HOURS

“TOGETHER WE ACHIEVE MORE” PROGRAM

The purpose of Together We Achieve More is to contribute to social and economic development through the direct involvement of Gente BN (BN People), focusing on priority population segments identified: women in poverty, indigenous people, people with disabilities, children, youth, and business segments.

By 2018, a goal was established by which every Bank employee completed 8 volunteer hours; at the end of the period the target was achieved by 114.8%.

ttps://youtu.be/W5Rkddr4O2c

https://youtu.be/W5Rkddr4O2c

41


Training for students from Technical high schools, in partnership with the Omar Dengo Foundation and MEP, using BN Labor@, an Internet Banking simulation platform so students can perform financial operations

Banco Nacional sponsors this program in partnership with the Dehvi Foundation to promote productive paid work for 70 unemployed women who are heads of household. Training was provided on the management of financial resources and empowerment.

As part of the engagement process Banco Nacional maintains with the Bribri and Cabecar indigenous peoples, and to complement the installation of voice-guided ATMs in their native languages, Bank officials were organized to give support in education and financial accessibility and the use digital platforms, among other topics.

Training given by Bank experts on topics such as basic finance, budget, cash flow and financial analysis, effective communication, customer service, and marketing. The topics were defined from a needs assessment with beneficiaries.

Several offices of the Bank visited nursing homes and organized groups of elderly people to bring them training on the use of Banco Nacional’s technology platforms such as ATMs and Sinpemóvil.

LABOR@ (WORK)

MUJERES ALCANZANDO SUEÑOS (MAS)

VOLUNTEER WORK WITH INDIGENOUS POPULATIONS

VOLUNTEER WORK IN DEVELOPMENT ASSOCIATIONS

TECHNOLOGICAL GRANDPAS

TOGETHERWE

ACHIEVEMORE:

Highlightedprojects

42


FINANCIAL FREEDOM

PROGRAM PILLARS:

ADULT

ELDERLY YOUTHAND CHILDREN

PEOPLE WITH DISABILITIES

INDIGENOUS WOMEN

• Correlation between income and expenses• Delve deeper into the importance of saving• Indebtedness versus buying strategies• Investments linked to financial solutions that

Banco Nacional makes available to all• Creating products and services available to

everyone, achieving effective financial inclusion• Inclusion in the digital channels of Banco

Nacional

Our country has seen a significant increase in the rate of indebtedness of the population, which threatens the ability of consumers to meet their financial commitments. In response, Banco Nacional has implemented the strategy of financial education and inclusion known as Financial Freedom Program.

The program wants to develop skills in the population, enabling them to make better use of the financial tools available in the market and understand the benefits, costs and risks associated with services such as credit cards, investments, loans, and savings instruments, among others .

To improve the management of their personal finances, Costa Ricans will get better use of financial products and services to bring economic stability to their homes and foster personal growth -and, consequently, the national economy.

To achieve its objectives, Financial Freedom uses different teaching strategies, such as presentations by experts, visits (including virtual ones) to institutions and education centers, use of audiovisual support material, recognition or awards, and educational games. Activities in 2018 focused on the following topics:

Thanks to the establishment of working partnerships with various business, academic, and civil society organizations, the following goal was achieved:

• Technological Grandpas• Inclusive ATMs• Entrepreneurship and financial freedom.• Technology Tools• Financial Freedom• Financial Education Fairs• Youth Expo• Empowerment and Entrepreneurship• Presentation of Works on Financial Freedom• BN Labora

103,790 BENEFICIARIES IN 2018

43


PROGRAM PARTNERSHIPS DURING 2018

PRIVATE BUSINESSES:Ricardo Saprissa stadium, Claro, Metropak Heredia, Torre Cordillera, Zona Franca America

NATIONAL LIBRARY SYSTEM:Cartago, Hatillo, Goicoechea, Naranjo, San Pedro, Liberia, Desamparados, Sarchí

COMMUNITIES:San Gerardo de Rivas, San Francisco Cajón de Pérez Zeledón, San Rafael de Heredia, San Carlos Pejibaye Pérez Zeledón, San Luis de Monteverde, Oreamuno, Alajuela, Carate de Puerto Jiménez

EDUCATION CENTERS:Colegio Técnico Profesional de Santo Domingo y de Ulloa Heredia, Escuela de San Juan de Grecia, Escuela Eulogia Ruiz Ruiz, Sedes Don Bosco

GOVERNMENT:Ministry of Education, DINADECO, INS, Correos de Costa Rica, Municipality of Heredia, National Stadium

MEDIA:Radio Columbia

OTHER ORGANIZATIONS:Parque La Libertad, Centro Cívico por la Paz Santa Cruz, Estado de La Nación, Cuadrangular porel Futuro, Casa de la Cultura Cahuita, Fundación Omar Dengo, Teletón, Museo de los Niños.

44


SUSTAINABLE ADVERTISING

The Advertising department is responsible for all advertising actions required by the Bank, including Corporations; it works with the guidelines of the current strategic plan and a tactical plan where all activities for the different areas are scheduled. This includes advertising campaigns, sponsorships and participation in expos.

All the organization’s advertising campaigns consider the institutional objectives and one or more of the objectives of social responsibility within their content.

During 2018, the Institutional Sponsorship Policy of Banco Nacional Conglomerate was updated with new guidelines on the definition of what a sponsorship is, types of sponsorships (commercial, institutional loyalty, local or rural), technical criteria defined for acceptance or rejection, as well as the type of events in which the Bank cannot participate because of their nature, such as religious or political events, where senior management has direct interference, or that contravenes Article 12 of the General Law on the Control of Tobacco and Its Harmful Effects on Health (IAFA). All sponsorships must comply with the Code of Ethics and Sustainability Policy of Banco Nacional Conglomerate.

In all expos where Banco Nacional participated in 2018, a “zero paper” policy was implemented, so all information is provided through digital media. This allows us each day to develop more technological and environmentally-friendly activities.

During this period, no cases of non-compliance related to the information and labeling of products and services were reported.

Concrete actions that took place during 2018

• The department completely eliminated printing, so no reams of paper are requested

• All departments were encouraged to not consider printing materials in their advertising actions. During 2018, we participated in 122 expos or fairs in which no printed materials were used.

• Our commercial included aspects that would promote inclusion, highlighting the diversity in gender, ethnicity, age and disability.

• Within the established guidelines with communication provider, the campaigns or materials produced, should not promote any discrimination towards other people or vulnerable sectors.

Campaigns carried out in 2018 with social and environmental vision.

• Image campaign: Juntos somos progreso (Together we are progress)

• Paperless ads: International Day of People with Disabilities• Program, Women of a thousand battles• ATM in Bribri and Cabécar language

Participation in other activities in 2018• 90 minutos por la vida (90 minutes for life)• CIMAC: Institutional fair for disabled artisans, held within

the framework of the Day of People with Disabilities• Participation in the Festival of Light with an allegorical

float: The whole process was guided by the Sustainability department.

45


SPONSORSHIPS

Sponsorships are strategic partnerships that provide the opportunity to benefit and build a positive relationship with different stakeholders. For this reason, Banco Nacional has linked its sponsorship directly to topics such as sports, health, entrepreneurship, innovation, and training.

Sponsorships had an impact on more than 5,000 people in 2018, including young students with the potential to generate new ideas for the development of Costa Rica and talented athletes who excelled in different disciplines. Additional support was provided to initiatives that analyzed reputation trends and business analysis from an academic perspective.

CHIRRIPO MOUNTAIN RACE

THE HEART RACE

COMPETITION24 HOURS OF INNOVATION

NATIONAL OLYMPICCOMMITTEE

SEMINAR ON CORPORATE REPUTATION

LATIN AMERICAN COUNCIL OF

BUSINESS SCHOOLS

2,000

1261,164

280

350

5017 ¢87.400 500

600 29

468Spectators and

visitors

Students(5 public universities)

Olympic Athletes

People at the seminar

Attendants, both national and international

Including athletes and people

attending the fair.

People in the following workshop

Athletes

PEOPLE

INVESTMENT

ACHIEVEMENTS

2018

46


REACH OF THE MEDIA WHERE ADS WERE PLACED

TOTAL MEDIA WHERE ADS WERE PLACED

81 90

20182017

7 Provinces Alajuela Cartago Guanacaste Heredia Limón Puntarenas San José

45

39

8

4

12

6 5

8 12

40

35

30

25

20

15

10

5

0

DEMOCRATIZATION OF INFORMATION

In the exercise of institutional communication, the democratization of resources allows the participation of regional and alternative media throughout the country. Regional media are mostly ventures that make communication their line of business, with the intention of improving conditions and the immediate environment of their communities for the benefit of their inhabitants. Banco Nacional makes a strategic distribution of resources allocated to ads, positioning issues such as sustainability, security, financial education and credit supply for ventures.

An 11% growth was recorded in 2018 with respect to 2017, meaning that information from Banco Nacional impacted more people, with presence throughout the country, highlighting Guanacaste and San Jose among the provinces with the highest investment in ads.

47


48


ENVIRONMENTAL MANAGEMENT

In 2018, Banco Nacional strengthened its environmental commitment, implementing a strategy to further reduce the environmental impact of its operations and contribute to the country’s goals in this area.

Our environmental commitment is backed by internal regulations and a working structure involving the different organizational levels.

The main environmental management frameworks used by Banco Nacional are the Institutional Environment Management Program (PGAI) and the National Carbon Neutrality Program.

From a diagnosis that considers the organization’s inherent environmental aspects, institutions must establish mitigation, compensation or restoration measures for environmental impacts.

Moreover, Banco Nacional has signed the country’s Carbon Neutrality 2.0 program as the mechanism to manage their greenhouse gas emissions and contribute to climate change mitigation. For 2018, the measurement, reporting and verification by a third party (INTECO) of the carbon inventory in 45 offices took place. The goal for 2019 is to include 100% of the Bank’s premises.

TEAM WORK ON SUSTAINABILITY PGAI 2018

MINAE SCORE:96.7

2574TONNES OF CO2 EQUIVALENT

IDENTIFIED 45 PREMISES

High-level Environmental Committee comprised of Managers, Assistant Managers and Mid-level Managers

Work Team with representation from Project Management, Office of the Assistant Operations Manager, Directorate of Continuous Improvement, Human Development, Sustainability Directorate, and IT

182 working committees for each of the offices nationwide

NEUTRAL CARBON

COMMISSION

ENVIRONMENTAL COMMITTEES

https://www.bncr.fi.cr/transparencia/Paginas/ResponsabilidadSocial.aspx

https://youtu.be/rH6gT2UvqfI

https://youtu.be/rH6gT2UvqfI

https://www.bncr.fi.cr/transparencia/Paginas/Sostenibilidad.aspx

https://www.bncr.fi.cr/transparencia/Paginas/Sostenibilidad.aspx

49


ENVIRONMENTAL RESULTS 2018

15.112,74 m³

5.067.677,10

Savings equivalent to filling 6.05 Olympic swimming pools

Equivalent to the monthly consumption of 16,892 households

Saving 2017 – 2018: m³

Saving 2017 – 2018: Kwh

WATERCONSUMPTION m³

CONSUMPTION kwh

m³

WATER CONSUMPTION 2016-2018

2016

2016

145.970,50

28.898.127,00

2017

2017

126.899,70

27.496.372,00

2018

2018

111.787,00

21.639.786,00

160.000,00

35.000.000,00

140.000,00

30.000.000,00

120.000,00

25.000.000,00

100.000,00

20.000.000,00

80.000,00

15.000.000,00

60.000,00

10.000.000,00

40.000,00

5.000.000,00

20.000,00

0,00

kw

h

ELECTRICITY CONSUMPTION 2016-2018

WATER

ELECTRICITY

50


WASTE

8.045,55

165.876 KILOGRAMS

19.952

Equivalent to filling the tank with 50 liters for 160.91 vehicles

Equivalent to5.1 containers

32.5 tons

Saving 2017 – 2018: liters

Collected waste

2018

Saving inreams 2017 – 2018

FUEL CONSUMPTION

REAM CONSUMPTION

2016

2016

44.585,00

49.904,00

2017

2017

48.428,80

41.628,00

2018

2018

40.383,32

21.676,00

50.000,00

45.000,00

40.000,00

35.000,00

30.000,00

60.000,00

25.000,00

40.000,00

20.000,00

20.000,00

Lit

ers

Resm

s

FUEL CONSUMPTION (GASOLINE AND DIESEL) 2016-2018

PAPER CONSUMPTION 2016-2018

FUEL

PAPER

51


DEVELOPED PROJECTS

ZERO PAPER PROGRAM This paperless program aims to minimize, to what is strictly necessary, the use of paper in the operations of Banco Nacional Conglomerate to reduce the impact on the environment and increase administrative and operational efficiency.

OPEN SPACES MODELThe implementation of open spaces in the offices optimizes physical space and helps improve relations between employees and their processes. At an environmental level, the use of air conditioners and artificial lighting is reduced, recycling areas are consolidates, and a telecommuting model is promoted.

BN AMBIENTADOS (ENVIRONMENT)Ten Bank buildings established a collection center, which receives, twice a month, recoverable waste not only from employees and their families, but from members of the communities where they operate.

BN CLETAS (BIKES) At Headquarters and the La Uruca Complex bicycle spaces were enbled so they can be used by employees, contractors and customers.

AIR CONDITIONING PROJECTSAs part of the infrastructure initiatives Banco Nacional has implemented to optimize on-premise air conditioning, in 2018 an institutional guideline was issued setting the temperature at which air conditioners should be kept at 24 degrees Celsius.

52


GREEN PRODUCTS

Financial institutions have the opportunity to contribute to environmental challenges not only by reducing the direct impacts of their operations, but through products and services that promote the adoption of environmental practices in individuals and businesses, or to support conservation programs nationwide. For this reason, Banco Nacional has the following portfolio of green products available to its customers:

Sustainable Biodiversity Fund Credit/Debit cardFor every purchase with these cards, 10% of the net commission the bank receives goes into a trust fund called “Fund for Sustainable Biodiversity”, used to plant and maintain trees in protected forest areas.

BiolabelThe initiative stems from an agreement between the Environmental Bank Foundation (FUNBAM) and Banco Nacional to make available to vehicle owners a voluntary alternative to offset greenhouse gas (GH) emissions generated by fuel consumption during one year. The funds are allocated to the “Fund for Sustainable Biodiversity” trust fund.

Green SMEs:Preferential credit conditions for SMEs who want to make environmentally friendly investments. Some of the investments that can be financed by this loan are: energy efficiency projects, renewable

energy generation, prevention and control technologies, substitution of chemicals with organics, water treatment, eco-tourism, emission-reducing technologies, and waste management. Environmentally friendly housingCredit for the purchase or a home, purchase of lot and construction or construction involving low-environment-impact materials or efficiency aspects such as environmentally friendly design, solar panels, and smart water-saving faucets, among others.

BN Eco-technology SolutionsFinancial solutions through which investments in clean technology equipment for the home can be financed, such as solar panels and solar water heaters, wind turbines, water-, gas- and energy-saving devices, thermal insulation, etc.

Electric VehiclesLoans at a preferential rate for the purchase of electric vehicles. Banco Nacional also participates in the Program for the Acquisition of Efficient Vehicles (PAVE), whose purpose is to replace vehicles over 15 years old with efficient vehicles.

53


54


OUR HORIZON IS SUSTAINABLE ECONOMIC PROGRESSBanco Nacional continues to improve to become a universal bank that provides services to all sectors in the country. The goal is that more and more sectors and people have access to services so that, through responsible placement, they can continue to generate wealth in a sustainable and equitable manner.

The breakdown of the audited financial statements, budget reports, and monthly accounting reports are available in full at the Transparency Portal:

https://www.bncr.fi.cr/EstadosFinancieros/Paginas/Auditados.aspx

INDIRECT EMPLOYMENT GENERATED BY OUR PRODUCTS

NUMBER OF CUSTOMERS DIGITAL CHANNELS

3.175 186.858 8.361

198.000

578

174.479

636

2.057.4742.139.590

JOBS

Sustainable products

placed

Products for thebase of the

pyramid

Legal persons (businesses)

Customer Affiliation(Use of cell phones,

computers, etc.)

New affiliated merchants

BN SERVICES

Natural persons (individuals)2018

2018

2018

2017

2017

The cross-cutting axis remains technology improvement as one of the main mechanisms to provide services through: personal, business, corporate and institutional banking, stock market, pension funds, insurance brokerage, international services, and electronic services.

https://www.bncr.fi.cr/EstadosFinancieros/Paginas/Auditados.aspx

55


BUSINESS AND INSTITUTIONAL BANKINGWe support the development of Costa Rica by financing productive sectors that promote the local and national economy

In terms of environmental impact, applicable standards are met with the request of relevant environmental feasibility studies for all these projects, minimizing their impact on the environment.

Construction 0%

Trade 29%

ServiceFinancial 22% Energy 22%

Industry 17%

Services 10%

Agriculture 5%

Construction 26%

Services 24% Industry 18%

Trade 17%

Tourism 10%

FROM JANUARY 01 TO DECEMBER 31, 2018

ROM JANUARY 01 TO DECEMBER 31, 2018

Trade

Financial services

Energy

Industry

Services

Construction

Total

Construction

Services

Industry

Trade

Tourism

Agriculture

Total

CRC 13.202.000.000,00

CRC 10.000.000.000,00

CRC 9.742.000.000,00

CRC 7.930.921.728,20

CRC 4.337.750.000,00

CRC 40.000.000,00

CRC 45.252.671.728,20

USD 50.900.000,00

USD 48.732.970,00

USD 35.394.000,00

USD 33.756.000,00

USD 19.500.000,00

USD 10.879.589,00

USD 199.162.559,00

3

1

1

4

4

1

14

5

9

5

7

2

3

31

Number of loans

Number of loans

Amount formalized

Amount formalized

Type of activity

Type of activity

COLONES

DOLLARS

56


DEVELOPMENT AND RETAIL BANKING

1.223 FAMILIES,

113 HOMES 163 VEHICLES

2.860 15.141 436.602

13.928 293 10 FAMILIES

74.455

In

CDP

CRC 46.099.817.982

CRC 8.480.799.755

CRC 32.783.342.575

CRC 2.493.180.849

CRC 45.419.312.658 CRC 479.840.139.610

CRC 177.643.899.507 CRC 8.217.768.115 CRC 54.455.000

CRC 450.903.750.418

During 2018, the mass segment was able to finance

The preferential segment, which represents less than

1% of Banco Nacional customers, we were able to

finance

Regarding vehicle, financing for

In vehicles, financing for

Consumption, support was provided to

In savings,

In savings,creation of And a total of Social Interest

Generation of

for a total amount of

for a total of

people for a total of

for a total of

customers during 2018, for a total of

customers started or expanded their savingsin 2018, for a total of

accounts for a total balance

investment fundswith a balance of

were benefit during 2018, for a total in Bonds of Homes of

investments for customers, representing

MASS SEGMENT:

PREFERENTIAL SEGMENT:

57


17.275

CRC 136.106.119.910,43

In 2018, loans

were placed in different productive activities by micro and small

businesses, for a total amount of

INDUSTRY 3%

AGRICULTURA 20%

SERVICES 49%

TRADE 24%

MICRO AND SMALL BUSINESSES

PRODUCTIVE FINANCING BALANCE OF CURRENT PRODUCTION LOANS FOR MICRO AND SMALL BUSINESSES BY ACTIVITY (DEC/2018)

In addition, the distribution of productive financing is described per commercial area:

Source: Planning and Control Directorate, SGBDP

DISTIBUTION OF CURRENT PRODUCTION CREDIT BALANCE FOR MICRO AND SMALL BUSINESSES PER ZONE (DEC/2018)

PÉREZ ZELEDÓN 9% PUNTARENAS 9%

ALAJUELA 9%

CARTAGO 18%

CENTRAL 5%

CIUDAD QUESADA 10%

EASTERN SAN PEDRO 12%

HEREDIA 9%

LIBERIA 10%

LIMÓN 10%

OESTE SANTA ANA 5%

58


DEVELOPMENT BANKING FAMILY FINANCING

Banco Nacional is the main funding operator for the National Development Banking System (DBS). In 2018, 36.93782 billion colones were placed with more than 13 thousand customers

PLACEMENT OF OTHER CREDIT TO MEET THE NEEDS OF MICRO AND SMALL BUSINESSES (2018).

PLACEMENT IN DEVELOPMENT BANKING 2018

FCD

FOFIDE

FINADE

FINADE EMERGENCIES

TOTAL

PERSONAL EXPENSES

VEHICLES

HOUSING

TOTAL21.510,04

7.843,24

7.319,71

264,83

36.937,82

11.805.449.658,00

13.598.833.003,94

22.495.362.249,01

47.899.644.910,9531.391,23

41.170,65

33.775,67

6.810,19

113.147,74

1.907

955

596

3.4587,934

3,115

2,587

27

13,908

Placement 2018(billion colones)

Amount placed 2018

Balance December/2018

(billion colones)

Number of loans placed

Ongoing Loans December/2018FUNDING

TYPE OF CREDIT

Source: Coordination between Regulatores and Credit Bases

59


MUNICIPALITIES BUSINESS SUPPORT SERVICES

At the end of 2018, Banco Nacional had a financing balance for municipal projects in the amount of CRC 51,781,557,398.08, corresponding to 108 loans used by 47 local governments.

This funding applies to investment plans such as maintenance and repair of road infrastructure, bridges, storm drains, surveillance systems, software and hardware to improve administrative efficiency, waste collection, water supply, municipal infrastructure, among the main ones.

It highlights the case of the Municipality of Naranjo, which, with this financing, was able to speed up the paving of ballast roads and highways, resulting in better living conditions for the communities -which no longer have to live with dust-, better roads for farmers to transport their production, and decongestion of roads from downtown by enabling additional roads in good condition.

This type of financing also allowed the Municipality of Alajuela to take care of the drawbacks generated by the rains in an area of the canton.

As part of the range of services Banco Nacional provides, there are opportunities for different types of training and trade promotion activities for micro and small businesses.

In 2018, this segment had 6,678 spaces, distributed as follows:

In addition, with the expanded use of the Virtual Platform, for 2018 a goal of 5,000 participants was established, which was fulfilled by 134%.

TRAINING FOR MICRO AND SMALL BUSINESSES 2018

Agricultural sector

Financial literacy

Entrepreneurs

Business encounters

Export

Corporate management (virtual)Corporate

management (attendance-based)

Trade Promotion

TOTAL

543

244

379

2049

45

1914

1321

183

6.678

TYPE OF ACTIVITY PARTICIPANTS

https://youtu.be/kPwYkDrSroQ

https://youtu.be/kPwYkDrSroQ

60


OTHER PROGRAMS

• To serve people in poverty that have productive projects, financing by FIDEIMAS is available, providing up to 100% of the guarantee required for each case. At the end of 2018, there were 1,676 outstanding loans with a balance of CRC 2,146,774,285.81.

• Banco Nacional developed the BN PYME Verde (BN Green SME) Program, which started with a line of credit from KfW (German Development Bank). To December 2018, the balance of these loans was CRC 9,804,121,510.57, corresponding to 389 current loans. This program finances the use of environmentally-friendly energy sources, the use of input, and the development of environmentally friendly productive practices. The following projects are worked in this field:

1. Banco Nacional applies funding for the promotion of good sustainable practices in conjunction with CORFOGA, Corporación Ganadera,

2. Nama Ganadería, livestock companies, working together with the Central American Bank for Economic Integration (CABEI)

3. Work is also carried out in Nama Café and sustainable production, together with CABEI (Central American Bank for Economic 60 Integration).

• Rural Support Council: it is a partnership with co-responsible organizations (Development Associations, ASADAS, and others), to promote credit in rural areas

• BN Emprendedor PYME (BN SME Entrepreneur): contains components that differentiate it from traditional credit. In 2018, work was performed with a group of 15 people to develop a pilot process. Follow-up is performed and credit is given to those that through the different stages; from the moment the credit is granted, they are given assistace for 6 months to 1 year. In this process we work with INA; the National Development Banking System also participates.

• PYME Fácil (Easy SMEs): credit that is friendly to small and medium-sized businesses looking to refresh their working capital. This product does not require collateral and is especially suited for organizations that have a good credit history.

61


BN MUJER

BUSINESS SUPPORTBN Mujer (Women entrepreneur) is a commercial approach of Banco Nacional to women’s banking, ensuring that the greatest number of women have access to financial services, which are tailored to their needs, helping reduce the gender equality gap and achieving greater inclusion of women in the economy.

In 2016, Banco Nacional transformed the “BN Banca Mujer” program into “BN Mujer”. This is now a cross-cutting segment with gender focus, opening integrated services for all women. BN Mujer should achieve positioning new and more varied customer segments (housewives, freelancers, salaried women, students, pensioners, etc.), expanding its portfolio of approximately 136,000 women entrepreneurs to more than one million customers.

The participation of women-led companies in credit placemet reached, on a consolidated basis, 29% with respect to the number of cases handled and 27% in the amount formalized.

To achieve this goal, work was carried out to answer specific needs expressed by the clients through previous experiences, and the delimitation of the characteristics of participants in micro and small enterprises (including freelancers). To strengthen the supply, work was done in areas such as training, value proposition, marketing, organized groups, and financial literacy.

20182017

BN MUJER Clients

1,021,127 1,048,437

Client portfolio with banking penetration of approximately 43% of Costa Rican women, according to the NationalInstitute of Statisticsand Census

https://youtu.be/Dm8aDia-Z5E

https://youtu.be/Dm8aDia-Z5E

62


RESULTS OF NON-FINANCIAL SERVICES

2,017

1817 585

36063 2

REACHED WOMEN

Women trained Fairs (Regional and Expo Women entrepreneur)Women in fairs

IDB program Mujeres Líderes

(Women Leaders)Activities (Organized groups

and current clients)Business Rounds

DEVELOPMENT BANKING SYSTEM: WOMEN IN POVERTY:

million colones

434 WOMEN

CRC 748,609,946.00

During 2018, we reached

in poverty, formalizing

In 2018, the portfolio of women entrepreneurs who received funds

from the Development Banking System amounted to

3,641transactions for

CRC 27,190,383,722.30

New placements of credit products during 2018 amounted to 34,104 operations, distributed as follows:

CREDIT PLACEMENT BN MUJER 2018

PRODUCTIVE ACTIVITY

CONSUMPTION

CREDIT CARDS

VEHICLES

HOUSING / APARTMENT

Total general

CRC 114.616.928.314,12

CRC 20.207.880.933,01

CRC 8.267.547.387,34

CRC 19.464.128.480,00

CRC 28.424.555.800,50

CRC 190.981.040.914,97

5.493

5.454

20.763

1.677

717

34.104

Type of Credit CRC Amount

63


Revamping of the Site BN Mujer at the BN Portal

Women of 1.000 Battles

IDB-FOMIN-BN Agreement

Program Mujeres Líderes (Women leaders) 360

Campaign Somos la Generación

Entre vos y yo(Between You and Me) Blog

Provide post mastectomy breast reconstruction to women with low income status. It works with a campaign for the prevention of breast cancer; in addition to prevention, it provides real benefits with the BN Mujer cards.

Resources were dedicated to support BN entrepreneurs during the last three years, as well as to strengthen different components to better serve this market. As part of this agreement and as Administrator of the Multilateral Investment Fund, a consultancy for the development of new products was hired.

Program to strengthen the entrepreneurial skills of women in order to develop their potential in sales growth and number of employees of the entities involved in the process. They benefited from participation in leadership mentoring processes, participation in boards of directors, business conferences, and access to grants for tailored consulting services.

Its aim is to empower women in Costa Rica through the provision of financial and non-financial services, to empower women to fulfill their personal and professional goals, becoming promoters of economic development and reducing the gender inequality gap.

http://entrevosyyoblog.com

64


TRUST FUNDS FOR SUSTAINABILITY

Don Bosco Plus

National Forestry Financing Fund

(FONAFIFO)

Sustainable Biodiversity Fund

(FBS) Aguatica

Guarantee fund so students of CEDES Don Bosco at social risk can have access to university degrees related to Science, Technology, Engineering and Mathematics (STEM).

It is broken down into three elements: attracting funds, managing funds, and financing for the payment of environmental services provided by forests, forest plantations and other necessary measures to strengthen the development of the natural resources sector.

It consolidates a long-term Asset Fund that, with its yield, would permit processes for the protection and improvement of the environment and natural resources, supporting programs on the payment for environmental services provided by forests, forest plantations, and important ecosystems in mitigating greenhouse gases.

It contributes to the protection of water resources in Costa Rica by supporting environmental services and strategies that promote its conservation, protection, and recovery, through partnerships and joint work between the parties.

65


ICODER - BNCR(National Stadium)

Manuel Antonio Beach National

Park SUTEL – BNCRLaw No. 9124 – MEP –

BID – BNCRIts aim is the self-maintenance of facilities at the National Stadium, with the possibility of educational, recreational and health improvement of Costa Ricans. Among the activities carried out by the administration of the Trust Fund Directorate, this sports arena obtained its Carbon Neutral Certificate.

It provides custody and management of the contributions made by the Trustor, corresponding to fifty percent (50%) of the revenues from tickets, to the Manuel Antonio National Recreational Park.

It manages funds from the National Telecommunications Fund (FONATEL)building digital infrastructure throughout the entire country. 123 districts with Internet and fixed telephony connection, more than 55 thousand beneficiaries received computers, tablets and smartphones.

Investment:USD 167.524.233

Education Centers:103

Completed Projects12

Students benefitted:35,000

66


SUSTAINABLEVALUE CHAIN

Institutional Policy for Banco Nacional suppliers

“Banco Nacional shall establish commercial relationships with solid and competitive suppliers who meet their tax and social obligations, and who are committed to environmental conservation, for which it will gradually and progressively include environmental, social and working conditions in its purchase criteria, considering their different impacts at different stages of the life cycle of the goods or services.”

Approved by Article 17, session 11,889, on the Board’s session of February 18, 2014.

Starting from the implementation of the institutional policy for suppliers, the Social Responsibility Directorate will suggest the environmental, social and economic criteria that can be considered and used in the bids or tenders for goods and services as a means of promoting a sustainable procurement system, and, in turn, to foster the growth of suppliers within the principles of social responsibility through the our responsible supplier program.

1. Align the strategic suppliers of our value chain with the principles of corporate sustainability.

2. Determine, within their internal administrative procurement processes, the incorporation of social responsibility criteria to maximize their level of alignment.

3. Encourage the gradual adoption of best practices on social responsibility through a win-win action platform.

It began with the fundamentals of the Institutional Policy for Suppliers, which allows the operationalization of concrete actions on bids and procurement processes to generate a more sustainable purchase process. The Directorate of Infrastructure and Purchasing and the Directorate of Social Responsibility have worked with the Responsible Supplier Program since 2008. In 2018, Banco Nacional took action to strengthen strategic suppliers in its value chain, namely:

• Talks with strategic suppliers• Production chains• Responsible suppliers

PROGRAM OBJECTIVES:

SUSTAINABLE PURCHASING:

67


¢748,609,946.00

Banco Nacional uses the government’s Green Purchase Manualhttps://www.hacienda.go.cr/comprared/manual_compras_verdes.pdf

CERTIFICATION FOR STRATEGIC SUPPLIERS

PROCUREMENT AND TENDERS

Starting in 2019, the Procurement Unit will include in the bids a document entitled “Institutional Guidelines on Sustainable Practices for Suppliers,” which will be annexed to the bids on cleaning, just-in-time and security, as part of a pilot plan to analyze the behavior or reaction of the bidders.

The bids for cleaning incorporated a clause in the evaluation criteria that bidders must meet to participate as bank suppliers or to obtain a higher score, such as including persons with disabilities in their roster, in accordance with Article 3 of the Law of Equal Opportunities. In 2018, 45 cleaning processes were processed, and in which this clause was inserted.

The General Directorate of Infrastructure and Procurement of the major items for the Just In Time (JIT) System to make changes for friendlier products. For example: Paper from certified plantations, cloth bags, biodegradable products like hand soap, etc.

Within the Training Program in Corporate Sustainability, a certification was created whose goal was that, for the 2017-2021 period, Banco Nacional would achieve the certification of 100% of strategic suppliers for the Conglomerate. In 2017, a training program with strategic suppliers was implemented, which allowed 43 to be certified in Corporate Sustainability. This process was developed in partnership with the Business Alliance for Development (AED).

Two sustainability aspects were included in all bids:

• Non-discrimination and equality policy.• Environmental Management Plan.

22 suppliers were trained and certified in environmental topics.

https://www.hacienda.go.cr/comprared/manual_compras_verdes.pdf

68


STRATEGIC SUPPLIERS PROGRAM: CERTIFIED SUPPLIERS

Safety

Construction

Cleaning

Messaging/Transactional Support

Just-in-time Delivery

Marketing/advertising

Business Support

Technology and Information

Total

2

1

1

2

1

1

5

5

18

1

1

2

0

0

5

3

13

25

SUPPLIER 2017 SUPPLIER 2018SERVICE

REDUCTION OF COMPLAINTS RECEIVED, and their possible economic impact linked to their management.

SUPPORT FORBusiness Continuity and minimizing associated operational and reputation risks.

REINFORCEMENTof the sustainability strategy

SCOPE OF COMMITMENT of Banco Nacional to its sphere of influence(local workforce).

INSURING the value chain towards the promotion of sustainable procurement.

BENEFITS OF THE RESPONSIBLE SUPPLIER PROGRAM

69


ANNEXES

70


ANNEX 1

71


ANNEX 2

72


ANNEX 2

73


ANNEX 3

1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in

poverty in all its dimensions according to national definitions

2.3By 2030, doubling agricultural productivity and

the revenue of small-scale food producers, particularly women, indigenous peoples, family

farmers, farmers and fishermen, including, among others, safe and equitable access to land, other

resources and production inputs and knowledge, financial services, markets, and opportunities to

add value and obtain non-farm jobs.

2.4By 2030, to ensure the sustainability of

food production systems and apply resilient agricultural practices that increase productivity and production, contribute to the maintenance of ecosystems, strengthen adaptation to climate change, extreme weather phenomena, droughts,

floods and other disasters, and progressively improve soil quality.

1.5 By 2030, build the resilience of the poor and

those in vulnerable situations and reduce their exposure and vulnerability to climate-related

extreme events and othereconomic, social and environmental shocks and

disasters

1.a Ensure significant mobilization of resources

from various sources, including improvements in development cooperation, to provide means

that are both sufficient and predictable to developing countries, particularly least developed countries, to implement programs and policies to

end poverty in allits dimensions

Transforming Communities ProgramIntegrated Development Associations (ADIs)

Parafiscal National Emergency Fund

“FONABE FIDEIMAS AVANCEMOS”

Parafiscal: Disability, Old age and Death Regime

“BN Entrepreneur”Financial Products and Services for the base

of the pyramid.

Credit for agriculture Credit for livestock Credit for forestry Credit for fishing

BN Desarrollo(loans for micro and small enterprises)

BN MujerCorporate and business loans

“Credit for agricultureBN Desarrollo

(loans for micro and small enterprises) BN Mujer

Corporate and business loans FONAFIFO trust fund

Sustainable Biodiversity Trust Fund

“BN MunicipalitiesBN Development Trust

FIDEIMAS”

“BN MunicipalitiesBN Development Trust

FIDEIMAS”

“Health and Wellness Program” Law No. 9124-MEP-BID-BNCR

SDG TARGET BUSINESS STRATEGY“A BANK FOR EVERYBODY”

BUSINESS STRATEGY“GREEN BANK “

BUSINESS STRATEGY“PRODUCTIVE BANK”

74





4.3 By 2030, ensure equal access for all women and men to affordable and quality technical, vocational and tertiary education, including

university education

4.4 By 2030, significantly increase the number of

youth and adults who haverelevant skills, including technical and vocational

skills, for employment, decent jobs and entrepreneurship

4.5 By 2030, eliminate gender disparities in education and ensure equal access to all levels of education

and vocational training for vulnerable people, including people with

disabilities, indigenous peoples and children in vulnerable situations.

4.7 By 2030, ensure that all students acquire the necessary knowledge and skills to promotesustainable development, including, among

others, education for sustainable development and sustainable lifestyles, human rights,

gender equality, promotion of a culture of peace and non-violence, global citizenship and

appreciation of cultural diversity,and the contribution of culture to economic

development.

4.a Build and upgrade education facilities so they

take into account the needs of children, persons with disability, and gender differences, and

provide safe, non-violent, inclusive and effective learning environments for all.

4.b By 2020, increase significantly the number of

scholarships available worldwide to developing countries, particularly least developed countries,

small island developing states and African countries, so that their students can enroll in

higher education programs, including vocational training and technical, scientific, engineering and

information technology and communications programs, from developed countries and other

developing countries.

Parafiscal for the National Commission for Education Loans (CONAPE)

“Sponsorship Expo Engineering Sponsorship Expotec “

“Devices for people with disabilities such as ATM 474 (100%), BN Internet Banking and Mobile SINPE; recognized by “Costa Rica

Includes”Technological Grandpas Program“

“Financial Freedom Program Labor@ Program Sponsorship BN Youth Expo

Savings Caravans Program

TRUST FUND LAW No. 9124-MEP-IDB-BNCR

“FONABE“Avancemos” (Go Forward) scholarships

Credit for Education

Credit for Technology

75


5.5Ensure the full and effective participation of

women and equal opportunities for leadership at all decision-making levels in their

political, economic, and public life.

6.1By 2030, achieve universal and equitable access

to safe water at an affordable price for all

6.3By 2030, improve water quality by reducing

pollution, eliminating dumping and minimizing the emission of chemicals and hazardous

materials, halving the percentage of untreated waste water and increasing

considerably both recycling and safe reuse worldwide

6.4By 2030, substantially increase water-use

efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity and substantially reduce

the number of people suffering from water scarcity.

6.6By 2020, protect and restore water-related ecosystems, including mountains, forests,

wetlands, rivers, aquifers and lakes

6.bSupport and strengthen the participation of local communities in improving water and sanitation

management

5.aUndertake reforms to give women equal rights to economic resources and access to ownership

and control of land and other types of goods, financial services, heritage and natural resources,

in accordance with national laws

5.cApprove and strengthen successful policies and applicable laws to promote gender equality and

the empowerment of women and girls at all levels.

BN Talents program

Transforming Communities program ASADAS





“Eco-efficiency ProgramCredit for Green SMEs”

Eco-efficiency program


“BN Municipalities Aguatica trust fundCorporate and business loans

“Aguatica trust fund AyA trust fundSanitation plant”

“Aguatica trust fund AyA trust fund Sanitation plant Business and Corporate loans

BN Municipalities”

“National Forestry Financing Fund (FONAFIFO) trust fund Sustainable Biodiversity Fund (FBS)

trust fund

“Aguatica trust fund AyA trust fund Sanitation plant Business and Corporate loans

BN Municipalities”

“BN MujerFemale Heads of Household

“IDB-FOMIN-BN Agreement Women Leaders 360 Program”

BN Mujer




76





7.1 By 2030, ensure universal access to affordable,

reliable and modern energy services.

8.1 Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth

per annum in the least developed countries

8.2 Achieve higher levels of productivity of economies through diversification,

technological upgrading and innovation, including through a focus on high value added

and labor-intensive sectors

8.5By 2030, achieve full and productive employment

and decent work for all women and men, including for young people and persons with

disabilities, and equal pay for work of equal value

9.2Promote inclusive and sustainable

industrialization and, by 2030,significantly raise industry’s share of employment and gross domestic product, in line with national

circumstances, and double its share in least developed countries

9.3Increase the access of small-scale industrial and

other enterprises, in particular in developing countries, to financial services, including

affordable credit, and their integration into value chains and markets.

7.2 By 2030, increase substantially the share of renewable energy in the global energy mix.

7.b By 2030, increase substantially the share of renewable energy in the global energy mix.

Green SMEs

Green SMEs

Green SMEs

“BN DevelopmentLoans for large companies Corporate loans”

“BN DevelopmentLoans for large companies Corporate loans

Investment fundsTerm deposit certificates Insurance

BN Women brokerage firmMutual Funds”

“Loans for Industry Loans for technology Commercial loans

Investment in the development of public works Agricultural loans

Loans for livestock Loans for tourism “


Investment fundsBN Mujer “

“BN DevelopmentLoans for large companies Corporate loansBN Mujer Loans for industry Commercial

loans”

BN Desarrollo (Development)BN Mujer (Women)

“BN DevelopmentLoans for large companies Corporate loansBN Mujer Loans for industry Commercial

loans”

BN Desarrollo (Development)BN Mujer (Women)

“Corporate loans BN DevelopmentMutual Funds”


Investment funds”

“BN Investment funds Corporate loans”

77





9.4By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with

increased resource use efficiency and greater adoption of clean and environmentally sound

technologies and industrial processes, all countries taking action in accordance with their

respective capabilities

11.2By 2030, provide access to safe,

affordable, accessible and sustainabletransport systems for all, improving road safety,

notably by expanding publictransport, with special attention

to the needs of those in vulnerablesituations, women, children,persons with disabilities and

older persons

11.4Strengthen efforts to protect and

safeguard the world’s cultural and naturalheritage.

11.5By 2030, significantly reduce the

number of deaths and the numberof people affected and substantiallydecrease the direct economic losses

relative to global gross domestic productcaused by disasters, including

water-related disasters,with a focus on protecting

the poor and people invulnerable situations.

10.1By 2030, progressively achieve and sustain income growth of the bottom 40% of the

population at a rate higher than the national average

10.2By 2030, empower and promote the social,

economic and political inclusion of all irrespective of age, sex, disability, race, ethnicity, origin,

religion or economic or other status

10.5Improve regulation and monitoring of global

financial markets and institutions and strengthen implementation of such regulations

9.cSignificantly increase access to information and

communications technology and strive to provide universal and affordable access to the Internet in

least developed countries by 2020

Loans for Industry

“Commercial loans Corporate loansCredits for the Development of Public Works”

Manuel Antonio Beach National Park trust fund

Parafiscal National Emergency Fund

“BN Emprendedor (Entrepreneur)BN Desarrollo (Development)

BN Mujer (Women)”

“BN Emprendedor (Entrepreneur)BN Desarrollo (Development)

BN Mujer (Women)”

“Profit EfficiencyReturn on assets (ROA), return on equity

(ROE) weighed by riskOperativos expenses Credit portfolio

Delinquency”

SUTEL-BNCR trust fund

BN Carbon Neutrality PLUS Program

“Women heads of household Technological grandpas Financial Freedom program”

“IDB-FOMIN-BN Agreement Women Leaders 360 Program

Devices for people with disabilities such as ATM 474 (100%), BN Internet Banking and Mobile SINPE; recognized by “Costa Rica

Includes”Technological Grandpas Program”

78


11.7By 2030, provide universal access to safe,

inclusive and accessible, green and public spaces, particularly for women and children, older

persons and persons with disabilities

12.5By 2030, substantially reduce waste generation through prevention, reduction, recycling, and

reuse

13.3Improve education, awareness raising and human

and institutional capacity on climate change mitigation, adaptation,

impact reduction, and early warning

14.6By 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity

and overfishing, and eliminate subsidies that contribute to IUU fishing, and refrain from

introducing new such subsidies, recognizing that appropriate and effective special and differential

treatment for developing and least developed countries should be an integral part of the

WTO fisheries subsidies negotiation

14.bProvide access of small-scale artisanal fishers to

marine resources and markets•Indicator

12.7Promote public procurement practices that are sustainable in accordance with national policies

and priorities

11.cSupport least developed countries, including through financial and technical assistance, for

sustainable and resilient buildings utilizing local materials

BN Municipalities


Carbon Neutral Plus program

Fishing loans

BN Desarrollo

Sustainable Procurement and Responsible Supplier Program

Construction loansEnvironmentally sustainable housing




79


15.aMobilize and significantly increase from all sources financial resources to conserve and sustainably use biodiversity and ecosystems

16.4 De aquí a 2030, reducir significativamente By

2030 significantly reduce illicit financial and arms flows, strengthen recovery and return of stolen

assets, and combat all forms oforganized crime

17.1 Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic

capacity for tax and other revenue

17.8Fully operationalize the Technology Bank and STI

(Science, Technology and Innovation) capacity building mechanism for LDCs by 2017, and

enhance the use of enabling technologies in particular ICT

16.6Create effective, transparent and accountable

institutions at all levels

15.bMobilize significantly resources from all sources

and at all levels to finance sustainable forest management, and provide adequate incentives to developing countries to advance sustainable forest management, including for conservation

and reforestation

“National Trust Fund for Forestry Financing (FONAFIFO)”

Program on Risk Identification and Classification

BN Development BN WomenMiscellaneous Credit

Miscellaneous Trusts FundsEducation and Financial Inclusion Program Eco-efficiency Program Green SMEs

Eco-efficient Products & Services

Digital platforms of Banco Nacional Financial Conglomerate

Codes of Ethics and Corporate Governance Risk Control

Anticorruption Policies Quality Certification

Sustainable Biodiversity Trust Fund (FBS)




80


ANNEX 4

81


GRI INDEXGRI STANDARD DISCLOSURE NUMBER DISCLOSURE TITLE PAGE

GRI 102:GENERAL

DISCLOSURES

102-1

102-16

102-6

102-23

102-2

102-17

102-7

102-4

102-3

102-18

102-8

102-25

102-4

102-20

102-13

102-26

102-5

102-22

102-14

102-31

102-33

102-40

102-41

102-42

102-45

102-47

102-49

102-48

102-46

2

26 and 27

9

12

11

26 and 28

32 and 54

12

2

14

32

13

9

13

15

13

8

12 and 13

5 and 6

13

13

21

21

8

17

Not applicable for this period

Not applicable for this period

The results of the materialityanalysis were reported

in the 2017 report.

Name of the organization

Values, principles, standards, and norms of behavior

Markets served

Chair of the highest governance body

Activities, brands, products, and services

Mechanisms for advice and concerns about ethics

Scale of the organization

Location of operations

Location of headquarters

Governance structure

Information on employees and other workers

Conflicts of interest

Location of operations

Executive-level responsibility for economic, environmental, and social topics

Membership of associations

Role of highest governance body in setting purpose, values, and strategy

Ownership and legal form

Composition of the highest governance body and its committees

Statement from senior decision-maker

Review of economic, environmental, and social topics

Communicating critical concerns

List of stakeholder groups

Collective bargaining agreements

Identifying and selecting stakeholders

Entities included in the consolidated financial statements

List of material topics

Changes in reporting

Restatements of information

Defining report content and topic Boundaries

82



GRI 102:GENERAL

DISCLOSURES

GRI 203:INDIRECT ECONOMIC

IMPACTS

GRI 205:ANTI-CORRUPTION

GRI 302: ENERGY

GRI 401: EMPLOYMENT

GRI 305:EMISSIONS

GRI 403:OCCUPATIONAL HEALTH

AND SAFETY

GRI 303: WATER

GRI 307: ENVIRONMENTAL COMPLIANCE

102-50

203-1

203-2

205-1

302-1

401-1

305-1

403-1

303-1

307-1

205-2

302-4

401-2

401-3

305-2

403-2

102-51

102-52

102-53

102-54

102-55

102-56

3

38, 59 and 64

54 - 65

29

49

32

48

37

50

Non-compliance not observed during this period.

26 and 30

49

37

36

48

37

3

3

2

3

81

No external verification of the contents of this report was

Reporting period

Infrastructure investments and services supported

Significant indirect economic impacts

Operations assessed for risks related to corruption

Energy consumption within the organization

New employee hires and employee turnover [This Standard includes a Standard Interpretation on how to calculate the rates of new employee hires and employee turnover.]

Direct (Scope 1) GHG emissions

Occupational health and safety management system

Interactions with water as a shared resource

Non-compliance with environmental laws and regulations

Communication and training about anti-corruption policies and procedures

Reduction of energy consumption

Benefits provided to full-time employees that are not provided to temporary or part-time employees

Parental leave

Energy indirect (Scope 2) GHG emissions

Hazard identification, risk assessment, and incident investigation

Date of most recent report

Reporting cycle

Contact point for questions regarding the report

Claims of reporting in accordance with the GRI Standards

GRI content index

External assurance

83



GRI 413:LOCAL COMMUNITIES

GRI 414: SUPPLIER SOCIAL ASSESSMENT

GRI 417:MARKETING AND LABELING

PRODUCTPORTFOLIO

413-1

414-1

417-2

FS6

417-3

FS13

FS14

38

66

44

57

44

9

42

Operations with local community engagement, impact assessments, and development programs

New suppliers that were screened using social criteria

Incidents of non-compliance concerning product and service information and labeling

Percentage of the portfolio for business lines by specific region, size (e.g. micro/sme/large) and by sector

Incidents of non-compliance concerning marketing communications

Access points in low-populated or economically disadvantaged areas by type

Initiatives to improve access to financial services for disadvantaged people

GRI 405:DIVERSITY AND EQUAL

OPPORTUNITY405-1 32Diversity of governance bodies and employees

GRI 404:TRAINING AND EDUCATION

404-1

404-2

404-3

35

35 and 36

37

Average hours of training per year per employee

Programs for upgrading employee skills and transition assistance programs

Percentage of employees receiving regular performance and career development reviews

SUSTAINABILITY REPORT 2018