Bread Financial 2021 ESG Report: Our ESG Strategy

In 2021, we worked with a leading third-party consultant to prioritize our ESG objectives and develop key metrics that align with our business strategy and sustainable performance goals. The purpose of these efforts was to develop a Board-approved ESG strategy to serve as the roadmap for our forwardlooking policies, practices and performance.

To guide our process, we conducted a gap analysis against key reporting frameworks such as the Sustainability Accounting Standards Board (SASB) standards and United Nations Sustainable Development Goals (SDGs). We also looked to global ESG ratings agencies such as Sustainalytics, MSCI and ISS during this process to ensure our actions aligned with accepted standards.

We performed a benchmark assessment evaluating select peers and other financial services providers to gauge our standing in the market. This assessment ensured we align our priorities in accordance with industry standards and best practices and that we meet, if not exceed, stakeholder expectations.

In developing our ESG strategy, we leveraged the expertise and diversity of thought of cross-functional Bread Financial leadership through extensive internal, enterprise-wide engagement and subject matter expert interviews to conceptualize material topics most pertinent to our changing organization. Additionally, we reached out to our top 20 stockholders to review and seek input on our proposed ESG strategy.

As a result of these efforts, Bread Financial achieved internal and external consensus, including full Board approval and executive support for our newly devised and significantly enhanced ESG strategy.

ESG STRATEGIC FRAMEWORK

Our ESG Strategic Framework outlines the ambitions and priorities of our strategy within five focus areas. We developed an ESG scorecard correlating with each focus area of the strategy that will be used to manage and measure our efforts as we make progress. In 2022, we anticipate redefining our baselines and key performance metrics to establish new quantitative goals in accordance with our updated strategy and framework.

OUR OBJECTIVE

Integrate ESG principles into Bread Financial’s business strategy in ways that optimize opportunities to make positive environmental, social and governance impacts while advancing long-term financial and reputational goals.

• Managing Our Business Responsibly
  Integrate ESG issues into our overall governance, risk management, business strategy and priorities.
• Empowering Customers
  Empower customers through inclusive, responsible access to a diverse mix of financial solutions.
• Engaging Our Associates
  Promote an inclusive, engaged culture that empowers associates through opportunities to grow, develop and lead.
• Protecting Our Planet
  Accelerate our actions and investments to address the impact of climate change while driving resource efficiency.
• Creating Possibilities for Our Communities
  Make bold, strategic investments that empower our communities and create possibilities.

ESG GOVERNANCE STRUCTURE

Our Objective: Integrate ESG principles into Bread Financial’s business strategy in ways that optimize opportunities to make positive environmental, social and governance impacts while advancing long-term financial and reputational goals.

Board of Directors
Conduct active oversight of our strategy through the Nominating and Corporate Governance Committee of the Board of Directors and receive quarterly updates on key ESG topics.

Executive Leadership Team
Accountable for all aspects of our company’s overall performance, including economic and ESG. Our Executive Vice President, General Counsel and Secretary serves as the executive sponsor of our ESG strategy and initiatives.

Corporate Affairs
Our Head of Sustainability within the Corporate Affairs function guides the enterprise sustainability strategy, measurement and reporting, working closely with the appropriate business leaders and enterprise committees to ensure proper strategic alignment and management of programs and initiatives.

Enterprise Committees
Senior leaders across the company provide guidance, oversight and accountability for strategy and performance outcomes related to individual initiatives and programs.

Read more about our ESG Governance in the Managing Our Business Responsibly section of this report.

We have identified two United Nations Sustainable Development Goals – #8 Decent Work and Economic Growth and #10 Reduced Inequalities – which we believe align with our ESG priorities. Alignment with these goals reflects our mindful, macro-conscious approach to impacting our stakeholders and the world around us.

2021 ESG MILESTONES

In addition to the work that went into formalizing our ESG strategy, Bread Financial achieved notable milestones in 2021 that further reflect our transformation and commitment.

Highlights include:

• Creating a new Head of Sustainability position to oversee and lead the development of our ESG strategy and execution
• Publishing our eighth sustainability report documenting our progress from 2020, notably closing out three-year sustainability goals previously set in 2017
• Developing an executive compensation scorecard inclusive of metrics tied to ESG performance
• Developing and disclosing our Environmental Policy and Human Rights Statement

2021 Materiality Assessment

In late 2020 and early 2021, we conducted our second materiality assessment process*, engaging key internal and external stakeholders to evaluate and inform our ESG priorities and obtain a deeper understanding of why they matter. The assessment clearly defines our most important stakeholder and business priorities. For more details, please see the 2021 Materiality Assessment Overview posted on our website.

_{*This assessment followed the recommended process outlined in the Global Reporting Initiative (GRI) Standards.}

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