A Purpose-Driven Financial Services Company

Our approach to operating ethically and sustainably has always been core to our business and culture. Over the last decade we have taken deliberate steps to formalize our environmental, social and governance (ESG) strategy, measure our performance and report our progress with transparency.

Our ability to integrate sustainable business practices into our operations is critical to delivering long-term value to our clients, customers, associates and community. In order to meet increasing and changing expectations an enormous commitment is required by all companies, and we are well positioned to execute.

Governance

“The parameters of good corporate governance are always changing. In the face of rapidly evolving regulatory and market pressures, along with increasing stakeholder expectations, we will continue to advance ESG as an integrated part of our overall business strategy, operational priorities and continued transformation.”

Joe Motes, EVP, CAO General Counsel & Secretary

Ethics
28.5% Board gender diversity
14% Board racial/ethnic diversity
99.6% associates completing annual Code of Ethics training
6% diverse supplier spend
Recognition: named one of America’s Most Responsible Companies 2023 by Newsweek

Management Approach

Managing Our Business Responsibly

Bread Financial is committed to operating our business responsibly based on the highest standards of ethics and integrity. This commitment starts with comprehensive corporate governance structures, processes, and policies designed to promote transparency for our stakeholders and strengthen Board and management accountability.

Corporate governance

We have a solid track record of sound corporate governance, with rigorously stress-tested processes, controls and comprehensive policies. Corporate governance at Bread Financial is designed to promote the diverse priorities and interests of all our stakeholders, strengthen Board and management accountability and foster responsible decision-making.

Our Board of Directors is responsible for oversight of the business, including the company’s long-term business strategy to promote the diverse priorities and interests of all of our stakeholders. This oversight role includes a focus on responsible decision-making, including risk management, leadership development and succession planning, external reporting, compliance, data management, and data security. The Board also oversees our ESG strategy and programs, including initiatives to promote sustainability, diversity, equity and inclusion (DE&I), and stakeholder engagement.

Ethics & Integrity

Integrity, ethical decision-making and compliance with all applicable laws and regulations governing our business drive our global growth and long-term success. We are focused on earning the trust of our stakeholders by protecting our reputation as a responsible and compliance-centric organization.

Our comprehensive Code of Ethics outlines the values and principles we agree to embody, maintain and protect, and provides guidance to help us consistently make sound decisions and perform our duties ethically and responsibly. Every decision we make — and each of our daily actions — reflects our values, beliefs and behaviors. Individually and collectively, we are focused on driving business performance and protecting our reputation as a responsible and compliance-centric organization.

We also maintain supplementary codes of ethics for our Board of Directors and senior financial officers, which address additional standards and guidance applicable to their roles.

The Board’s Nominating & Corporate Governance Committee is responsible for monitoring compliance with and enforcement of the provisions of the Code of Ethics.

Risk Management

Our approach to Enterprise Risk Management identifies and manages risks related to the achievement of strategic, financial, compliance and operational objectives.

Our key risks and mitigation strategies are documented, monitored and reviewed quarterly. The Company’s Board of Directors reviews management’s assessment of enterprise risk as well as risk mitigation strategies twice a year. The Board may request additional review should they deem it appropriate or necessary. These risks are also reviewed alongside our sustainability strategy and priorities to ensure alignment of key issues across functions company-wide.

Data Management

Ensuring the privacy and security of customer data is critical to the success of our tech-forward business and building the trust of our customers. We are committed to keeping data safe from cybersecurity risks, adhering to applicable state and federal privacy regulations, and applying sound data management practices. This commitment starts at the top with oversight by our Board and Risk Committee, which receives at least quarterly reports related to Information Security, data quality, data privacy, as well as industry and regulatory updates.

Responsible Supply Chain

Bread Financial is committed to working with suppliers who conduct business with integrity and support our social responsibility, human rights, and diversity initiatives. Our Supplier Code of Conduct outlines the expectations we have of our suppliers and the basic requirements they must follow when conducting business with or on behalf of Bread Financial.

Our due diligence risk assessment process and ongoing oversight includes evaluating suppliers for risks including regulatory compliance, information security, financial, reputational, and business continuity. We follow guidance from the Federal Deposit Insurance Corporation (FDIC) and other best practices regarding risks to assess for third parties.

We are committed to promoting DE&I in our supply chain and supporting local communities by increasing our business with diverse suppliers. Bread Financial’s Supplier Diversity program is designed to build mutually-beneficial relationships, create value, and ensure diverse suppliers have a fair and equal opportunity to be included in the company’s sourcing and procurement process.

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Customers

Empower customers through inclusive, responsible access to a diverse mix of financial solutions.

“Providing the tools, training, and resources for our associates to be supported at home and at work directly impacts our ability to provide an exceptional experience for our customers.”

Tammy McConnaughey, EVP & Chief Credit Risk and Operations Officer

Excellence
92.6% Customer Care first call resolution
Top 3 Contact Center in North America*
$125+ million invested in marketing, technology and digital product innovation
Recognition: Best Consumer Payments Platform , 2022 Fintech Breakthrough Awards

*As determined by Benchmark Portal
80% of customers engaging with our Care Centers were satisfied with the courteousness, knowledge, and clear communication of our agents.

Management Approach

Customer Experience

At Bread Financial, customer experience is woven into the fabric of our business. Our mission is to enable customer satisfaction through simple, smart financial solutions and facilitating effortless interactions. We consistently monitor and gather real-time customer insights and feedback across customer journeys to ensure our services reflect the exceptional standards we seek to attain. We leverage these insights to better understand, anticipate, and respond to the needs of both our customers and associates.

Our goal is to consistently create personalized and effortless experiences across all channels. Our associates are fundamental to the experience of our customers. We invest significantly in training, resources and technology so that our associates have the necessary tools to provide the best possible service. We place tremendous value on customer feedback, including complaints. To ensure that we are providing the best customer experience possible, we have a robust complaint management program designed to ensure prompt handling and timely resolution.

Fair and Responsible Banking

We take great care and consideration to ensure our consumer credit application and underwriting processes are administered equitably. We are transparent and impartial in our lending practices and rely on our fully automated proprietary process to accurately analyze and issue credit based on unbiased statistical modeling criteria. Our automated lending process undergoes routine scrutiny both internally and externally to verify its decision-making criteria. As part of this assessment, we employ a third-party firm to conduct an extensive annual review of our credit portfolio and evaluation metrics, screening for any evidence of unintentional bias or discrimination to further ensure fair and responsible lending protocols.

During the underwriting process, issuing credit responsibly also means taking care not to overburden cardmembers with credit limits that surpass their ability to repay. We apply advanced analytics and best-practice industry strategies to establish limits that provide the appropriate level of credit access and spending power while responsibly protecting the interests and needs of both cardmembers and our brand partners.

We have resources dedicated to continually examine and evaluate our models to ensure we maintain accurate and consistent credit thresholds.

FINANCIAL WELLNESS

Bread Financial is committed to fostering financial wellness through education and training, access to technology and other financial literacy tools needed to build a bright financial future for our customers, associates and community. These tools are critical for helping individuals make informed financial decisions that allow them to thrive financially and achieve financial wellness.

Our internal working group, established in 2021, continues to create and enhance a formalized financial wellness platform, with a focus on our customers, associates, and communities.

Data Protection & Privacy

Our commitment to protecting the privacy and security of personal information is fundamental to building trust with our customers. We strive to ensure our privacy policies are clear and concise by informing customers about what data we collect, why we collect it, and how we use it. We also provide customers with information and choice regarding how they can limit the data we collect or share, along with offering online resources and tips on how to keep their information safe.

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Associates

Promote an inclusive, culture that empowers associates through opportunities to grow, develop and lead.

“Our goal is to create an inclusive culture, where associates are empowered to thrive, be their authentic self, and feel connected and invested in contributing to the long-term success of our company.”

Calvin Hilton, SVP & Chief Diversity Officer

Associates
~7,500 global associates
69% total workforce gender diversity
44% Director and above gender diversity
34% of 592 new jobs posted were filled by internal candidates
79% favorable “Empowered to Thrive” associate engagement combined score
5th consecutive year recognized as a member of the Bloomberg Gender Equality Index.

Management Approach

Our associates are the heart of our company. We strive to attract, develop, and retain top talent, understanding that this is a perpetual business imperative. We actively promote an inclusive, engaged culture that enables our associates to thrive by providing opportunities to engage, grow, lead, and be recognized for their efforts. We take a holistic approach to supporting their experiences in the workplace and beyond, recognizing that we must empower our associates in order to deliver on our promises to all of our stakeholders.

Associate Experience and Engagement

We strive to foster an engaging and rewarding experience for our associates. Ensuring high levels of associate pride and engagement requires significant attention to topics such as growth and development, rewards and recognition, and the evolving needs of the workforce of the future. We know that if we deliver an exceptional experience for our associates and they are at their best, they are better equipped to deliver an exceptional experience for our customers.

To stay attuned to the needs of our associates, we evaluate their engagement based on a continuous loop of data-driven feedback, enhanced through essential tools and technology. We rely on frequent “pulse” surveys to complement our once-a-year “snapshot” survey to regularly listen to the voice of our associates, stay connected to how they are feeling, and stay in tune to their perceptions.

Growth and Development

Bread Financial is committed to providing equitable pathways for individual learning and development for our associates to enable them to grow and achieve their career goals. We offer a variety of training and educational opportunities, including online and onsite structured training, coaching, tuition reimbursement for external courses, and on-the-job learning opportunities. Our goal is to provide every associate with the tools and support they need to develop in their current role and help them find opportunities for advancement in line with the long-term goals of the organization.

To foster growth and development, associates regularly receive feedback from their supervisor through formal mid-year and year-end reviews.

Diversity, Equity & Inclusion

We create an inclusive culture that attracts and values diversity of thought, experience, background, skills, and ideas. We believe our people are our most important asset and we are at our best when we embrace the diverse perspectives of our associates, clients, customers, and communities. Prioritizing a workplace that fosters DE&I is essential to Bread Financial’s long-term growth and sustainability, and we have made it an imperative part of our continued business transformation.

Training at all levels of the company is foundational to our DE&I efforts. At the heart is our Power of Conscious Inclusion training offered to all associates and leaders. To further embed DE&I throughout our organization, we created the DE&I Leadership Series, a development program providing company leaders with in-depth trainings on diversity, equity, and inclusion topics, which will be rolled out in 2023.

Our associate-led BRGs celebrate distinct dimensions of diversity and help to cultivate a culture of inclusion. In 2022, we solidified their role within our organization by re-chartering seven existing BRGs and chartering one new BRG, each with two sponsors from our Executive Leadership Team.

Associate Health and Well-being

To attract and retain talented associates, Bread Financial is committed to providing competitive total compensation, benefits, and wellness resources. Our compensation model is designed to provide equal pay opportunities for all associates. We provide a comprehensive and competitive benefits package that supports the physical and mental well-being of our workforce, including a focus on financial wellness that runs throughout our company. To promote flexibility in our offerings, our “Workplace of the Future” A Action Team is charged with providing ongoing recommendations for enhancements to help associates achieve optimal work-life balance in a hybrid working environment.

Our associates get exclusive access to LivingWell – our award-winning, holistic well-being program that offers simple, inclusive, no to low-cost solutions that meet them whenever they are on their wellness journey. LivingWell helps associates and their families navigate to resources that support their whole self and improve financial confidence.

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Environment

Accelerate our actions and investments to address the impact of climate change while driving resource efficiency.

"Bread Financial is focused on integrating environmental criteria into all aspects of our business operations, helping to mitigate the impacts of climate change while driving energy efficiency and conserving resources."

Dana Beckman, Head of Sustainability

Community
125,113 MT Co2e total greenhouse gas emissions
101,978 GJ total energy consumed
26% electricity from renewable sources
74% electricity from non-renewable sources

Management Approach

Bread Financial recognizes the importance of addressing environmental and climate-related threats to ensure the sustainability of our operations, resilience for the future, and protecting and preserving our planet. With support from our Executive Leadership Team (XLT) and Board of Directors, we continue to accelerate our actions and investments to facilitate improved resource efficiency and address the impact of climate change.

Environmental Strategy

Our approach to environmental management is guided by our Environmental Policy Statement, which we developed and launched in 2021 as an integral part of our business transformation. We aim to promote environmentally beneficial business practices through our products and services, company culture, procurement practices, facility energy and resource conservation practices, and environmental risk and opportunity management.

As part of our environmental strategy, we have developed a scorecard, roadmap, and timeline for our ongoing efforts. Items are reviewed, updated, and adopted annually. A supporting control framework further defines how we govern, measure, and act on our commitments and ensures accountability for long-term progress.

Environmental Performance

We are committed to reducing our GHG emissions to help combat climate change. We have upgraded our tools and processes to collect emissions data over the past few years leading to more accurate and actionable findings. We measure our GHG emissions (Scopes 1, 2, and 3) across our company. We completed our 10th inventory in 2022 and used the results to report to CDP.

In 2022, we established a new GHG emissions baseline that more accurately reflects our current business. During the three prior years our footprint fluctuated as a result of COVID and then a return to normalcy post-COVID, combined with the divestiture of substantial lines of business and optimization of our real estate portfolio.

Energy and resource conservation is a priority at each of our locations. We are continuously working to reduce our environmental footprint through facility improvements, investment in renewable energy sources, and associate engagement and education.

Climate Related Risk

To meet the ambitions of our 2021 Climate Action Roadmap, we partnered with a climate consultant to assess our climate-related physical and transition risks, including a scenario analysis in line with two-degrees of warming. We have engaged a cross-functional group of leaders who will have a role in the management of the identified risks and will work together in the coming year to begin establishing processes and metrics through which to mitigate and monitor them.

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Communities

Make bold, strategic investments that empower our communities and create possibilities.

“Our holistic approach to community reinvestment engages local stakeholders with resources to effectively meet the needs of low- to moderate-income individuals and address inequities in the communities we serve.”

Stephanie White, Director of CRA Compliance

Environment
$9M total contributions
$10M in new small business support commitments
3,771 volunteer hours
$949,110 matching gifts
$73,600 Dollars for Doers contributions

Management Approach

At Bread Financial, community-centric values are woven into our company and culture. We’re committed to making bold, strategic investments that strengthen our communities, foster independence, and create opportunities for our associates to engage through volunteerism and supported giving. We work hard to align our community initiatives with our business priorities in a way that will be good for society and good for our business.

Community Giving and Investment

The strategic areas that guide our community investment and initiatives, what we call our Purpose-Driven Priorities include: Financial Wellness, Equity & Inclusion and Protecting Our Planet.

We have the responsibility and resources to enable positive change in building a more sustainable, resilient future for all those we serve. The oversight of our community investments ensures alignment between the socioeconomic needs of the community and our identified strategic priorities.

The Office of Sustainability staff works together with our associate-driven Sustainability & Community Relations Committee and our BRGs to activate our non-profit partnerships, coordinate and plan volunteer opportunities, and execute internal fundraising campaigns.

Associate Community Engagement

Our associates play a critical role in advancing our value to “Pay it Forward.” We match their donations, encourage their volunteer time, and create opportunities for each and every associate to give back in their own way.

We conduct several campaigns throughout the year providing our associates opportunities to give back to their communities. These include our annual Giving Campaign, Operation Feed, and Volunteer Week. We also provide associates incentives to support the causes most important to them through our Matching Gifts, Dollars for Doers and Board Matching programs.

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