KBC Group NV

The Executive Committee reports to the Board of Directors on the sustainability strategy, including the policy on climate change but also other relevant ESG (environment, social and governance)-related themes such as gender diversity and human rights. As the Board of Directors has determined climate action failure as a top risk for the KBC Group (for more information [please see our risk report), the Risk and Compliance Committee](https://www.kbc.com/content/dam/kbccom/doc/investor-relations/Results/jvs-2021/risk-report-2021.pdf) very closely monitors the sustainability-related risks. Twice a year the Board of Directors conducts a comprehensive review of all sustainability-related domains and targets by way of the KBC Sustainability Dashboard. At least once a year, the Board of Directors has an in-depth discussion on ESG-related topics at which the status of the Sustainable Finance Programme is presented. Important changes to sustainability policies as well as sustainability-related reporting are also discussed at board level. The Executive Committee has the highest level of direct responsibility for sustainability, including the group's policy on climate change. It has granted decision-making powers on sus­tainability and climate-related issues to the Internal Sustainability Board and the Sustainable Finance Steering Committee. However, the ultimate decision-making authority rests with the Executive Committee, which is required to ratify any such decisions. The Internal Sustainability Board (ISB) is chaired by the Group CEO and comprises of the Group CFO (as chairman of the Sustainable Finance Steering Committee), the Group Corporate Sustainability General Manager and senior managers from all business units and core countries. As such all Executive Committee members are represented. Given the presence of top executives and senior representatives of all our business units and core countries in the ISB, it is the primary forum for discussing all ESG-related issues, such as determining and updating ESG policies, addressing ESG-related risks, sharing ESG knowledge and best practices across the organisation and the strategic and commercial aspects of the KBC Sustainable Finance Programme. The ISB is the main platform for driving sustainability at group level. It debates and takes decisions on all sustainability-related matters, both at a strategic level and in more operational terms. The ISB acts in close partnership with the Group Corporate Sustainability Division. The members of the ISB are responsible for communicating on sustainability matters within their respective countries and business lines, for creating a support and sponsorship base and for making the group's sustainability strategy work. The Sustainable Finance Programme is overseen by the Sustainable Finance Steering Committee chaired by the Group CFO. The latter is also a member of the ISB. Under the guidance of the Group CFO, various departments at group level work closely together and monitor the overall progress and technical implementation of the Sustainable Finance Programme. Specifically to manage climate-related data collection and reporting, a separate Data and Metrics Steering Committee was set up to include representatives from all core countries. Progress is reported to the Executive Committee and the Board of Directors in a status report that is presented at least once a year Headed up by a programme manager from Group Corporate Sustainability, the Sustainable Finance Programme Core Team comprises specialists from the Finance, Credit Risk and Risk functions, along with sustainability experts. The core team integrates the policy on climate change within the group and oversees and supports our business departments in developing climate resilience in line with the TCFD recommendations and the EU Action Plan. The core team meets on a weekly basis to ensure swift action on the programme's objectives and works in close cooperation with specifically designated climate contacts in the core markets of our group and all relevant departments, including albeit not limited to Data Quality Management, KBC Insurance, KBC Asset Management, KBC Corporate Banking, Treasury, Pensioenfonds KBC Legal Audit Compliance and KBC Securities [...] The Group Corporate Sustainability Division is headed up by the Group Corporate Sustainability General Manager and reports directly to the Group CEO. The General Manager also has regular discussions with the Chairman of the Board of Directors to prepare discussions around sustainability at board level. The team is responsible for developing our sustainability strategy and implementing said strategy across the group and informs the ISB on the implementation. The Executive Committee and the Board of Directors are informed of the progress made twice a year through the KBC Sustainability Dashboard. In each core country, the Corporate Sustainability Country Coordinator is responsible for integrating the decisions of the ISB and the objectives of the Sustainable Finance Programme. The Country Coordinators work closely and frequently with the Group Corporate Sustainability division, designated sustainability and climate contacts in their country as well as with their country representative in the ISB. As such, all core countries of KBC are duly involved in both the strategic discussions and the operational implementation of our group-wide sustainability policies and programmes. In each of our core countries, our country sustainability departments and committees are organised in such a way so as to support their senior managers who sit on the ISB and the Corporate Sustainability Country Coordinator in integrating our sustainability strategy and organising and communicating local initiatives in this area. Amongst other things, the relevant staff and committees supply and validate non-financial information. Sustainability is anchored in our core activities – banking, insurance and asset management – in all business units and core countries. In addition to our internal organisation, we have set up two external advisory boards to advise KBC on various sustainability aspects. They consist of experts from the academic world: The External Sustainability Board advises the Group Corporate Sustainability Division on KBC sustainability policies and strategy and is consulted on a regular basis by the Sustainable Finance Programme on climate-related topics. The SRI Advisory Board acts as an independent body for our SRI funds and oversees screening of the socially responsible character of the SRI funds offered by KBC Asset Management."
"Colleagues from the relevant departments in all of our core countries took the lead to draft the White Papers and worked together to this end with the relevant central departments. All White Papers were discussed in detail and approved by the Internal Sustainability Board (ISB), to ensure group-wide adoption and implementation. The ISB also approved the first policy decisions for some of these sectors and business lines, as well as the next actions for all of them. The ISB also decided to repeat the White Paper exercise on a regular basis to keep a finger on the pulse of all the movements that could affect these sectors and business lines and to be able to take timely action. The sectors and business lines that we have identified as requiring further action and policy updates in the short term will now be updated annually (next time already by mid-2022). In concrete terms, these are the sectors and business lines we have defined as priority sectors: energy, commercial real estate and mortgages and transport (including car loans and car leasing), agriculture and food production. For energy, commercial real estate and mortgages and transport, we are preparing a further possible refinement and extension of our concrete climate-related, sector-based targets. This exercise will be based on the first data collection efforts that have been performed in the past year. We will keep on monitoring the other sectors as well, although a more detailed update is scheduled from 2023. This choice was made since we currently assume that the climate mitigation measures in these sectors still require substantial technological advancement before we can strive for significant reductions of greenhouse gases. However, please note that the energy component of the production process in all sectors is an integral part of the Energy priority approach (for further information please refer to the appendix on the White Papers of this report).

We want to ensure the integration of our sustainability strategy throughout our group and in all our core activities. We therefore implement our sustainability strategy through a firm sustainability governance structure. This includes top level responsibility for our sustainability and climate strategy, covering all environment, social and governance-related (ESG) themes. The centrally decided strategy is implemented group-wide through clear local accountabilities in each of our core countries. We have further strengthened this hybrid organisational structure in 2022 by placing local accountability at management level. [...] The Group Corporate Sustainability Division is headed up by the Group Corporate Sustainability Senior General Manager. The latter reports directly to the Group CEO and also meets on a regular basis with the Chairman of the Board of Directors. The division is responsible for developing our general sustainability strategy, for implementing this strategy across the group and for informing the ISB on its implementation. The Executive Committee and the Board of Directors are informed of the progress made twice a year through the KBC Sustainability Dashboard. [...] At the end of 2022, we have further strengthened our sustainability and climate governance. We decided to install local accountability at management level in each of our core countries. A functional reporting relationship is set up with the Senior General Manager of the Group Corporate Sustainability department. By organising sustainability close to our business and through clear, local accountabilities, we ensure that it is anchored throughout the group and that sustainability at KBC is not about empty words, but an actual management objective and strategic element of our organisation. [...] The Executive Committee reports to the Board of Directors on the sustainability strategy. This covers ESG-related themes in the broad sense, including climate and other environmental topics, but also topics such as gender diversity and human rights. The Risk and Compliance Committee also very closely monitors ESG-related risks. And more specifically climate-related risks, as the board has defined climate action failure as a top risk for the KBC Group. For more information, see the [KBC Group Risk Report. Twice a year the Board evaluates and](https://www.kbc.com/content/dam/kbccom/doc/investor-relations/Results/jvs-2022/risk-report-2022.pdf) discusses progress in the area of sustainability via the KBC Sustainability Dashboard. On top of that, important changes to sustainability policies as well as sustainability-related reporting are also discussed at board level. [...] The Internal Sustainability Board is chaired by the Group CEO. The board furthermore includes the Group CFO as the vice-chairman in his capacity as the chairman of the Sustainable Finance Steering Committee, the Group Corporate Sustainability Senior General Manager and senior managers from all business units and core countries. All Executive Committee members are either members of or represented on the ISB. Given the presence of top executives and senior representatives of all our business units and core countries, the ISB is the principal forum for discussing all ESG-related issues. The ISB operates in close partnership with the Group Corporate Sustainability division. It is the responsibility of the members of the ISB to communicate on sustainability matters within their respective countries and business lines. They work closely with the country Sustainability General Managers to create a support and sponsorship base and implement the strategic decisions throughout the group. [...] The Sustainable Finance Programme Core Team handles the day-to-day implementation of KBC's climate approach and supports its business departments in these endeavours. The core team, headed up by a programme manager from Group Corporate Sustainability, meets on a weekly basis to ensure swift action. The team is made up of specialists from the Finance, Credit Risk and Risk functions, along with sustainability experts. The team furthermore works closely with specifically designated contacts in the core markets. Finally, the team is also in close interaction with all relevant departments throughout the group such as Data Quality Management, KBC Insurance, KBC Asset Management, Treasury, Pensioenfonds KBC, Legal, Audit, Compliance and KBC Securities. [...] The Sustainable Finance Steering Committee, chaired by the Group CFO, oversees the Sustainable Finance Programme. The role of the steering committee is to monitor the overall progress and technical implementation of the Sustainable Finance Programme. Various departments at group level work closely for this purpose. On top of that, a separate Data and Metrics Steering Committee was set up to specifically manage climate-related data collection and reporting. It additionally includes representatives from all core countries. The Sustainable Finance Steering Committee provides the Executive Committee and the Board of Directors with a status report on the Programme at least once a year. [...] We have placed local accountability at management level by appointing a General Manager Sustainability in each core country. The Country Sustainability Managers are responsible for integrating the decisions of the ISB on KBC's sustainability strategy in their country. They work closely and frequently with the Group Corporate Sustainability division, and functionally report to the Senior General Manager Corporate Sustainability. These local accountabilities ensure all core countries of KBC are duly involved in both the strategic discussions and the operational implementation of the strategy. The organisation of the local sustainability teams varies from country to country. However, in general, country sustainability departments and committees provide support with the integration of the sustainability strategy and the organisation and communication of local initiatives in this area. Amongst other things, the relevant staff and committees supply and validate non-financial information. [...] We use the KBC Sustainability Dashboard to follow up on the implementation of our sustainability strategy. The dashboard reflects the key actions of our sustainability strategy. It includes measurable and verifiable parameters to ensure an objective assessment of the strategy. The dashboard is presented twice a year to the Executive Committee and the Board of Directors to evaluate and discuss the progress on sustainability. This assessment affects the variable remuneration of the Executive Committee members. [...] The variable remuneration of Executive Committee members is therefore partly contingent on the progress in our sustainability strategy. In practical terms, one of the collective targets that determines their variable remuneration is related to the implementation of the sustainability strategy. The progress is evaluated every six months using the KBC Sustainability Dashboard. The ultimate assessment of the criteria used to evaluate the members of the Executive Committee lies with the Board of Directors via the Remuneration Committee. Also, the variable remuneration of senior management is partly linked to sustainability performance. In concrete terms, at least 10% of the variable remuneration of senior management members is tied to the achievement of individual targets related to the implementation of the group's sustainability strategy.

We want to ensure the integration of our sustainability strategy throughout our group and in all our core activities. We therefore implement our sustainability strategy through a firm sustainability governance structure. This includes top level responsibility for our sustainability and climate strategy, covering all environment, social and governance-related (ESG) themes. The centrally decided strategy is implemented group-wide through clear local accountabilities in each of our core countries. We have further strengthened this hybrid organisational structure in 2022 by placing local accountability at management level. [...] The Group Corporate Sustainability Division is headed up by the Group Corporate Sustainability Senior General Manager. The latter reports directly to the Group CEO and also meets on a regular basis with the Chairman of the Board of Directors. The division is responsible for developing our general sustainability strategy, for implementing this strategy across the group and for informing the ISB on its implementation. The Executive Committee and the Board of Directors are informed of the progress made twice a year through the KBC Sustainability Dashboard. [...] At the end of 2022, we have further strengthened our sustainability and climate governance. We decided to install local accountability at management level in each of our core countries. A functional reporting relationship is set up with the Senior General Manager of the Group Corporate Sustainability department. By organising sustainability close to our business and through clear, local accountabilities, we ensure that it is anchored throughout the group and that sustainability at KBC is not about empty words, but an actual management objective and strategic element of our organisation. [...] The Executive Committee reports to the Board of Directors on the sustainability strategy. This covers ESG-related themes in the broad sense, including climate and other environmental topics, but also topics such as gender diversity and human rights. The Risk and Compliance Committee also very closely monitors ESG-related risks. And more specifically climate-related risks, as the board has defined climate action failure as a top risk for the KBC Group. For more information, see the [KBC Group Risk Report. Twice a year the Board evaluates and](https://www.kbc.com/content/dam/kbccom/doc/investor-relations/Results/jvs-2022/risk-report-2022.pdf) discusses progress in the area of sustainability via the KBC Sustainability Dashboard. On top of that, important changes to sustainability policies as well as sustainability-related reporting are also discussed at board level. [...] The Executive Committee has the highest level of direct responsibility for sustainability. It has given the Internal Sustainability Board (ISB) and the Sustainable Finance Steering Committee decision-making powers on sustainability issues. However, the ultimate decision-making power remains with the Executive Committee, which is required to ratify all decisions. [...] The Internal Sustainability Board is chaired by the Group CEO. The board furthermore includes the Group CFO as the vice-chairman in his capacity as the chairman of the Sustainable Finance Steering Committee, the Group Corporate Sustainability Senior General Manager and senior managers from all business units and core countries. All Executive Committee members are either members of or represented on the ISB. Given the presence of top executives and senior representatives of all our business units and core countries, the ISB is the principal forum for discussing all ESG-related issues. The ISB operates in close partnership with the Group Corporate Sustainability division. It is the responsibility of the members of the ISB to communicate on sustainability matters within their respective countries and business lines. They work closely with the country Sustainability General Managers to create a support and sponsorship base and implement the strategic decisions throughout the group. [...] The Sustainable Finance Programme Core Team handles the day-to-day implementation of KBC's climate approach and supports its business departments in these endeavours. The core team, headed up by a programme manager from Group Corporate Sustainability, meets on a weekly basis to ensure swift action. The team is made up of specialists from the Finance, Credit Risk and Risk functions, along with sustainability experts. The team furthermore works closely with specifically designated contacts in the core markets. Finally, the team is also in close interaction with all relevant departments throughout the group such as Data Quality Management, KBC Insurance, KBC Asset Management, Treasury, Pensioenfonds KBC, Legal, Audit, Compliance and KBC Securities. [...] The Sustainable Finance Steering Committee, chaired by the Group CFO, oversees the Sustainable Finance Programme. The role of the steering committee is to monitor the overall progress and technical implementation of the Sustainable Finance Programme. Various departments at group level work closely for this purpose. On top of that, a separate Data and Metrics Steering Committee was set up to specifically manage climate-related data collection and reporting. It additionally includes representatives from all core countries. The Sustainable Finance Steering Committee provides the Executive Committee and the Board of Directors with a status report on the Programme at least once a year. [...] We have placed local accountability at management level by appointing a General Manager Sustainability in each core country. The Country Sustainability Managers are responsible for integrating the decisions of the ISB on KBC's sustainability strategy in their country. They work closely and frequently with the Group Corporate Sustainability division, and functionally report to the Senior General Manager Corporate Sustainability. These local accountabilities ensure all core countries of KBC are duly involved in both the strategic discussions and the operational implementation of the strategy. The organisation of the local sustainability teams varies from country to country. However, in general, country sustainability departments and committees provide support with the integration of the sustainability strategy and the organisation and communication of local initiatives in this area. Amongst other things, the relevant staff and committees supply and validate non-financial information. [...] In addition to our internal organisation, we have set up an External Sustainability Board. This board consists of sustainability experts, mainly from the world of academia. Its role is to advise KBC on its sustainability strategy and policies. Another external board is the RI (responsible investing) Advisory Board. The latter acts as an independent body and oversees the screening of the responsible character of the RI funds offered by KBC Asset Management. [...] KBC Sustainability Dashboard We use the KBC Sustainability Dashboard to follow up on the implementation of our sustainability strategy. The dashboard reflects the key actions of our sustainability strategy. It includes measurable and verifiable parameters to ensure an objective assessment of the strategy. The dashboard is presented twice a year to the Executive Committee and the Board of Directors to evaluate and discuss the progress on sustainability. This assessment affects the variable remuneration of the Executive Committee members. We have thoroughly reviewed the KBC Sustainability Dashboard this year to reflect changes in strategic focus and to add new priority topics. The updated dashboard is adaptable, meaning it can be adjusted to also reflect future changes. The figure on this page shows the key elements of the KBC Sustainability Dashboard. We discuss the underlying Key Performance Indicators (KPIs) throughout this report as well as [in our Annual Report. However, please be advised that some](https://www.kbc.com/content/dam/kbccom/doc/investor-relations/Results/jvs-2022/jvs-2022-grp-en.pdf) indicators are available only within the KBC organisation. [...] Sustainability integrated into our remuneration policy We believe our top management has an important role in the implementation of our sustainability strategy. The variable remuneration of Executive Committee members is therefore partly contingent on the progress in our sustainability strategy. In practical terms, one of the collective targets that determines their variable remuneration is related to the implementation of the sustainability strategy. The progress is evaluated every six months using the KBC Sustainability Dashboard. The ultimate assessment of the criteria used to evaluate the members of the Executive Committee lies with the Board of Directors via the Remuneration Committee. Also, the variable remuneration of senior management is partly linked to sustainability performance. In concrete terms, at least 10% of the variable remuneration of senior management members is tied to the achievement of individual targets related to the implementation of the group's sustainability strategy."
"KBC has set up a hybrid organisational structure and governance, with strong central steering and clear local accountabilities in each of our core countries to ensure the group-wide implementation of and progress on the centrally decided sustainability and climate policy. Our Internal Sustainability Board is the highest decision taking body on sustainability related matters such as the implementation of the Principles and is chaired by the CEO and comprises senior managers from all business units and core countries, the CFO and the Senior General Manager Sustainability. The Executive Committee ratifies the decisions taken by the Internal Sustainability Board and the Board of Directors is regularly briefed on the sustainability strategy and evaluates the implementation of this strategy using the Sustainability Dashboard. In 2023, we strengthened our sustainability governance by installing a local general manager sustainability in each core country with functional reporting to the Senior General Manager Sustainability at KBC Group. Our climate-related governance, set up as part of the KBC Sustainable Finance Programme and focusing on the integration of KBC's climate approach across the group – is anchored in our overall sustainability governance. The variable remuneration of the Executive Committee members is linked to for example, 'climate target setting'. This parameter has been embedded in a set of sustainability-linked KPIs (e.g. groupwide emission target setting of our most material carbon-intensive industrial sectors in our business and product lines). Sustainability is also integrated into senior management members' variable remuneration. At least 10% of the variable remuneration paid to senior management members depends on the achievement of individual targets agreed in advance as part of the group's sustainability strategy, including our climate policy.

The risk, compliance and actuarial functions (who together constitute the 'CRO Services') support KBC in achieving its strategic objectives, to contribute to its resilience and agility, to provide management and the Board with insights supporting risk-conscious decision-making and to proactively inform them about the risks KBC is facing. Priorities for risk management are defined in the KBC Risk Strategy. This strategy finds its origin in the KBC Risk Appetite, the Corporate Strategy and the PEARL culture and sets the bar for risk management throughout KBC. [...] The strategy of the risk, compliance and actuarial functions is based on three key pillars: 1. Support the business: we support, advise and challenge the business in its everyday activities ('business as usual') and in its transformation, aiming to help it keep KBC's control environment up to standards and respect KBC's risk appetite at all times; 2. Transform ourselves: in sync with the KBC Corporate Strategy and business, we become more digital, data-driven and straight-through. By being more efficient and effective in our business-as-usual processes, we create room to develop approaches for new risks. Moreover, we extend and improve our risk and compliance framework for an increasingly digital, interconnected and sustainable future; 3. People: we attract and nurture talent, building an engaged workforce of the future as an enabler of transformation and the execution of our business as usual. We ensure that our people have a clear view of KBC's strategic direction, how KBC's transformation impacts their job and how they contribute to KBC's strategy. [...] Our risk governance model includes the following main elements: - The Board of Directors (Board), supported by the Risk & Compliance Committee, decides on the risk appetite – defining the group's overall risk playing field and the risk strategy – and supervises KBC's risk exposure in relation to this risk appetite. It is also accountable for having robust governance arrangements in place to ensure that all material risks of KBC are managed appropriately, and for promoting a sound, consistent group-wide risk culture. The number of external mandates held by the members of the Board can be found on our KBC website under the topic 'Leadership' as part of the 'Corporate Governance' section. How the members are recruited, also taking into account the diversity in the composition of the Board, can be found in the 'Corporate governance statement' of the KBC Group NV 2024 Annual Report and under the topic 'Our corporate governance charter' as part of the 'Corporate Governance' section on our KBC website. - The Risk and Compliance Committee (RCC): o is an advisory committee on topics within the Board's accountability, e.g., the group's risk appetite, the monitoring of risk exposure compared to the group's risk appetite and the supervision of the implementation, efficiency and effectiveness of the Risk Management Framework; o reviews whether the prices of liabilities and assets and of categories of off-balance-sheet products offered to clients fully take into account the institution's business model and risk appetite, and examines, without prejudice to the tasks of the Remuneration Committee, whether incentives provided by the remuneration system take into consideration risk, capital, liquidity and the likelihood and timing of earnings; o issues periodic opinions on the quality, capacity and skills of the risk function. [...] The Executive Committee (ExCo) is the integrating management committee on risk management, operating in alignment with decisions taken by the Board related to risk appetite, strategy, and performance goals. o It monitors the group's risk exposure to ensure conformity with the risk appetite and the implementation of the Risk Management Framework throughout the group. o It forms, extended with relevant parties, the Group Crisis Committee in group-wide crisis situations. - The ExCo is supported by the CRO Services Management Committee (CRO Services MC), risk committees (right-hand side of the figure) and business committees (left-hand side of the figure), in which representatives of risk are present.

###### Governance
We have drawn up this climate report using input from business and sustainability experts in all core countries as part of the White Papers assessments and target-setting approach. It has been reviewed by senior managers, and discussed and approved by the Internal Sustainability Board and the Group Executive Committee. Final approval was given by the Board of Directors on 15 September 2022. [...] The entire Responsible Investing policy is overseen by the Responsible Investing Advisory Board, an independent body made up of academics, which continually seeks to improve the Responsible Investing offering. Any changes made by KBC Asset Management to its Responsible Investing methodologies must pass the scrutiny of the Board. This enables KBC Asset Management to keep its finger on the pulse of social trends and to continually challenge ourselves to do better.

The governance of defining, updating and implementing KBC's sustainability policies is as much as possible embedded within KBC's overall sustainability governance. In this way, we ensure that the policies are implemented correctly throughout our group and in all our core activities. [...] New policies and policy updates are generally prepared centrally by the Group's Corporate Sustainability Department (GCS). In this process, the department often involves: • Independent experts on our External Sustainability Board. This enables us to adapt our policies in specialised areas according to the latest scientific insights. • The local sustainability managers and their teams in our five home countries. • Other relevant entities at group level, such as the (credit) risk department. Policy proposals are submitted to the Internal Sustainability Board (ISB), which is the principal forum for discussing sustainability-related issues within the group. Once a proposal has been approved by the ISB, it is submitted to the group's Executive Committee for ratification. [...] We update our sustainability policies at least once every two years, as a response to growing concerns for environment and society. [...] GCS ensures that new policies are properly documented and distributed to all relevant entities once approved. This happens in close cooperation with other departments at group level (e.g. the credit risk department) and the home countries. [...] We have a strict due diligence process in place to monitor compliance of our lending, insurance and advisory service operations with our sustainability framework. For this, we also use third party ESG analysts' data on the sustainability of companies, including controversies in which they could be involved. Our due diligence process includes the possibility of requesting advice on sustainability-related matters for individual cases by sustainability experts. Reputational risk aspects are also taken into account within the scope of this advice. For certain policy domains, this advice is obligatory prior to any business transaction. In other cases, it can be requested in case of doubt. [...] For lending, advice requests related to our sustainability policies are processed locally, provided that the credit decision itself is also taken on the local level. Otherwise, advice is provided by the GCS department. For insurance and advisory services, as well as in relation to fundamental exclusions (see section 5), the advice is always provided by the GCS department. [...] When our policies are infringed, KBC imposes specific conditions on the existing credit or insurance relationships and advisory services. Depending on the nature of the infringement, we either reject new applications, impose specific conditions on or end existing relationships. In some cases, we start an engagement track with a specific company and monitor progress before taking a final decision. Also, if necessary, we have escalation processes in place up to the highest management level, including the Group Executive Committee. [...] The KBC list of most controversial regimes is based on a methodology described in the KBC Group Policy on Human Rights. This methodology implies the use of input from external data-providers. It is only available internally. It is updated at least once a year by GCS and approved by the Group Executive Committee. The new list is distributed by GCS to all relevant entities within the group, which are responsible for a proper implementation and must ensure that the list is complied with at all times. In case of doubt on how the list should be applied in specific cases, entities should mandatorily request the GCS' advice. [...] The KBC Blacklist is based on a methodology described in the KBC Group Policy on Blacklisted Companies. This methodology implies the use of input from external data-providers. The blacklist is publicly available and is updated at least twice a year by the Group Corporate Sustainability (GCS) Department and approved by the Group Executive Committee. The new list is distributed by GCS to all relevant entities within the group. In turn, those are responsible for its proper implementation and must ensure that the list is complied with at all times. In case of doubt on how the list should be applied in specific cases, entities should mandatorily request GCS' advice. [...] The KBC list of human rights offenders is based on a methodology described in the KBC Group Policy on Human Rights. This methodology implies the use of input from external data-providers. It is only available internally. It is updated at least once a year by GCS and approved by the Group Executive Committee. The new list is distributed by GCS to all relevant entities within the group. These are responsible for its proper implementation and must ensure that the list is complied with at all times. In case of doubt on how the list should be applied in specific cases, entities should mandatorily request GCS' advice.

Our sustainability governance is structured around the Sustainable Finance Steering Committee, the ISB, the ExCo and the Board. As these bodies oversee environmental issues, integrate them into the business strategy, and ensure accountability at all levels, it by definition has the consequence that climate strategy, target setting (see also section 2.2.3.1), and other relevant transition planning elements as listed above are managed and approved by the highest decision bodies within our organisation. As these decision bodies oversee the entire business model, value creation strategy, and financial planning of KBC, there is an intrinsic strong connection between these elements and our climate strategy. A dedicated Sustainable Finance Programme is in place to coordinate the implementation of the overall sustainability strategy. In order to manage the challenges linked to climate-related data collection and reporting, we installed a dedicated Data and Metrics Steering Programme. This governance framework (including its own Steering Committee) ensures that sustainability is embedded into the organisation. [...] We report every six months to the ISB, ExCo and Board on the implementation of our climate transition strategy, via a dedicated Sustainability Dashboard, which includes, among other things, the progress on our key climate targets. The dashboard outlines measurable and verifiable parameters related to the key themes and actions of the climate strategy as well as the decarbonisation levers and actions deployed (see section 2.2.2.2). This illustrates that transition planning elements are embedded within our overall business strategy. [...] Our sustainability governance is structured around the Sustainable Finance Steering Committee, the ISB, the ExCo and the Board. As these bodies oversee environmental issues, integrate them into the business strategy, and ensure accountability at all levels, it by definition has the consequence that climate strategy, target setting (see also section 2.2.3.1), and other relevant transition planning elements as listed above are managed and approved by the highest decision bodies within our organisation. As these decision bodies oversee the entire business model, value creation strategy, and financial planning of KBC, there is an intrinsic strong connection between these elements and our climate strategy. A dedicated Sustainable Finance Programme is in place to coordinate the implementation of the overall sustainability strategy. In order to manage the challenges linked to climate-related data collection and reporting, we installed a dedicated Data and Metrics Steering Programme. This governance framework (including its own Steering Committee) ensures that sustainability is embedded into the organisation.

#### Governance and management of eligible assets

**Client relationship managers**
Perform a credit and sustainability risk assessment before granting a loan or financing as normal course of business. This assessment is strictly defined by the KBC's sustainability policies and the standards of the KBC Group Sustainability Framework (including the exclusionary criteria), where applicable.

**KBC Business Units**
Propose eligible projects to the Green Bond Committee and provide information on the compliance of the projects with the criteria for Eligible Assets of the KBC Green Bond Framework.

**Green Bond Committee**
Verifies compliance with the Use of Proceeds requirements. The Green Bond Committee takes the final decision on the final selection of the proposed projects as Eligible Assets and thus instructing the labelling of the green assets.
Based on the internal monitoring of the portfolio of Eligible Assets by Group Treasury, the Green Bond Committee reviews and approves allocations of bond proceeds to Eligible Assets on a quarterly basis.

**KBC Group Treasury**
Manages the proceeds of the KBC Green Bond on a portfolio basis and monitors the allocation of Eligible Assets on a monthly basis to ensure that the allocation of Eligible Assets corresponds to the proceeds of the Green Bond issuance.

###### Governance
We have prepared this Sustainability Report using input from business and sustainability experts in all our core countries. The report has been reviewed by senior managers and discussed and approved by the Internal Sustainability Board and the Executive Committee. The Board of Directors approved the report on 13 March 2025. [...] **Supervisory**
###### core activities. This includes board level top-level responsibility for responsibility our sustainability strategy, covering all environment, social and governance- related (ESG) themes. We make decisions about our sustainability strategy at the group level, which local teams Key
**executives**
###### in each of the core countries and top then implement. Local management
**level**
###### accountability is placed at top responsibility management level to ensure proper implementation. [...] |Board of Directors|• Sets KBC's sustainability strategy and oversees its implementation and progress. This includes all ESG-related themes|
|---|---|
|Risk and Compliance Committee|• Closely monitors the management of ESG-related risks that are identified as top risks: climate and environmental risk, cyber risk, compliance risk and conduct risk|
|Audit Committee|• Monitors the sustainability reporting process|
|Executive Committee|• Responsible for the implementation of KBC's sustainability strategy and policies and monitors the group-wide implementation of that strategy. • Grants day-to-day decision-making powers to other relevant committees and top management positions| [...] |Internal Sustainability Board • Executive and top management representation of all our business units, core countries and group services • Primary forum for discussing all ESG-related issues at KBC Sustainable Finance • Monitors the progress and technical implementation of the Sustainable Finance Programme Steering Committee • Focuses on KBC's approach to climate action and other environmental themes Data and Metrics • Manages the challenges related to climate-related data collection and reporting Steering Committee CSRD Steering • Oversees and manages the implementation of the new European reporting legislation Committee CSRD|• Executive and top management representation of all our business units, core countries and group services • Primary forum for discussing all ESG-related issues at KBC|Col3| [...] |Country Sustainability General Managers|• Communicates on, translates and implements the sustainability strategy in their core countries and business units|
|---|---|
|Country sustainability departments and sustainability committees|• Supports Country Sustainability General Managers in their responsibilities • Steered by local top management • Organises the local sustainability teams| [...] **External Sustainability**
Consists of external sustainability experts that advise KBC on its sustainability strategy and policies
**Board**

Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]Consistency of KBC's climate engagement initiatives is ensured by our group-wide Sustainability Strategy that is embedded in the KBC Group Corporate strategy and deployed group-wide via our Sustainability Governance.
The Group Corporate Sustainability Division is responsible for developing the sustainability strategy and implementing it across the group. The Sustainable Finance Programme (SFP) focuses on integrating KBC's climate approach across the group, by overseeing and supporting our business departments in developing their climate actions. The programme is headed by a programme manager belonging to the Group Corporate Sustainability division, backed up by a SFP Core Team. This core team is in contact with all relevant departments and business entities.
 A hybrid organisational structure and governance, with strong central steering and clear local accountability in each of our core countries, ensures that sustainability topics, and especially climate-related actions, receive the necessary attention and resources in our business operations and strategies.
The Internal Sustainability Board (ISB), chaired by the Group CEO, is the main platform for driving sustainability at group level, including our climate approach. The country representatives at the ISB have been assigned clear country accountabilities for these topics.
In each core country we appointed a local Sustainability Coordinator with a mandate to steer the country's activities in line with the decisions of the ISB and the objectives of the SFP. This ensures a swift and group-wide implementation and progress on the centrally decided sustainability and climate matters.
This approach ensures that central decisions are translated into local actions, taking into account the local context, and engagement with the various local stakeholders (clients, trade organizations, authorities, etc.). The central departments and the SFP core team in turn are responsible for the contacts on a global and European level (UNEP FI, EU, ECB, other banks, ...).
The Group Corporate Sustainability division monitors implementation and informs the Executive Committee and the Board of Directors on progress twice per year via the KBC Sustainability Dashboard. This dashboard is communicated group-wide to all senior managers.
See KBC Sustainability Report 2021: Climate Governance p. 26. 

Does your organization have a public commitment or position statement to conduct your engagement activities in line with the goals of the Paris Agreement?[…]Yes