Aavas Financiers Ltd

### 3 Implementation of the ESG Policy

To further strengthen its vision and focus on ESG:

The Company seeks to establish a three-tier ESG framework comprising: (i) a Board-level CSR & ESG Committee,
(ii) a management-level ESG Steering Committee and; (iii) three area specific working groups. Annexure I to this
ESG Policy sets out the said framework.

### 4 ESG Framework

The Company hereby seeks to establish a three-tier ESG Framework comprising:

i. **A Board-level CSR & ESG Committee: The CSR committee shall be renamed as CSR & ESG Committee. The**
members, Secretary, Quorum, frequency of meetings, the role and functions of the said Committee shall be as
prescribed in CSR policy[1]. The CSR & ESG Committee shall be responsible for oversight and implementation of
the ESG Policy in addition to its role and functions under the CSR Policy.

ii. **A Management-Level ESG Steering Committee: The ESG Steering Committee shall be a Management-level**
Committee responsible for implementation of the ESG Policy. It shall comprise of the Managing Director & Chief
Executive Officer (MD & CEO), Chief Financial Officer (CFO), Chief Risk Officer (CRO), Chief People Officer
(CPO), Chief Business Officer (CBO) and Company Secretary & Chief Compliance Officer (CS & CCO). The ESG
Steering Committee shall meet as and when required and report to the CSR & ESG Committee members for the
same.

iii. **Three ESG Working Groups: The following groups shall meet at such times as and when required, and shall**
submit quarterly reports to the ESG Steering Committee.

a. **The Environment Working Group: CS & CCO, CSR Head, Admin Head & ESG Team.**

b. **The Social & Governance Working Group: CPO, CS & CCO, CSR Head & ESG Team**

c. **The Product Responsibility Working Group: CRO, CBO, CTO, Treasury Head, & ESG Team.**

[1 Please see https://www.aavas.in/img/pdf/corporate-social-responsibility-policy.pdf](https://www.aavas.in/img/pdf/corporate-social-responsibility-policy.pdf)

### 5 Functions

#### Functions of the CSR & ESG Committee

The CSR & ESG Committee shall, in addition to its functions under the CSR Policy, perform the following
functions:

i. **Framing ESG Roadmap: To: (a) set the ESG roadmap of the Company with short-term and long-term ESG**
targets for continual improvement of Company's ESG performance, (b) define pertinent E, S and G-related KPIs,
and (c) to evaluate the performance against each KPIs and (d) report the progress periodically to internal and
external stakeholders.

ii. **Monitoring Progress and Report: To monitor the impact of the ESG Policy on an Annual basis through the**
BRSR Report as well as the Sustainability Report, which will be published each year. In case of any deviation
from planned progress, identify root cause, and cause remedy to same.

iii. **ESG Risk Monitoring: To identify, assess and manage environment and social risks & opportunities and their**
associated impacts across its operations and value chains using the principles of materiality, and ensuring that
such practices are integrated in business strategies with allocation of appropriate resources.

iv. **Review & Amendment: To review the ESG Policy of the Company annually or as and when required; and to**
also amend or modify this Policy in whole or in part as when significant changes occur, to reflect the national &
global best practices, latest policy/ regulatory directions/ guidelines issued by the Government of India (GoI),
RBI, NHB, SEBI and any other statutory/ regulatory authority as applicable for the Company.

#### Functions of the ESG Steering Committee

It shall perform the following functions:

i. **ESG Goal Alignment: (a) Help the CSR and ESG Committee to set ESG roadmap, (b) Align short-term and**
long-term ESG targets with Company objectives, (c) Help to track progress using KPIs defined by CSR and ESG
Committee, (d) Approve cost of ESG implementation vis-à-vis the benefits, and; (e) Report progress on
achievement of ESG targets to the CSR & ESG Committee.

ii. **Gap identification in case of non-attainment of targets: (a) Help the CSR & ESG Committee to identify gaps**
in implementation in case of non-attainment of targets/slippages, (b) Help identify root-causes and help remedy
them.

iii. **Coordination between Working Groups: To coordinate the activities of the three working groups, esp. while**
working in unison or overlapped objectives.

iv. **Stakeholder identification, engagement and management on ESG issues:** To (a) oversee identification of
internal and external stakeholders, (b) identify and ensure means of engagement with relevant internal and external
stakeholders on ESG issues and (c) where necessary, provide and take feedback from relevant internal and external
stakeholders on ESG issues.

v. **Education and Awareness: Promote ESG awareness and understanding among employees and relevant external**
stakeholders, facilitating training and communication initiatives.

vi. **Monitoring & Reporting: To monitor and evaluate ESG performance of all three working groups as well as ESG**
related reports/assurances and present a report of the same before the CSR & ESG Committee members as and
when required..

vii. **Policy Implementation and Compliance:** Monitor the implementation of the ESG Policy to ensure its
effectiveness and relevance, as well as ensuring ongoing compliance with the latest policy, regulatory, and
statutory guidelines issued by relevant authorities, including the GOI, RBI, NHB, SEBI, and other applicable
regulatory bodies.

To uphold this philosophy, the Board of Aavas has determined that the CSR & ESG Committee will have oversight on ESG matters within the Company. While the CSR & ESG Committee primarily focuses on areas directly related to ESG, it also reviews the Company's action plan on various aspects of ESG, including external reporting and stakeholder feedback. [...] The Company has set a management-level ESG Steering Committee which provides regular oversight and guidance to the ESG Working group and ESG team. The Risk Committee under its terms of reference also reviews the ESG risk of the Company. The ESG policy of the Company is available on the website. Link- [https://www.aavas.in/codes-and-policies.](https://www.aavas.in/codes-and-policies)

### PRINCIPLE 7: BUSINESSES, WHEN ENGAGED IN INFLUENCING PUBLIC AND REGULATORY POLICY, SHOULD DO SO IN A RESPONSIBLE MANNER

1. Is your Company a member of any trade and chamber or association? If yes, name only those major ones that your business deals with:

The Company is a member of the following associations:

PHD Chamber of Commerce and Industry (PHD Chamber)

2. Have you advocated/lobbied through above associations for the advancement or improvement of public good? Yes/ No; if yes specify the broad areas (drop box: governance and administration, economic reforms, inclusive development policies, energy security, water, food security, sustainable business principles, among others)

The Company's leadership, through various national and international forums, puts forth a number of suggestions and ideas in respect of housing finance, touching upon issues that are particularly relevant to the developing world such as financial inclusion of women, green construction, sustainable housing etc. The Company's CEO, Mr. Sushil Kumar Agarwal, was one of the panelists in "Pakistan Housing Finance" webinar organized by International Finance Corporation (IFC), a member of the World Bank Group, on June 23, 2020 to facilitate knowledge sharing in Islamic Mortgage Finance and Affordable Housing. Mr. Agarwal was also one of the panelists in "Housing Finance for Women in India" webinar, organized by IFC ahead of International Women's Day in March 2021.

To further strengthen its vision and focus on ESG: The Company seeks to establish a three-tier ESG framework comprising: (i) a Board-level CSR & ESG Committee, (ii) a management-level ESG Steering Committee and; (iii) three area specific working groups. Annexure I to this ESG Policy sets out the said framework. [...] The CSR & ESG Committee shall be responsible for oversight and implementation of the ESG Policy in addition to its role and functions under the CSR Policy. [...] A Management-Level ESG Steering Committee: The ESG Steering Committee shall be a Management-level Committee responsible for implementation of the ESG Policy. It shall comprise of the Managing Director & Chief Executive Officer (MD & CEO), Chief Financial Officer (CFO), Chief Risk Officer (CRO), Chief People Officer (CPO), Chief Business Officer (CBO) and Company Secretary & Chief Compliance Officer (CS & CCO). The ESG Steering Committee shall meet as and when required and report to the CSR & ESG Committee members for the same. [...] Three ESG Working Groups: The following groups shall meet at such times as and when required, and shall submit quarterly reports to the ESG Steering Committee. [...] Functions of the CSR & ESG Committee: The CSR & ESG Committee shall, in addition to its functions under the CSR Policy, perform the following functions: i. Framing ESG Roadmap: To: (a) set the ESG roadmap of the Company with short-term and long-term ESG targets for continual improvement of Company's ESG performance, (b) define pertinent E, S and G-related KPIs, and (c) to evaluate the performance against each KPIs and (d) report the progress periodically to internal and external stakeholders. ii. Monitoring Progress and Report: To monitor the impact of the ESG Policy on an Annual basis through the BRSR Report as well as the Sustainability Report, which will be published each year. In case of any deviation from planned progress, identify root cause, and cause remedy to same. iii. ESG Risk Monitoring: To identify, assess and manage environment and social risks & opportunities and their associated impacts across its operations and value chains using the principles of materiality, and ensuring that such practices are integrated in business strategies with allocation of appropriate resources. iv. Review & Amendment: To review the ESG Policy of the Company annually or as and when required; and to also amend or modify this Policy in whole or in part as when significant changes occur, to reflect the national & global best practices, latest policy/ regulatory directions/ guidelines issued by the Government of India (GoI), RBI, NHB, SEBI and any other statutory/ regulatory authority as applicable for the Company. [...] Functions of the ESG Steering Committee: It shall perform the following functions: i. ESG Goal Alignment: (a) Help the CSR and ESG Committee to set ESG roadmap, (b) Align short-term and long-term ESG targets with Company objectives, (c) Help to track progress using KPIs defined by CSR and ESG Committee, (d) Approve cost of ESG implementation vis-à-vis the benefits, and; (e) Report progress on achievement of ESG targets to the CSR & ESG Committee. ii. Gap identification in case of non-attainment of targets: (a) Help the CSR & ESG Committee to identify gaps in implementation in case of non-attainment of targets/slippages, (b) Help identify root-causes and help remedy them. iii. Coordination between Working Groups: To coordinate the activities of the three working groups, esp. while working in unison or overlapped objectives. iv. Stakeholder identification, engagement and management on ESG issues: To (a) oversee identification of internal and external stakeholders, (b) identify and ensure means of engagement with relevant internal and external stakeholders on ESG issues and (c) where necessary, provide and take feedback from relevant internal and external stakeholders on ESG issues. v. Education and Awareness: Promote ESG awareness and understanding among employees and relevant external stakeholders, facilitating training and communication initiatives. vi. Monitoring & Reporting: To monitor and evaluate ESG performance of all three working groups as well as ESG related reports/assurances and present a report of the same before the CSR & ESG Committee members as and when required. vii. Policy Implementation and Compliance: Monitor the implementation of the ESG Policy to ensure its effectiveness and relevance, as well as ensuring ongoing compliance with the latest policy, regulatory, and statutory guidelines issued by relevant authorities, including the GOI, RBI, NHB, SEBI, and other applicable regulatory bodies.

### PRINCIPLE 7: BUSINESSES, WHEN ENGAGED IN INFLUENCING PUBLIC AND REGULATORY POLICY, SHOULD DO SO IN A RESPONSIBLE MANNER

1. Is your Company a member of any trade and chamber or association? If yes, name only those major ones that your business deals with:

The Company is a member of the following associations:

PHD Chamber of Commerce and Industry (PHD Chamber)

2. Have you advocated/lobbied through above associations for the advancement or improvement of public good? Yes/ No; if yes specify the broad areas (drop box: governance and administration, economic reforms, inclusive development policies, energy security, water, food security, sustainable business principles, among others)

The Company's leadership, through various national and international forums, puts forth a number of suggestions and ideas in respect of housing finance, touching upon issues that are particularly relevant to the developing world such as financial inclusion of women, green construction, sustainable housing etc. The Company's CEO, Mr. Sushil Kumar Agarwal, was one of the panelists in "Pakistan Housing Finance" webinar organized by International Finance Corporation (IFC), a member of the World Bank Group, on June 23, 2020 to facilitate knowledge sharing in Islamic Mortgage Finance and Affordable Housing. Mr. Agarwal was also one of the panelists in "Housing Finance for Women in India" webinar, organized by IFC ahead of International Women's Day in March 2021.

To uphold this philosophy, the Board of Aavas has determined that the CSR & ESG Committee will have oversight on ESG matters within the Company. While the CSR & ESG Committee primarily focuses on areas directly related to ESG, it also reviews the Company's action plan on various aspects of ESG, including external reporting and stakeholder feedback. [...] Additionally, areas that fall under the purview of other Board Committees will continue to be overseen by their respective committees. However, any updates relevant to ESG in these areas will also be presented to the Risk Management Committee and CSR & ESG Committee for consideration. [...] The Company has set a management-level ESG Steering Committee which provides regular oversight and guidance to the ESG Working group and ESG team. The Risk Committee under its terms of reference also reviews the ESG risk of the Company. The ESG policy of the Company is available on the website. Link- [https://www.aavas.in/codes-and-policies.](https://www.aavas.in/codes-and-policies)

The Audit Committee oversees the Vigil Mechanism. No personnel have been denied access to the Chairperson of the Audit Committee. The Policy is placed on the website of the Company and can be accessed at www.aavas.in/vigil-mechanism-policy.