Banco Bilbao Vizcaya Argentaria SA

###### Sustainability governance model

Following a strategic reflection on the
business and seeking its transformation
and adaptation to the major trends that will
change society and the financial industry,
BBVA decided to establish sustainability as
one of its six strategic priorities in 2019 and
raise it to the highest executive level of the
organisation in 2021 through the creation of
the Global Sustainability Area (GSA), as the
new global area in charge of designing the
agenda and leading the lines of work in this
area, reporting to the Chief Executive Officer,
Onur Genç, and, given the highly strategic
and transformational nature of the area, also
to the Group Executive Chairman, Carlos
Torres Vila.

The global head of the Sustainability area
reports to BBVA's corresponding corporate
bodies on the execution of the sustainability
strategy and the distinct lines of work,
including Asset Management.

###### Sustainability Governance Group

In 2021, in line with the BBVA Group's
sustainability drive, BBVA AM created the
Sustainability Governance Group (GGS),
comprising the global heads of the Product,
Investments, Risks and Control & Compliance
departments as well as the head of Sustainable
Investments.

Therefore, the GGS is the framework within
which they are responsible for designing
the sustainability strategy and plans for its
implementation and submitting it to the global
head of AM&GW and its steering committee
for approval.

Among others, the decision-making scope of
the ESG includes:

**I** the definition of the model for
incorporating sustainability into the
investment process and the risk and
control process;

**II** the adoption of strategic decisions
regarding exclusions or investment
criteria in certain sectors;

**III** the involvement and commitment
policies;

**IV** the approval of the Principal Adverse
Impacts (PAI) management policy;

**V** the approval of the ESG data providers
(Environmental, Social and Governance)
and the necessary technological
developments;

**VI** the identification of training needs
and plans;

**VII the definition of the criteria for the**

design and launch of sustainable
products;

**VIII and supporting, guiding and monitoring**

the implementation of the sustainability
strategy in each geography.

### 5. Governance and oversight model for the Policy

##### 5.1. Approval, responsibility for the Policy and model of governance

This Policy was approved by BBVA's Board of Directors on September 28 2022, after having been analysed by the Executive Committee, and entered into force at the time of its approval.

The Policy was developed and coordinated by the Sustainability Area, with the collaboration of Strategy & M&A, Global Risk Management, Regulation & Internal Control, General Secretary, Client Solutions, Corporate & Investment Banking and Talent & Culture areas, within the scope of their remits.

The Global Head of Sustainability is responsible for this Policy at an executive level, and will therefore be responsible for submitting it for approval, ensuring knowledge of the Policy amongst the persons who are subject to it, and, where appropriate, its extension to the Group companies.

In this sense, the Global Head of Sustainability shall be responsible for promoting and coordinating sustainability initiatives at the Group and, as indicated in section 4.3, is responsible for all areas at the Group incorporating this Policy into their strategic agenda and work dynamics.

The Policy maker must have knowledge of its degree of application, supported by the information provided by the heads of the areas to which it applies, and must take the necessary measures if it is not being properly implemented, reporting as appropriate.

##### 5.2. Oversight and control

The Board of Directors, as the highest supervisory body of the Bank, shall supervise, directly or through its Committees, the implementation of the Policy, on the basis of the periodic or ad hoc reports received from the Global Head of Sustainability, the different areas at the Bank that shall include sustainability in their day-to-day business and activities and, where appropriate, from those responsible for the different control functions in place at BBVA.

At least once per year, or in the event of any event requiring changes to this Policy, the Sustainability Area shall review it and submit any updates and modifications deemed necessary or appropriate at any time for consideration by the Bank's management bodies.

Control over the degree of compliance with both this Policy and its development will be performed in accordance with the internal control model established by the Group, for adequate management of the risks therein. This management is structured on the basis of three lines of defence, independent of each other.

Non-financial risks specialists shall analyse the provisions of this Policy to identify potential risks in their field of expertise, with a particular focus on legal, process and conduct and compliance risks, and include them into the corresponding mitigation and control frameworks, actively monitoring their degree of implementation.

All areas shall incorporate the aspects necessary for the achievement of the Principles and the Group's Sustainability Goals established in this Policy into their rules and procedures. The processes defined shall be adjusted to include the necessary controls to ensure their proper management, following the mitigation and control frameworks established by the corresponding specialists, and the details of the roles and responsibilities of the different participants in the process, in line with the Group's control model.

The monitoring and reporting of risk and control aspects shall be performed in line with the governance system established within the framework of the Group's General Risk Management and Control Model and the applicable specific risk policies.

#### Policy Influence 2023

BBVA collaborates with organisations that share our vision and whose activity is aligned with our strategic objectives, such as industry associations, chambers of commerce and think tanks.

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Within the above mentioned context, the Board of Directors has incorporated sustainability as one of the Bank's strategic priorities, as reflected in the Group's 2019 strategic plan, and has approved the General Sustainability Policy, which defines and establishes the general principles, management and control objectives and guidelines to be followed by the Group in the area of sustainable development. [...] As an essential part of this approach, the Corporate Bodies promote the integration of sustainability in all the Group's businesses and activities. To this end, the Bank has a Global Sustainability Area (GSA), which has the competence, inter alia, for designing and promoting the implementation of the Group's strategic sustainability agenda (focusing on the fight against climate change, protection of natural capital and inclusive growth) and business development in this area; establishing the Group's objectives in these matters; and promoting and coordinating the different lines of work of the Group in this area, developed by the different areas; maintaining in all areas of the Group the objective of promoting integrity in the relationship with the different stakeholders. [...] In order to manage and supervise this area, the Board of Directors has adopted a governance model which, with the Board itself at the center, is supported by the specialized assistance of its Committees on matters within their respective areas of competence. [...] In this way, the Committees of the Board support this body in the development of its functions in matters of sustainability, through the attribution of specific tasks in this area. In the case of the Executive Committee, it supports the Board of Directors in decision-making and the ongoing monitoring of BBVA's strategy and objectives in the area of sustainability as well as its development and execution by the Group's executive areas. The Risk and Compliance Committee supports the Board in integrating sustainability into the analysis, planning and management of the Group's risks, and in supervising their execution. The Audit Committee supervises the preparation process and the content of the information that must be formulated by the Corporate Bodies on sustainability for its publication as part of the Group's financial and non-financial reporting. The Appointments and Corporate Governance Committee, in addition to assisting the Board in assessing the effectiveness of the Corporate Governance System, ensures that sustainability-related competencies are taken into account when considering the composition of the Board of Directors. [...] The Remuneration Committee analyzes the selection and monitors the performance of strategic indicators linked to variable remuneration, including sustainability-related indicators, and the Technology and Cybersecurity Committee assists the Board in monitoring technology strategy and supervising technology risk and managing cybersecurity. [...] Through this governance model, the governing bodies define, supervise and monitor the implementation of the Group's sustainability strategy, on the basis of the reports received both from the Global Sustainability Area and from the different areas of the Group that incorporate sustainability into their reporting of their businesses and activities. These reports are submitted to the corporate bodies according to their competencies, on a regular or ad hoc basis. To this end, it should be noted that in 2023, the Corporate Bodies received, generally every two months, specific reports on sustainability matters from the Head of the Global Sustainability Area, the Head of the Talent and Culture Area or the Global Head of Risks, as well as the reports from the different areas of the Group in which sustainability-related issues were addressed.

## **New governance model**

The TCFD also covers its new governance model to approve and monitor alignment goals by sector, implement them and make decisions derived from their management, based on:

1. **Creation of the Sustainability Alignment Steering Group (SASG).** The function of this group is to approve proposed decarbonization objectives, evaluate the degree of compliance, and supervise plans to achieve them; and promote knowledge of best practices in the sector. It consists of the global heads of the **Sustainability, Risk, Strategy and Corporate & Investment Banking** After going through the SASG, monitoring of objective fulfillment will be presented to the highest executive level and to corporate bodies for their review, at least on a biannual basis.
2. **Identification of leaders in each sector (or cluster of sectors) in charge of** defining a Strategic Plan for the Sector and key indicators to ensure that alignment objectives are met.
3. **Integration of business and risk processes.** Therefore, client alignment and their expected evolution toward a low carbon economy are included as yet **another consideration in risk decisions."

## **Remuneration**

The TFCD also reports that as of 2023 and subject to the approval of corresponding corporate bodies, the BBVA Board Member Remuneration Policy and General Remuneration Policy for the BBVA Group is expected to "include a long-term incentive as part of the annual variable pay for members of the identified group, including executive directors and members of BBVA's senior management, which is tied the degree to which decarbonization targets are met for a series of sectors for which the bank publishes concrete objectives, among other things."

Since 2021, the sustainable finance mobilization target is part of the indicators used to **calculate variable remuneration** of all Group employees. The report notes that 20 percent of the long-term incentive to be applied to the 'risk takers' group (personnel with a significant role in the risk profile). It also includes, among other things, meeting ESG goals, decarbonization (15 percent) and gender diversity (five percent).

BBVA's corporate governance bodies have devised and promoted a sustainability and climate change strategy for the Bank, approving its basic elements and regularly monitoring its implementation across the Group. This task is carried out by the Board of Directors, BBVA's highest representation, administration, management and surveillance body, with the assistance of its specialized committees. The Executive Committee and the Risk and Compliance Committee specifically play the most active role in assisting the Board on sustainability and climate change issues, as detailed below. [...] The Board of Directors approved the Group's Corporate Social Responsibility policy in 2008, subsequently amending it to adapt to any new developments over the years. This policy reflects the Group's commitment to drawing up and implementing a climate change and sustainable development strategy for the achievement of the SDGs, in line with the Paris Climate Agreement, among other considerations. To this end, the Board fostered the Group's commitment to sustainability with the "2025 Pledge" described in this report. Its progress and development have been regularly monitored by the Board of Directors, at least on an annual basis, and by its Executive Committee, at least on a biannual basis. [...] The Board of Directors will oversee the policy's implementation directly or through the Executive Committee, on the basis of periodic or ad-hoc reports received by the Global Sustainability Office (described in this report), the Head of Corporate & Investment Banking (who is responsible for this policy at the senior management level), the Bank's areas that will incorporate sustainability into their day-to-day businesses and operations and, where appropriate, the Heads of BBVA's control functions. [...] At least once a year, or in the event of any event requiring changes to this Policy, the Global Sustainability Office will revise and submit to the Bank's corporate governance bodies any updates and modifications deemed necessary or appropriate at any time. [...] Consisting of a majority of non-executive directors, over the years the Executive Committee has assisted the Board in defining and monitoring the development and implementation of the Group's sustainability policies and initiatives and in regularly reviewing compliance with the corporate social responsibility (CSR) policy. In this regard, the Executive Committee has reviewed such matters at least on a biannual basis, including: the evolution of the volume and type of sustainable finance mobilized by the Group, the environmental impacts of the Group and action plans performed by the Group's business and support areas regarding sustainable finance, among others. [...] As part of its duties, BBVA's Risk and Compliance Committee is monitoring the executive team's progress toward integrating sustainability into the Group's risk analysis and management, both from a risk planning and a risk management point of view. As regards the former, the Group's risk appetite statement already includes a reference to the commitment to sustainable development as one of the elements which defines BBVA business model; as regards the latter, this risk has been added to the Sectoral Frameworks which the executives specifically report to the Committee.

The Management Company usually takes a very active role within the financial industry, both during regulatory processes and through dialogue with supervisors, which sometimes includes lobbying for legislative initiatives. [...] In 2022, it took part in numerous forums, including INVERCO (Spanish Association of Collective Investment Institutions and Pension Funds), ALFI (Association of the Luxembourg Fund Industry), ASCRI (Spanish Association of Capital, Growth and Investment), where it promoted the best market practices on behalf of its investors (including, especially, with regard to sustainability). It has also contributed to the debate around the upcoming code of best practices for institutional investors, asset managers and voting advisers promoted by Spain's National Securities Market Commission (CNMV).

### GOVERNANCE MODEL BBVA's corporate governance

BBVA's corporate governance bodies have devised and promoted a **sustainability and climate change strategy for the Bank, approving its basic** elements and regularly monitoring its implementation across the Group. This task is carried out by the Board of Directors, BBVA's highest representation, administration, management and surveillance body, with the assistance of its specialized committees.

**Board of Directors**

Executive Risk and Remunerations Audit Appointments and Technology and Committee Compliance Committee Committee Corporate Governance Cybersecurity

Committee Committee Committee

_Executive level_

The Executive Committee and the Risk and Compliance Committee specifically play the most active role in assisting the Board on sustainability and climate change issues, as detailed below.

### GOVERNANCE MODEL

An essential element of this strategic approach determined by the Board is the integration **of sustainability and the fight against** **climate change into the Group's business.** They are considered as medium and longterm development opportunities which will be managed by establishing objectives to facilitate their implementation, oversight and monitoring of progress.

In addition, in 2020, the Board, with the prior analysis of the Executive Committee, approved the Group's Sustainability Policy, which defines and sets out the general principles and the main management and control objectives and guidelines to be followed by the Group on sustainable development.

The Board of Directors will oversee the **policy's implementation directly or through** the Executive Committee, on the basis of periodic or ad-hoc reports received by the Global Sustainability Office (described in this report), the Head of Corporate & Investment Banking (who is responsible for this policy at the senior management level), the Bank's areas that will incorporate sustainability into their day-to-day businesses and operations and, where appropriate, the Heads of BBVA's control functions.

###### BOARD OF DIRECTORS

BBVA's Board of Directors has long considered the progress and main impacts of sustainable development and the fight against climate change as important matters, and these have become even more important issues to monitor in recent years.

The Board of Directors approved the Group's **Corporate Social Responsibility policy in** 2008, subsequently amending it to adapt to any new developments over the years. This policy reflects the Group's commitment to drawing up and implementing a climate change and sustainable development strategy for the achievement of the SDGs, in line with the Paris Climate Agreement, among other considerations.

To this end, the Board fostered the Group's commitment to sustainability with the **"2025 Pledge" described in this report. Its** progress and development have been regularly monitored by the Board of Directors, at least on an annual basis, and by its Executive Committee, at least on a biannual basis.

In 2019, BBVA's Board of Directors led the **strategic reflection process carried out** within the Group, which identified the need to make sustainability one of the pillars of its strategy for the coming years.

This strategic reflection performed in 2019 had a special implication of the corporate governance bodies, in particular the Board and the Executive Committee who directly participated in the drafting and approval of the Group's new strategic plan (in several meetings throughout the year). A process to monitor the plan's implementation and execution was defined with measures including holding specific meetings focused on strategy or the establishment of KPIs to implement the strategic plan.

As a result the Board approved at the end of 2019 such Group's strategic plan, which defines as one of its priorities "to help our **clients transition toward a sustainable** **future."**

At a minimum once a year, or in the event of any event requiring changes to this Policy, the Global Sustainability Office will revise and submit to the Bank's corporate governance bodies any updates and modifications deemed necessary or appropriate at any time.

The above approach allows the corporate governance bodies to define the basic **lines of action for the Group as regards the** management of opportunities and risks arising from sustainability in their businesses. It also allows the execution to be overseen by the executive areas in all spheres of the entity's operations.

In addition to the above and in order to achieve the best performance of its duties in this matter, the Board considered it necessary to strengthen its own knowledge **and experience in sustainability. This** is being done by onboarding people with extensive knowledge and experience and by a continuous training program to include sustainability-related subjects (such as sustainable finance or main trends that are being developed in the market on this matter).

###### EXECUTIVE COMMITTEE

Consisting of a majority of non-executive directors, over the years the Executive Committee has assisted the Board in **defining and monitoring the development** **and implementation of the Group's** **sustainability policies and initiatives and** in regularly reviewing compliance with the corporate social responsibility (CSR) policy. In this regard, the Executive Committee has reviewed such matters at least on a biannual basis, including: the evolution of the volume and type of sustainable finance mobilized by the Group, the environmental impacts of the Group and action plans performed by the Group's business and support areas regarding sustainable finance, among others.

Additionally, as regards its role in supporting the Board in strategic decision-making, in 2019 the Executive Committee had an active role (as described in the previous paragraphs) in monitoring and overseeing the strategic reflection process, later establishing the basis and finally drafting the new strategic **plan. It is also worth noting the Executive** Committee in 2020 reviewed the Group's new sustainability policy prior to its approval by the Board.

Finally, the Executive Committee tracks, on a regular basis, the integration of **sustainability into the Group's business** **processes, according to its role of monitoring** and analyzing the progress of the Group's strategic key performance indicators, operations and P&L.

###### RISK AND COMPLIANCE COMMITTEE

Composed of a large majority of independent directors and including non-executive directors, the Risk and Compliance Committee's duties include analyzing and escalating to the Board any proposals on Group strategy, control and risk **management specified, in particular, in the** Risk Appetite Framework. To this end, the Risk and Compliance Committee must work from the strategic foundations established by the Board of Directors or the Executive Committee.

In addition, the Risk and Compliance Committee sets out the policies for monitoring and managing the Group's various risks, oversees internal information and control systems and, as regards controlling the Group's risk development, monitors its adjustment to the Risk Appetite Framework and defined policies. It performs its monitoring and control duties regularly enough and with sufficient granular information to ensure their correct fulfillment.

As part of its duties, BBVA's Risk and Compliance Committee is following the executive team's progress toward integrating **sustainability into the Group's risk analysis** **and management, both from a risk planning** and a risk management point of view. As regards the former, the Group's risk appetite statement already includes a reference to the commitment to sustainable development (which will be developed in the future, as detailed in paragraph 4 of this report); as regards the latter, this risk has been added to the Sectoral Frameworks which the executives specifically report to the Committee.

Engagement activities are governed by the Engagement Policy. This Policy extends beyond the scope of Directive (EU) 2017/828 on the encouragement of long-term shareholder engagement, as it encompasses not only investments in companies listed on a regulated market within or operating in a Member State of the European Union but also the broader spectrum of investments managed across the vehicles and portfolios. [...] The Management Company evaluates each instance individually to determine the appropriate course of action and sets escalation protocols if the intended objectives are not met. [...] Regarding voting in BBVA Group companies, conflicts of interest could arise. The Management Company has a voting procedure that avoids such conflicts by preventing the involvement of decision-makers from outside the Management Company and by setting up internal mechanisms for segregating voting decisions and reporting conflicts. The Management Company will not request or accept, from BBVA or any other controlled companies, any direct or indirect instructions on voting.

Engagement activities are governed by the Engagement Policy. This Policy extends beyond the scope of Directive (EU) 2017/828 on the encouragement of long-term shareholder engagement, as it encompasses not only investments in companies listed on a regulated market within or operating in a Member State of the European Union but also the broader spectrum of investments managed across the vehicles and portfolios. [...] The Management Company evaluates each instance individually to determine the appropriate course of action and sets escalation protocols if the intended objectives are not met. [...] Regarding voting in BBVA Group companies, conflicts of interest could arise. The Management Company has a voting procedure that avoids such conflicts by preventing the involvement of decision-makers from outside the Management Company and by setting up internal mechanisms for segregating voting decisions and reporting conflicts. The Management Company will not request or accept, from BBVA or any other controlled companies, any direct or indirect instructions on voting.

In accordance with the General Sustainability Policy, BBVA understands \"sustainable development\" (or \"sustainability\", which includes environmental, social and governance aspects, referred to as \"ESG\") as meeting the needs of the present generation without compromising the ability of future generations to meet their own needs. BBVA faces the challenge of sustainable development from a holistic perspective, being aware that, by making the Purpose of \"Bringing the age of opportunity to everyone\" a reality, as well as the strategic priority of \"helping our customers in the transition to a sustainable future\", the Bank aims to generate a positive impact through the activities of its customers, its own activity, as well as its relationship with and support for society. [...] As an essential part of this approach, the Corporate Bodies promote the integration of sustainability in all the Group's businesses and activities. To this end, the Bank has a Global Sustainability Area (GSA), which has the competence, inter alia, for designing and promoting the implementation of the Group's strategic sustainability agenda (focusing on the fight against climate change, protection of natural capital and inclusive growth) and business development in this area; establishing the Group's objectives in these matters; and promoting and coordinating the different lines of work of the Group in this area, developed by the different areas; maintaining in all areas of the Group the objective of promoting integrity in the relationship with the different stakeholders. [...] In order to manage and supervise this area, the Board of Directors has adopted a governance model which, with the Board itself at the center, is supported by the specialized assistance of its Committees on matters within their respective areas of competence. [...] In this way, the Committees of the Board support this body in the development of its functions in matters of sustainability, through the attribution of specific tasks in this area. In the case of the Executive Committee, it supports the Board of Directors in decision-making and the ongoing monitoring of BBVA's strategy and objectives in the area of sustainability as well as its development and execution by the Group's executive areas. The Risk and Compliance Committee supports the Board in integrating sustainability into the analysis, planning and management of the Group's risks, and in supervising their execution. The Audit Committee supervises the preparation process and the content of the information that must be formulated by the Corporate Bodies on sustainability for its publication as part of the Group's financial and non-financial reporting. The Appointments and Corporate Governance Committee, in addition to assisting the Board in assessing the effectiveness of the Corporate Governance System, ensures that sustainability-related competencies are taken into account when considering the composition of the Board of Directors. The Remuneration Committee analyses the selection and monitors the performance of strategic indicators linked to variable remuneration, including sustainability-related indicators, and the Technology and Cybersecurity Committee assists the Board in monitoring technology strategy and supervising technology risk and managing cybersecurity. [...] Through this governance model, the governing bodies define, supervise and monitor the implementation of the Group's sustainability strategy, on the basis of the reports received both from the Global Sustainability Area and from the different areas of the Group that incorporate sustainability into their reporting of their businesses and activities. These reports are submitted to the corporate bodies according to their competencies, on a regular or ad hoc basis. To this end, it should be noted that in 2023, the Corporate Bodies received, generally every two months, specific reports on sustainability matters from the Head of the Global Sustainability Area, the Head of the Talent and Culture Area or the Global Head of Risks, as well as the reports from the different areas of the Group in which sustainability-related issues were addressed."
"In order to monitor the alignment objectives of the sectors for which targets have been set and supervise their compliance, BBVA created the Sustainability Alignment Steering Group (SASG) in 2022. Among the functions of the SASG are the following: – Analyze and discuss the alignment objectives for 2030 prior to their approval. – Evaluate the degree of compliance with the alignment objectives and their levers. – Analyze and discuss the proposals for sectoral or aggregate alignment plans, and their updating, which will be submitted to the SASG by the business units, with the support of the technical teams from other participating areas. – Promote the creation and deployment of the tools, methodologies and variables necessary for the operationalization of sector alignment plans in the management processes already existing in the business units. – Analyze and learn about the best practices in the sector, promoting the integration of sustainable criteria in the day-to-day business. BBVA's alignment governance model has been strengthened during 2023. In addition to the existing SASG, Global Sectoral Heads have been introduced in CIB for sectors with 2030 decarbonization targets. These sectoral leaders are responsible for leading the business strategy according to each sector, executing the actions defined in the sectoral alignment plans and implementing a support plan with customers in the sector to help them in their transition to a low-carbon economy. As part of this progress, an annual process has been incorporated to review key customer projections from a climate alignment perspective, which influences the development of the annual business plan. For more information see section "2.1.6. Governance model". Actions to manage portfolio alignment metrics include: – Gather, evaluate and monitor the climate transition plans publicly disclosed by BBVA's customers. – Assess the CO2 emissions and climate impact of all new transactions as part of the commercial business approval process through the use of tools. – Generate strategic dialogue with customers on their transition strategies, seeking opportunities to support them through investment and financing proposals and solutions. In order to promote knowledge of the best sectoral practices across the organization, specific training programs on sectoral alignment plans have been developed, complementing the sustainability training offered to all employees and specific programs on decarbonization for bankers and risk analysts. In 2023, the BBVA Directors' Remuneration Policy and the BBVA Group's General Remuneration Policy included, as part of the Annual Variable Remuneration of the members of the Identified Staff, including executive directors and members of BBVA's Senior Management, a long-term incentive linked, for example, to the degree of compliance with the decarbonization targets of a number of sectors for which the Group publishes specific targets. For more information on the calculation of variable remuneration, see the "Remuneration" section under "2.3.3 Employees".

This Framework has been prepared and coordinated by the Global Sustainability Area, and has been approved on May, 30th 2024 by the Global Head of CIB & Sustainability. [...] At least annually, or upon the occurrence of any event that requires changes to this Framework, the Sustainability Standards Unit will review it and submit it to the Global Head of CIB & Sustainability.

Target 1. Climate Change (decarbonization). milestones and action plan. in order to monitor decarbonization objectives and supervise their compliance, the Bank has approved a governance framework made up of those responsible for the Business, Risk, Sustainability and Strategy areas that report directly to senior management and corporate bodies. In addition, BBVA has developed a series of internal tools that allow it to integrate the management of these objectives into the day-to-day business and risk processes. Likewise, sectoral plans have been developed in the Oil & Gas and Electricity sectors (which includes electricity generation), which has made it possible to define strategies and business plans aimed at meeting decarbonization objectives. This work is an input for the definition of the risk appetite of the Sectoral Frameworks. During 2023, it is planned to undertake the sectoral plans of the rest of the sectors for which a decarbonisation objective has been defined (auto, steel, cement and coal).

BBVA has specified a governance model for the approval and monitoring of these alignment goals, the levers to implement them, as well as the decision-making for their management. The governance framework for portfolio alignment management rests on three main pillars: 01. The creation of a Sustainability Alignment Steering Group (SASG) to approve the proposal of the alignment goals and levers, monitor compliance and promote knowledge of the best industry practices in sustainability and their integration into business management. This group consists of the global heads of Global Sustainability business area, Global Risk Management, Corporate & Investment Banking and Strategy. They report to the CEO, the Chair and the Board of Directors through the Global Sustainability business area. More specifically the functions of this group are: Approval of the proposal of the sectoral alignment objectives and intermediate objectives, as well as the methodologies used in their calculation. Evaluation of the fulfillment of these objectives and the promotion of initiatives to facilitate their management. Analysis and understanding of the best practices in the sector, promoting the integration of alignment criteria in day-to-day business. After having passed through the SASG, the monitoring of compliance with the objectives, including the explanation of possible deviations and measures to redirect them (if applicable), will be submitted for review to the highest executive level and subsequently to the corporate bodies, at least two-yearly. 02. The definition of a business area leader for each sector (or cluster of sectors) to define and follow a Sector Strategic Plan and its related KPIs associated with the alignment goals achievement. 03. Integration into business and risk processes, as customer alignment and expectations of their evolution towards a low-carbon economy must be a further consideration in risk decisions. Another key aspect is the creation of multidisciplinary industry climate and environment working groups comprising business, risks, strategy and sustainability areas, which generate sectoral intelligence to support critical processes related to the opportunities and risks arising from the decarbonization of clients.

Carlos Torres Vila participated in a webinar with **Andrea Enria, Chair of the European Central Bank's Supervisory Board**, organized by the Florence School of Banking and Finance. Both have discussed the role of the financial sector, and its corporate governance, considering the new economy in the wake of COVID-19, digital disruption and climate change. Asked by the moderator about how the banks' Boards of Directors should prepare for climate change, the BBVA Chairman pointed out that **\"it is important that they are prepared, because it is going to be the largest disruption that mankind has ever seen\"**. [...] It is also important for banks to learn how to measure the risks when a client is not undertaking this transition correctly. **\"This approach has to scale up our teams and the Board would be a reflection of that,\"** he explained.

Within the above mentioned context, the Board of Directors has incorporated sustainability as one of the Bank's strategic priorities, as reflected in the Group's 2019 strategic plan, and has approved the General Sustainability Policy, which defines and establishes the general principles, management and control objectives and guidelines to be followed by the Group in the area of sustainable development. [...] As an essential part of this approach, the Corporate Bodies promote the integration of sustainability in all the Group's businesses and activities. To this end, the Bank has a Global Sustainability Area (GSA), which has the competence, inter alia, for designing and promoting the implementation of the Group's strategic sustainability agenda (focusing on the fight against climate change, protection of natural capital and inclusive growth) and business development in this area; establishing the Group's objectives in these matters; and promoting and coordinating the different lines of work of the Group in this area, developed by the different areas; maintaining in all areas of the Group the objective of promoting integrity in the relationship with the different stakeholders. [...] In order to manage and supervise this area, the Board of Directors has adopted a governance model which, with the Board itself at the center, is supported by the specialized assistance of its Committees on matters within their respective areas of competence. [...] In this way, the Committees of the Board support this body in the development of its functions in matters of sustainability, through the attribution of specific tasks in this area. In the case of the Executive Committee, it supports the Board of Directors in decision-making and the ongoing monitoring of BBVA's strategy and objectives in the area of sustainability as well as its development and execution by the Group's executive areas. The Risk and Compliance Committee supports the Board in integrating sustainability into the analysis, planning and management of the Group's risks, and in supervising their execution. The Audit Committee supervises the preparation process and the content of the information that must be formulated by the Corporate Bodies on sustainability for its publication as part of the Group's financial and non-financial reporting. The Appointments and Corporate Governance Committee, in addition to assisting the Board in assessing the effectiveness of the Corporate Governance System, ensures that sustainability-related competencies are taken into account when considering the composition of the Board of Directors. [...] The Remuneration Committee analyzes the selection and monitors the performance of strategic indicators linked to variable remuneration, including sustainability-related indicators, and the Technology and Cybersecurity Committee assists the Board in monitoring technology strategy and supervising technology risk and managing cybersecurity. [...] Through this governance model, the governing bodies define, supervise and monitor the implementation of the Group's sustainability strategy, on the basis of the reports received both from the Global Sustainability Area and from the different areas of the Group that incorporate sustainability into their reporting of their businesses and activities. These reports are submitted to the corporate bodies according to their competencies, on a regular or ad hoc basis. To this end, it should be noted that in 2023, the Corporate Bodies received, generally every two months, specific reports on sustainability matters from the Head of the Global Sustainability Area, the Head of the Talent and Culture Area or the Global Head of Risks, as well as the reports from the different areas of the Group in which sustainability-related issues were addressed.

###### Strong commitment from BBVAs top governing bodies

###### 01 Board of Directors

###### Group's Strategic Plan and Sustainability Policy approval Oversight of policy implementation Sustainability origination KPI monitoring & embedding climate risk in analysis and management Executive directors' variable remuneration linked to sustainability

Monitoring of the Group's Sustainability Policy and its implementation Incorporate sustainability challenges and opportunities in our business Gearing of sustainability into the Group's business processes

Integration of sustainability in day-to-day operations, both in relation to clients and internal processes All BBVA Group employees' variable remuneration aligned with the Group's strategic objectives - including sustainability

The Corporate Bodies promote that Sustainability, which includes environmental, social and governance aspects (hereinafter \"ESG\"), is integrated into all the Group's small businesses and activities, from a global perspective, and that the material impacts, risks and opportunities arising from it are adequately managed. To this end, the Bank has a Global Sustainability Area, which is responsible, among other things, for designing and promoting the execution of the Group's strategic Sustainability agenda and business development in this area; for establishing the Group's objectives in these matters; and for promoting and coordinating the Group's various lines of work in this area, developed by the different areas, maintaining the objective of promoting integrity in the relationship with the different stakeholders in all areas of the Group. Likewise, the different executive areas promote the different aspects of Sustainability in their respective areas of competencies, considering it in the definition of their strategies, work plans, initiatives and resource management, and establishing, when appropriate, objectives and metrics that allow measuring the progress made by each of them in these areas. The impacts, risks and opportunities arising from the different aspects of Sustainability that are of material importance to the Bank are taken into consideration in the various decisions approved by the Board of Directors that make up the general management and control framework of BBVA. In particular, they find a place in the Strategic Plan, which incorporates Sustainability as one of the strategic priorities, in the Budget, which sets annual targets for strategic indicators, among others, related to Sustainability], and in the Risk Appetite Framework, which includes mentions of Sustainability in the Risk Appetite Statement, as well as specific metrics related to Sustainability (for example, high transition risk (HTR) metric and the portfolio decarbonization metric). Furthermore, the various general policies of the BBVA Group that establish the basic management guidelines in the different areas of special relevance for the proper development of the Bank's activity also include various issues related to Sustainability. In this context, BBVA has governance models for the different elements that contribute to Sustainability and the generation of long-term value, which the environment classifies as \"ESG\" factors or which must be included in the concept of \"Sustainability\". This includes the management of the environmental impact of our direct activity and that of our customers on climate change, the treatment of social issues, both within the organization with regard to our own employees and in society and, fundamentally, in our customers, as well as the Bank's actions in the different areas aimed at guaranteeing appropriate business conduct. Within the framework of the development of management and supervision functions of issues related to Sustainability, the Board of Directors has provided itself with a governance model that has the Board itself as its central axis and is supported by the specialized assistance of its various Committees on the matters of their respective competencies. In the case of the Executive Committee, it supports the Board of Directors in decision-making and in the ongoing monitoring of BBVA's strategy and objectives in terms of Sustainability, which are defined taking into consideration the impacts, risks and opportunities derived from Sustainability that are of relative importance to the Bank. The Executive Committee also supports the Board in supervising the development and execution of the strategy by the Group's executive areas. For its part, the Risk and Compliance Committee, supports the Board in integrating Sustainability into the analysis, planning and management of the Group's financial and non-financial risks, and in supervising their execution. The Audit Committee supervises the process of preparing and the content of the information that must be formulated by the Corporate Bodies in matters of Sustainability for publication, as part of the public information of the Group. The Appointments Committee, in addition to assisting the Board in evaluating the effectiveness of the Corporate Governance System described above, also ensures that the competencies related to Sustainability are taken into account when analyzing the composition of the Board of Directors. Furthermore, the Remuneration Committee analyses the selection and monitors the evolution of strategic indicators linked to variable remuneration, including indicators related to Sustainability. Finally, the Technology and Cybersecurity Committee assists the Council in monitoring the technology strategy and managing cybersecurity. Through this governance model, the Corporate Bodies carry out the task of defining, supervising and monitoring the implementation of the Group's Sustainability strategy, for which the impacts, risks and opportunities that this generates for the Group are taken into consideration. It also allows the Corporate Bodies to establish or supervise the establishment at executive level, as appropriate, of the Bank's objectives in these areas and to monitor progress towards their achievement.

Thus, the Board Committees have been assigned with specific functions related to sustainability. Firstly, the Executive Committee supports the Board of Directors in decision-making and recurrent monitoring of BBVA's objectives and strategy in matters of sustainability. The Risk & Compliance Committee supports the Board in integrating sustainability into the analysis, planning and management of the Group's risks, and in supervising their execution. The Audit Committee oversees the sustainability information published as part of the Group's financial and non-financial reporting. The Appointments & Corporate Governance Committee ensures that sustainability-related competencies are taken into account when assessing the composition of the Board of Directors, while the Remuneration Committee analyzes issues related to remuneration aspects linked to environmental, social and governance indicators. [...] Furthermore, in order to implement the strategy approved by BBVA's corporate bodies, the Group has a Global Sustainability Area, the head of which reports directly to both the CEO and the Chair in matters of transformation and sustainability strategy. At the same time, all the business development teams report to the Global Sustainability Area. [...] In this way, the governance model for sustainability in the Group integrates a sound structure of the corporate bodies with a solid executive structure that respond to them and combines the cross-sectional nature of the Global Sustainability Area with the execution of the strategic priority in the different business areas which provides the Board and its Committees with the necessary information to make decisions in an appropriate manner and to carry out their supervisory and control function.

#### 06 ## Development and approval The Global Area of Sustainability is responsible for developing and coordinating this Framework. The Global Head of Sustainability is responsible for its approval. This version of the Framework will be applicable from the date of its cover page, without retroactive effects, until the date it is replaced, as the case may be, by a later version. The current version reflects the trends in sustainability, social and environmental risks, as well as stakeholders expectations at the time it was prepared. Future revisions of the document will take into account these issues, along with best practices and industry standards. Once a year, or whenever any event occurs that requires changes to this Framework, the Global Area of Sustainability will review it and submit any updates and modifications deemed necessary or appropriate at any given time to the Global Head of Sustainability for his or her consideration.

In monitoring and supervising the implementation of the Group's sustainability, the Board is assisted by its committees specialized in their respective areas: EXECUTIVE COMMITTEE, driving this strategy in the monitoring of the integration of sustainability in the Group's processes of business and activity, and their impact on its activity and results in accordance with its monitoring and analysis function of the development of the Group's key performance indicators RISK AND COMPLIANCE COMMITTEE, in the integration of sustainability in the analysis, planning and management of the Group's risks, and in supervising their execution. AUDIT COMMITTEE, in supervising the public information on sustainability reported to the market; REMUNERATION COMMITTEE, in driving the integration of indicators related to sustainability in the Group's variable remuneration model. A specific example of this activity is the work of the Board in adopting very important decisions for the Group in the area of sustainability which are described in this report, such as the increased commitment to sustainable finance (Pledge 2025); the adoption of the Net Zero pledge for 2050; the determination of commitments related to the decarbonization of the portfolio; decisions related to the integration of risks associated with climate change in the management processes; as well as the creation of the Group's new Sustainability Area, raising the function to the highest executive level of the organization, as described in this report. In addition to this, there is the work of the corporate supervisory and monitoring bodies for the implementation of the Group's sustainability strategy and activity, and compliance with the organization's objectives, which is carried out on the basis of the reports received by the Sustainability Area and the different areas of the Bank which incorporate sustainability into their daily businesses and activities. These reports are carried out for corporate bodies according to their competence, as described in the above paragraphs, either periodically or ad hoc (worth particular mention are the specific presentations drawn up at least twice a year for the Board of Directors and the Executive Committee).

###### Strong commitment from BBVAs top governing bodies

###### 01 Board of Directors

###### Group's Strategic Plan and Sustainability Policy approval Oversight of policy implementation Sustainability origination KPI monitoring & embedding climate risk in analysis and management Executive directors' variable remuneration linked to sustainability

Monitoring of the Group's Sustainability Policy and its implementation Incorporate sustainability challenges and opportunities in our business Gearing of sustainability into the Group's business processes

Integration of sustainability in day-to-day operations, both in relation to clients and internal processes All BBVA Group employees' variable remuneration aligned with the Group's strategic objectives - including sustainability

##### Governance and accountability in responsible banking

###### Responsible business function reports regularly to the Corporate Bodies

## 1

2

3

###### CORPORATE BODIES

Approval and monitoring of the responsible banking policy* and responsible business plan

Report periodically to plenary & to the Executive Committee

###### LEADERSHIP

Global Leadership

Team & Local Leadership approve and oversight specific plans and norms related to responsible banking commitments

###### OPERATIONAL MODEL

Responsible Business [...] **Escalation & exceptions**

Exemptions will only take place exceptionally and shall only be approved by the CIB Leadership Committee

###### 7\n\n## Governance and oversight model\n\nThis Standard has been prepared and coordinated by the Global Sustainability Unit and Global Risk Management CIB, and has been approved on December 19, 2024 by the Global Head of CIB & Sustainability.\n\nThis version includes the trends in sustainability, social and environmental risks, as well as the expectations of the interest groups at the time of its preparation. These aspects, together with best practices and sector standards, as well as the possibility of implementing restrictions, will be taken into account in future revisions.\n\nThis version of the Framework will be applicable from the date indicated on the cover, without retroactive effect, until the date on which it is replaced, if applicable, by a later version. The data contained therein are subject to change without prior notice.\n\nAt least once a year, or upon the occurrence of any event requiring changes to this Standard, the Sustainability Standards Unit will review it and submit it to the consideration and approval of the Global Head of CIB & Sustainability.

Through advocacy, BBVA aims to share its experience and expertise with policy makers, but with a focus on regulatory matters and not on political affairs. In 2023, BBVA continued to adopt an active role within the framework of future EU regulatory initiatives. In this context, our interests covers EU regulatory initiatives in the field of financial services (which include Sustainable Finance; Banking Union; prudential requirements CRR/CRD, Capital Markets, retail banking, payments, structural reforms in the banking sector, etc.), as well as other initiatives in areas such as Digital economy, Innovation and Technology, Corporate Governance and Company Law, Audit, Consumer Protection, Competition, Taxation and Corporate Social Responsibility, among others. For that purpose, BBVA participates in the public consultations or position papers that the regulators and other authorities launch to gather input from stakeholders, either individually or via the associations of which we are members. The responses to these consultations and position papers in Europe and globally are available on the Transparency Register or on the public websites of the associations (e.g. EBF, IIF, AFME, etc). BBVA has a robust internal process to ensure that the information provided to the market associations is consistent with BBVA's Sustainability General Policy, in line with the bank's strategy and its priorities.

The areas in charge of regulatory and non-regulatory advocacy on sustainability have procedures to ensure that the positions they defend in different fora are in line with our net zero ambition and sustainability performance as agreed in our governing bodies.

Management system in place: Additionally, the Bank's sustainability advocacy strategy (beyond regulators) is structured around a dedicated Working Group (WG) which meets on a monthly basis with the participation of Public Affairs, Legal, Research, Regulation, Reputational Risk, Competition, Communications, Risk Management, Compliance, Internal Audit, Investor Relations, Premises, Talent & Culture, among other areas. In this WG, technical assessment of new sustainability commitments is carried out and proposals are made to be submitted to the Head of the Global Sustainability Area for decision on adhesion and disengagement of commitments, and the fulfillment of the obligations that these commitments entail is monitored. These responsibilities related to sustainability advocacy are part of the Duties and Authority of the Head of the Global Sustainability Area.

This WG is global in scope, covering all jurisdictions in which the Bank operates. Assessment of local commitments is carried out with the teams involved in the appropriate jurisdiction in each case.

In general, BBVA contributes to consultations on sustainability issues through trade associations and banking associations, either global or local (such as European Banking Federation, Asociación Española de Banca, Asociación de Bancos de México, Asobancaria in Colombia, ASBANC in Peru…). In general we make sure that the position of these associations are in line with our own positions. In the event that the position of these associations does not exactly coincide with that of BBVA, or BBVA considers that the industry's position needs to be completed, qualified or emphasized, BBVA would express its views individually.

### 5. Governance and oversight model for the Policy

##### 5.1. Approval, responsibility for the Policy and model of governance

This Policy was approved by BBVA's Board of Directors on September 28 2022, after having been analysed by the Executive Committee, and entered into force at the time of its approval.

The Policy was developed and coordinated by the Sustainability Area, with the collaboration of Strategy & M&A, Global Risk Management, Regulation & Internal Control, General Secretary, Client Solutions, Corporate & Investment Banking and Talent & Culture areas, within the scope of their remits.

The Global Head of Sustainability is responsible for this Policy at an executive level, and will therefore be responsible for submitting it for approval, ensuring knowledge of the Policy amongst the persons who are subject to it, and, where appropriate, its extension to the Group companies.

In this sense, the Global Head of Sustainability shall be responsible for promoting and coordinating sustainability initiatives at the Group and, as indicated in section 4.3, is responsible for all areas at the Group incorporating this Policy into their strategic agenda and work dynamics.

The Policy maker must have knowledge of its degree of application, supported by the information provided by the heads of the areas to which it applies, and must take the necessary measures if it is not being properly implemented, reporting as appropriate.

##### 5.2. Oversight and control

The Board of Directors, as the highest supervisory body of the Bank, shall supervise, directly or through its Committees, the implementation of the Policy, on the basis of the periodic or ad hoc reports received from the Global Head of Sustainability, the different areas at the Bank that shall include sustainability in their day-to-day business and activities and, where appropriate, from those responsible for the different control functions in place at BBVA.

At least once per year, or in the event of any event requiring changes to this Policy, the Sustainability Area shall review it and submit any updates and modifications deemed necessary or appropriate at any time for consideration by the Bank's management bodies.

Control over the degree of compliance with both this Policy and its development will be performed in accordance with the internal control model established by the Group, for adequate management of the risks therein. This management is structured on the basis of three lines of defence, independent of each other.

Non-financial risks specialists shall analyse the provisions of this Policy to identify potential risks in their field of expertise, with a particular focus on legal, process and conduct and compliance risks, and include them into the corresponding mitigation and control frameworks, actively monitoring their degree of implementation.

All areas shall incorporate the aspects necessary for the achievement of the Principles and the Group's Sustainability Goals established in this Policy into their rules and procedures. The processes defined shall be adjusted to include the necessary controls to ensure their proper management, following the mitigation and control frameworks established by the corresponding specialists, and the details of the roles and responsibilities of the different participants in the process, in line with the Group's control model.

The monitoring and reporting of risk and control aspects shall be performed in line with the governance system established within the framework of the Group's General Risk Management and Control Model and the applicable specific risk policies.

Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]For over 20 years, BBVA has participated actively in various supranational initiatives to ensure that our engagement activities are consistent with our overall climate change and sustainability strategy. As well as repeating our commitment to the UN Global Compact once more this year, as part of the Pledge 2025, BBVA actively participates in numerous initiatives, always in close collaboration with all its stakeholders (such as the industry itself, regulators and supervisors, investors and organizations from civil society).

BBVA was one of 28 founding banks in the Principles for Responsible Banking promoted by the United Nations Environment Program Finance Initiative (UNEP FI), This initiative is a benchmark for corporate responsibility in the banking sector, which aims to respond to the growing demand from different stakeholders for a comprehensive framework that covers all aspects of sustainable banking through six core areas.

Currently, more than 250 entities worldwide, approximately 40% by asset volume of the banking system, have already signed these Principles. BBVA believes that these Principles will help reaffirm its purpose, enhance its contribution to both the United Nations SDGs and the commitments derived from the Paris Climate Agreements, and align its business strategy with said commitments. In 2020 and 2021, BBVA has reported its progress and achievements in each of the 2021 six principles to UNEP FI, in the first and second year they have been implemented. Within the framework of these Principles, in 2021 BBVA was one of the founding banks of the Collective Commitment to Financial Health and Inclusion promoted by UNEP FI with the aim of promoting universal financial inclusion and a banking sector which supports the financial health of all its customers.

BBVA also participates in global initiatives such as the United Nations Global Compact, Principles for Responsible Investment, and the Thun Group, which describes how the United Nations Guiding Principles on Business and Human Rights (UNGPs) should be applied in the banking sector.

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

Describe the process(es) your organization has in place to ensure that your external engagement activities are consistent with your climate commitments and/or climate transition plan?[…]For over 20 years, BBVA has participated actively in various supranational initiatives to ensure that our engagement activities are consistent with our overall climate change and sustainability strategy. As well as repeating our commitment to the UN Global Compact once more this year, as part of the 2025 Objectives, BBVA actively participates in numerous initiatives, always in close collaboration with all its stakeholders (such as the industry itself, regulators and supervisors, investors and organizations from civil society). BBVA was one of 30 founding banks in the Principles for Responsible Banking promoted by the United Nations Environment Program Finance Initiative (UNEP FI), This initiative is a benchmark for corporate responsibility in the banking sector, which aims to respond to the growing demand from different stakeholders for a comprehensive framework that covers all aspects of sustainable banking through six core areas.