Absa Group Ltd

Our Board and management team have worked diligently this year to solidify our foundation for a sustainable future. Our efforts – led by the Group Strategy and Sustainability Function with oversight from the SSEC – have strengthened processes, introduced metrics for improved accountability and integrated sustainability initiatives into the Group strategy. [...] Our SSEC played an important role in overseeing our climate objectives, approving our strategy and goals. It reviewed key climate-related standards and scenario approaches, such as the International Energy Agency Announced Pledges Scenario, to ensure our Scope 3 financed emission reduction pathways are aligned with best practice and sound methodology. [...] Our Board has delegated authority to the SSEC for the management of sustainability related matters. To effectively manage sustainability related challenges, our organisation employs the "Three Lines of Defence" model. This framework provides a structured approach to risk management, ensuring clear roles, responsibilities, and accountability across different parts of the organisation. [...] The Group internal audit team specialises in assessing sustainability risks, providing independent assurance to the Social Sustainability and Ethics Committee and the Board. They play a critical role in evaluating the effectiveness of sustainability and climate risk governance.

We have established robust governance structures, policies, and procedures to manage significant positive and negative impacts and to support the effective implementation of the Principles for Responsible Banking. Below is how these elements are structured within the organisation: Governance structures Our framework reflects a commitment to sustainability and ethical business practices, overseen by various committees and supported by executive teams. Key governance bodies include: • Social Sustainability and Ethics Committee: This committee is responsible for overseeing our sustainability strategy, including target approval and monitoring. • Group Risk and Capital Management Committee: Addresses financial and operational risks, including those associated with environmental and social factors. • Remuneration Committee: Ensures that remuneration practices are aligned with sustainability targets and overall company performance. • Executive Committees: These include the Group Executive Committee, Executive Risk Committee, Remuneration Panel Review, and Treasury Committee, supporting the main governance bodies in executing the sustainability strategy. • Strategy and Sustainability Function: Works across the organisation to define framework for sustainability and ensures effective integration into our core strategy and supports embedment into operations. Committee responsibility and oversight The Social Sustainability and Ethics Committee is at the core of our sustainability governance. It ensures the integrity and excellence of our sustainability mandate in alignment with King IV and the Companies Act. The Independent Chairman leads the Board and has the responsibility for ensuring the effectiveness and integrity of the Board and its committees. The committee's work includes: • Evaluating our sustainability framework against international best practices. • Refining strategic purposes, values and behaviours to align with stakeholder aspirations. • Prioritising strategic pillars: Financial Inclusion, Diversity and Inclusion, and Climate. • Fostering a diverse and inclusive organisational culture. • Ensuring that the organisation is aligning its portfolio to the Paris Agreement net zero pathway. • Placing entrepreneurial support at the forefront of the Group's societal contributions. Monitoring and remedial action The committee adheres to high governance standards, actively evaluating and refining sustainability initiatives. It ensures that the company's strategies are aligned with stakeholder expectations and international best practices. In cases where targets or milestones are not achieved, or unexpected negative impacts are detected, the committee is responsible for guiding remedial actions and ensuring accountability. Remuneration practices Remuneration practices within the company are linked to sustainability targets, with executive remuneration being partially dependent on the achievement of these targets.

In 2020, the Social and Ethics Committee considered and approved the annual revision of the Group Stakeholder Policy, and noted the related Business, Industry and Professional Association Standard. [...] Management of stakeholder risk is an integral part of risk management and is managed through our Group Stakeholder Engagement Policy and the Business, Industry and Professional Associations Standard. Other related policies include the Group Citizenship Policy, the Media Relations Policy and the Sponsorship Policy. These policies are reviewed annually. All sponsorships and citizenship investments are subject to the Group's due diligence assessments, which includes anti-bribery and corruption, sanctions, politically exposed employees and adverse media screening.

The Social, Sustainability and Ethics Committee monitors: i. Key organisational health indicators relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation ii. The Group's activities relating to its role as an active force for good in everything we do in Africa's growth and sustainability and the impact thereof on the Group's employees, customers, and the environment. [...] In 2021, the Committee held four meetings, lasting six to eight hours each. One additional meeting was held to discuss the first progress report on the Absa Group's implementation of the United Nations Environment Programme Finance Initiative's Principles for Responsible Banking. [...] Stakeholder engagement: We received regular updates on the challenging external environment, various public interest groups, along with several industry initiatives and the Group's responses. The Committee contributed to policy formulation both in response to COVID-19 and in anticipation of a post-COVID-19 world. A revised stakeholder strategy and Group Stakeholder Policy were approved, and management approved the related Business, Industry and Professional Association Standard.

The accountability of our Environmental, Social and Governance (ESG) strategy and reporting is part of the Social, Sustainability and Ethics Committee's (SSEC) mandate. The Executive Committee is responsible for aligning the Group's business strategy with the TCFD's recommendations, ensuring the accuracy and transparency of the TCFD report and actively addressing climate-related risks and opportunities. [...] In line with their respective mandates, specific reports are reviewed and recommended to the Board for approval by the Disclosure, SSEC, Remuneration, Directors' Affairs, Group Audit and Compliance, and Group Risk and Capital Management committees. [...] The SSEC oversees this report. [...] The name of the Board Social and Ethics Committee was changed to the Social, Sustainability and Ethics Committee in March 2022 to reflect the heightened importance of sustainability and ESG globally and with many of our stakeholders. The change also emphasises our commitment to sustainability across the Group. [...] In 2022, our organisation underwent a thorough review of our ESG strategy, resulting in a sharpened focus that was approved by the SSEC. This included the adoption of three key areas of focus: financial inclusion, diversity and inclusion, and climate. Additionally, during the same period, the SSEC approved the sensitive sector financing limit caps to the fossil fuels sectors. This decision aligns with our commitment to sustainable and responsible business practices, as we seek to mitigate the negative impacts of our operations on the environment and society. [...] In January 2022, a Sustainability Risk Working Group was established to act as a principal risk forum to discuss, challenge, agree and create alignment and consistency on how sustainability risk is implemented, managed, measured and reported across the organisation. Its first meeting was in February 2022, and it meets monthly. [...] The Group Executive Risk Committee (ERC) is the highest-ranking executive management committee responsible for overseeing the collective actions of the Group's Executive Committee in matters of audit and operational risk. The committee monitors the Group's internal control and compliance environment. [...] The SSEC considered and approved the sensitive sector financing limit cap (SSFLC) to the fossil fuels sectors. [...] The SSEC signed off the Agriculture, Manufacturing, Real Estate and Construction, and Transport standards. [...] Our organisation recognises the importance of incorporating non-financial metrics, including sustainability-related metrics, into our management's short- and long-term incentives. As part of our efforts to address climate change and align with stakeholder interests, we have allocated 20% (2020: 10%) of the on-target outcome in the 2022 and 2023 long-term incentives towards non-financial elements, which includes employee (5%), customer (5%), and sustainability (10%). The sustainability outcomes also include climate-related outcomes, which is a crucial aspect given the growing concerns around climate change. The weighting of the non-financial health measure reflects the increased focus on the ESG agenda and shareholder feedback. As such, considerable rigor is applied in assessing the non-financial outcomes. Our Sustainability, Social and Ethics Committee (SSEC) reviews the outcomes related to employee, customer, and sustainability, and makes a recommendation to the Remuneration Committee. The Remuneration Committee deliberates on these recommendations and determines the final non-financial outcome. [...] The three lines of defence establish the segregation of duties and roles with reference to our risk practices. The first line of defence in our Enterprise Risk Management Framework implements our ESMS and the second line of defence develops and monitors it and assists in the implementation. [...] Our environmental and social risks are assessed and screened Group-wide in accordance with Absa's ESMS. The system identifies, assesses, manages, and monitors the environmental and social risks and impact of loans on an ongoing basis to avoid, eliminate, offset, or reduce risk to acceptable levels. [...] Our environmental and social risks are assessed and screened Group-wide in accordance with Absa's ESMS. The mechanism outlined below is aligned with the Equator Principles. Mechanisms for assessing and screening these risks include: Customer-facing employees and credit analysts review the information related to environmental risks for the credit review and approval process, guided by our specialist environmental credit risk management teams and designated environmental and social officers in the Absa Regional Operations. Credit analysts consider environmental and social risks when providing credit facilities, as environmental credit risk is embedded in the credit risk process. They document applicable material risks and mitigating actions in the credit paper. Transactions are referred to the appropriate committees for approval, as determined by our Credit Policy and business procedures, for initial support and final credit approval. Financing requests for sensitive sectors are assessed on a case-by-case basis, and the process includes various considerations as guided by our standards. We appoint independent environmental consultants to assess, manage and mitigate the identified risks where appropriate. A transaction will be rejected or approved based on a holistic decision considering numerous factors, including environmental, human rights and social risks. Financing will only be provided if all requirements are met. Moreover, identified gaps regarding environmental and social risks are included in action plans and covenanted in facility agreements, where appropriate. Client exposures and facilities are reviewed regularly as part of credit risk management processes where action plans, covenants and any new developments are considered by mandated officials and committees. We are gradually implementing exclusion lists that limit funding for high-risk environmentally and socially sensitive sectors. We have also set coal, oil, and gas climate caps that will be reviewed at least once every three years from their adoption date. [...] Within the environmental risk assessment process, our customer relationship, legal, transaction support, and environmental credit risk teams engage with clients during the transaction life cycle to ensure environmental and social risks are appropriately mitigated and that financing opportunities that support the green finance economy are identified, for example, renewable energy opportunities. The environmental credit risk function reviews the reports to ensure that environmental and social risks are satisfactorily managed. When required we engage with our clients on environmental issues of concern or address cases where unsatisfactory progress has been noted to agree on an appropriate resolution or action plan. Where appropriate action is not taken, support for the finance application may be cancelled or revoked after following due process. [...] We have established financing standards for the critical high-emission fossil fuel sectors and published a summary on our web page https://www.absa.africa/absaafrica/about-us/who-we-are/. In addition, we have sector-specific guidance notes outlining key sector and reputational risks, headline issues and considerations to inform decision-making for numerous sectors, including agriculture and fisheries, chemicals and pharmaceuticals, Kimberley process diamonds, forestry and logging, general manufacturing, infrastructure, power generation and distribution, service industries, and utilities and waste management. The Agriculture, Manufacturing, Real Estate and Construction and Transport standards were approved by the SSEC in 2022. [...] We have adhered to the Equator Principles since 2009 to manage environmental and social risk in project financing, and we undertake environmental risk assessments for all transactions that fall within the set thresholds. These are reviewed by our environmental credit risk management team, working with the business and legal teams. We completed six Equator Principles transactions in 2022 (2021: two). We continue to enhance our ESMS by extending the application of the International Finance Corporation Performance Standards on Environmental and Social Sustainability beyond Equator Principles transactions to lower-value project finance, project-related corporate loans and general corporate loans that meet specified criteria. A further 227 general transactions were concluded in 2022 (2021: 93).

### Our ESG governance

**Key:**

Social, Sustainability and Ethics Committee

Group Risk and Capital Management Committee

Remuneration Committee

**Board level governance**

Oversees our ESG work across the Group drives coordination and scales our impact across Africa

--NEW-PAGE--

### The Social, Sustainability and Ethics Committee

###### The purpose of the SSEC is to monitor the Group's activities, having regard to any relevant legislation, or prevailing codes of best practice on matters relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation. The Group has an ambition of shaping Africa's growth and sustainability. This ambition links to a variety of areas within the SSEC's mandate. The Committee also provide oversight and evaluation of management's performance against the balanced scorecard on all appropriate non-financial matters.[1]

**Francis** **Ihron Rensburg** **[63]** **Nonhlanhla** **Swithin Munyantwali** **[60]** **Sello Moloko [57]** **Rose**
**Okomo-Okello** **[73]** _BPharm, MA (Political and_ **Mjoli-Mncube** **[64]** _BSc, LLD, LLM_ Group Chairman

Chairman _Organisational Sociology),_ _PgCert (Engineering_ _BSc (Hons), PGCE, AMP_

_LLD (Hons Causa), PhD_ _Business Management),_

_LLB (Hons), Dip (Law),_

_(International Development_ _Fellowship in Urban_

_Certified Public Secretary_

_Education)_ _Development, Masters_

_in Regional and Urban_
_Planning_

As outlined in King IV and the Companies Act, the Committee applies the recommended practices and regulations in executing its mandate.

###### Attendees
• Group Chief Compliance
Officer

###### • Chief Executive: Corporate
and Investment Bank

###### • Chief Executive:

**Ihron Rensburg** **[63]** **Nonhlanhla** **Swithin Munyantwali** **[60]** **Sello Moloko [57]** **Rose** **Keanly** **[64]** **Arrie Rautenbach** **[58]** Relationship Banking

_BPharm, MA (Political and_ **Mjoli-Mncube** **[64]** _BSc, LLD, LLM_ Group Chairman _BCom (Hons), BSc_ Chief Executive Officer - Group Chief People Officer
_Organisational Sociology),_ _PgCert (Engineering_ - Chief Executive: Absa
_LLD (Hons Causa), PhD_ _Business Management),_ _BSc (Hons), PGCE, AMP_ _BBA AMP, MBA_ Regional Operations
_(International Development_ _Fellowship in Urban_ - Group Chief Strategy and
_Education)_ _Development, Masters_ Sustainability Officer

_in Regional and Urban_ - Group Chief Marketing
_Planning_ and Corporate Affairs.

Additional attention was given to several aspects in 2022:

###### • Understanding our starting point through a comprehensive assessment of gaps in our current
approach based on best practice globally

###### • Shaping our purpose and ESG focus areas by understanding the heart of the business and resulting
go-forward purpose, and shaping our ESG strategy accordingly (including the Voice of Stakeholder)

###### • Articulating our overall ESG strategy and ambition entailed prioritising three ESG focus areas to
differentiate ourselves and communicate our aims for priority areas, crystalising our strategy and
moving to action

###### • Focus on people, culture, B-BBEE, ESG and the Group's role in society

###### The purpose of the SSEC is to monitor the Group's activities, having regard to any relevant legislation, or prevailing codes of best practice on matters relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation. The Group has an ambition of shaping Africa's growth and sustainability. This ambition links to a variety of areas within the SSEC's mandate. The Committee also provide oversight and evaluation of management's performance against the balanced scorecard on all appropriate non-financial matters.[1]

###### • Approval of the Strategic, Sustainability and Reputational Risk Framework and Sustainability Risk
Policy, the Absa Way Code of Ethics Policy, and the Conduct Risk Management Framework

###### • Monitoring of existing standards and approval of new standards concerning extractive and other
environmentally sensitive industries, including the decarbonisation targets

###### • Finalisation of the Sustainable Development Goals (SDG) prioritisation and target setting
• Approval of customer measurement indexes and metrics
• Approval of the organisational health metrics for the long-term incentive (for 2022-2024) and
short-term incentive for 2022; and review and approval of the attainment of the prior incentive
schemes.

The Absa Board of Directors holds the ultimate responsibility for overseeing the Group's approach to governance and comprehensive risk management frameworks and practices, including the management and integration of sustainability and climate-related risks and opportunities into business operations. This oversight assists in monitoring that sustainability and climate risk considerations are embedded within the strategic decision-making processes across the entire organisation and reinforces our commitment to responsible banking, ensuring that sustainability considerations are not just an add-on but an integral part of how we operate. [...] The SSEC, Group Risk and Capital Management Committee, Group Remuneration Committee, Group Audit and Compliance Committee, and Group Credit Risk Committee are actively involved in offering targeted oversight and guidance on sustainability and climate-related risks and opportunities. The Board annually reviews and approves the Group's Enterprise Risk Management Framework (ERMF), which is designed to identify, evaluate, and manage key risks to manage the business within the Group's defined risk appetite. [...] The SSEC plays a key role in our governance structure, with Board-delegated authority to oversee and guide the Group's sustainability strategy. It monitors responses to global and local sustainability challenges, with a view to aligning with strategic goals and effective implementation. Meeting quarterly, the SSEC reviews and steers the Group's sustainability and climate-related strategies and initiatives, promoting integration with best practices and broader sustainability objectives, with regard also to the competing interests of stakeholder groupings.

Various Board committees assist the Board to execute its duties and responsibilities. The Group Risk and Capital Management Committee (GRCMC) and the Social and Ethics Committee (SEC), play essential roles in monitoring climate-related risk. [...] The SEC is responsible for monitoring conduct and ethics, reputation, people, sustainability and environmental risks. It also monitors key organisational health indicators, responsible corporate citizenship, stakeholder management and the Group's activities pertaining to our role in Africa's growth and sustainability, among other issues. [...] In 2020, the SEC reviewed Absa's progress in implementing the Principles for Responsible Banking, including the Group's impact areas in terms of the Sustainable Development Goals, our exposure to climate-sensitive sectors, fossil fuels and renewable energy, work on how climate change could impact a particular agricultural loan book, and progress on an environmental and social management system in seven of the countries in which we operate. During the year, the SEC also approved the Group's refocused role in society strategy and our 2020 Environmental, Social and Governance Report. [...] The group sustainability function reports to our Financial Director, who is also responsible for other areas related to climate risk, specifically real estate management and the associated environmental impact of our operations, supplier management and the Group's integrated and environmental, social and governance reporting. The Financial Director chairs the ExCo Sustainability Steering Committee, which considers sustainability issues, including climate-related risks and opportunities.

With oversight from our SSEC we have made good progress on climate action in the year. [...] The Social Sustainability and Ethics Committee plays a pivotal role within this structure. It holds the delegated authority from the Board to lead the Group's strategic direction concerning sustainability. This includes overseeing the Group's responses to both global and local sustainability challenges and ensuring that our strategic initiatives align with our overarching sustainability goals. The Committee ensures that our sustainability strategy is robust, relevant, and effectively implemented across the Group. [...] The SSEC convenes quarterly to review and guide the Group's climate-related strategies and initiatives. This rigorous scrutiny ensures that our climate actions are not only aligned with current best practices but are also strategically integrated with the Group's overarching sustainability goals. In 2023, the SSEC made the following decisions related to climate: • Approved our financed emissions targets for coal, oil and gas sectors • Sustainability metrics within Organisational Health in our incentive scorecards refined to include climate-related elements. [...] The Board developed and approved the guiding principles to enhance the Group Chief Strategy and Sustainability Officer's ability to assess our climate change efforts and ensure they align with the organisation's sustainability strategic pillars. [...] We also initiated a project to establish a central Sustainability Data programme, enhancing our ability to collect quality data for managing sustainability-related disclosures. [...] We have also implemented sustainability training for employees and engaged with Chapter Zero for the training on sustainability matters for the Executive Committee and Board. A sustainability metrics framework was developed, refining the sustainability Group scorecard.

Through our strategic review process, we sought to clarify our intent to be active contributors to the greater good, rather than mere participants. As a result, we refined our strategic thinking towards a more purposeful intent to contribute proactively and meaningfully to the societies in which we operate, while committing to the highest standards of governance and ethics. [...] Working through the Banking Association of South Africa (BASA), we are engaging with government regarding plans for an orderly energy transition to enable South Africa to comply with its international greenhouse gas emission reduction commitments. The Board expects the executive team to ensure that our business dealings align with our commitments while proactively assisting clients in advancing their own transition in an effective and efficient manner. We saw strong stakeholder response to certain ESG-sensitive deals, and measures have been implemented to avoid these.

Performance against the targets in 2.2 is monitored by the Board Social, Sustainability and Ethics Committee and the Group Risk and Capital Management Committee. From a management perspective, the Group Chief Executive Officer, the Financial Director, the Group Executive Committee and the Executive Risk Committee monitor the performance. Below the Group Executive Committee, a Sustainability Risk Working Group monitors and reports on how Sustainability Risk is implemented, while a Sustainable Finance Committee covers the opportunity side of climate change. Annual reporting on our progress is contained in our Environmental, Social and Governance Report and Task Force on Climate-related Financial Disclosures Report, both of which are considered and approved for publication by the Social, Sustainability and Ethics Committee. Note that sustainability performance is included in the group's short-term and long-term incentives, with a weighting of 10%. Targets here include the annual targets for CIB's ESG-related financing and our exposure to climate sensitive sectors, among others. In addition, our non-financial measures include customer and digital, plus employees, with weightings of 5% each. [...] Our Social, Sustainability and Ethics Committee is mandated, on behalf of our Group Board, to oversee social and environmental issues, as well as conduct and ethics, reputation and people risks. Group Sustainability presents updates on the group's progress on implementing the PRB to this Committee. Our Social, Sustainability and Ethics Committee Chairman provides a summary to the Board on the matters deliberated by the committee. The Board remains responsible for establishing effective governance structures to provide oversight on implementation of the PRB and for approving the Group's risk appetite and key frameworks and policies. At management level, our Group Executive Committee, oversees our strategic sustainability programme. Group Sustainability, responsible for implementing the PRB, reports to the Group Financial Director. Below the Group Executive Committee, a Sustainability Risk Working Group has been established to monitor and report on how Sustainability Risk is implemented (see details in 1.2). This reports into the group Executive Risk Committee. In addition, a Sustainable Finance Committee involving all the relevant executives across the group, covers the opportunity side of climate change. It tracks performance versus our sustainable finance targets in 2.2, as well as client engagement to assist our clients to transition to less carbon-intensive businesses. Our Group Board and Executive Committee monitor the group's performance against a balanced scorecard, which includes a meaningful environmental and social component that is included in the Board Remuneration Committee's decision-making process for employee incentives.

### Social, Sustainability and Ethics Committee (SSEC)

The name of the board Social and Ethics Committee was changed to the Social, Sustainability and Ethics Committee in March 2022 to reflect the heightened importance of sustainability and ESG globally and with many of our stakeholders. The change also emphasises our commitment to sustainability in the Group.

The SSEC monitors:

y Key organisational health indicators relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation.

y Group activities relating to its role as an active force for good in everything we do in Africa's growth and sustainability and the impact thereof on the Group's employees, customers, and the environment.

In executing its mandate, the SSEC applies the recommended practices and regulation as outlined in the Companies Act and King IV.

The SSEC held four meetings in 2021, lasting six to eight hours each. An additional meeting was held to discuss the first progress report on the group's implementation of the UN PRBs.

During 2021, the SSEC considered and approved the sharpened focus of our 'active force for good in all we do' strategy. It also noted the adoption of a scorecard covering role in society strategic pillars, including promoting environmental sustainability, advancing inclusive finance, advancing education and skills development and promoting a just society. It received periodic feedback on performance against this scorecard. The Sustainable Risk team also updated the SSEC on their progress in managing climate change risk, while Group Sustainability updated it on the group's external ESG ratings. In May 2022, the SSEC approved the lending targets to the fossil fuels sectors, which are published in this report. [...] ### Management's role

Our Group Chief Executive Officer (CEO) leads the Group Executive Committee (ExCo), which is responsible for executing the Group strategy and managing the business day-to-day.

Our CEO takes accountability for climate-related risks and opportunities within the broader ambit of ESG matters. ExCo members are responsible for sustainability in their respective areas.

The group sustainability function reports to our Financial Director, who is also responsible for other areas related to climate risk, specifically real estate management and the associated environmental impact of our operations, supplier management and the Group's integrated and ESG reporting.

Below Exco, the Executive Risk Committee manages the Group's risks in accordance with our ERMF. This includes sustainability risk as a principal risk type. Within sustainability risk, there are four sub-risks: climate change risk, environmental and social risk, premises environment risk, and indirect investment risk. Absa's Chief Risk Officer chairs this committee, which meets quarterly.

In January 2022, a Sustainability Risk Working Group was established to act as a Principal Risk Forum to discuss, challenge, agree and create alignment and consistency on how Sustainability risk is implemented, managed, measured and reported across the organisation. Its first meeting was in February 2022 and it will initially meet monthly.

On the opportunity side of climate change, our Sustainable Finance Committee meets monthly. The committee includes employees from Risk, Treasury, Relationship Banking, Group Sustainability and numerous CIB teams. It is chaired by CIB's Head: Investment Banking Division.

With oversight from our SSEC we have made good progress on climate action in the year. [...] The Social Sustainability and Ethics Committee plays a pivotal role within this structure. It holds the delegated authority from the Board to lead the Group's strategic direction concerning sustainability. This includes overseeing the Group's responses to both global and local sustainability challenges and ensuring that our strategic initiatives align with our overarching sustainability goals. The Committee ensures that our sustainability strategy is robust, relevant, and effectively implemented across the Group. [...] The SSEC convenes quarterly to review and guide the Group's climate-related strategies and initiatives. This rigorous scrutiny ensures that our climate actions are not only aligned with current best practices but are also strategically integrated with the Group's overarching sustainability goals. In 2023, the SSEC made the following decisions related to climate: • Approved our financed emissions targets for coal, oil and gas sectors • Sustainability metrics within Organisational Health in our incentive scorecards refined to include climate-related elements. [...] The Board developed and approved the guiding principles to enhance the Group Chief Strategy and Sustainability Officer's ability to assess our climate change efforts and ensure they align with the organisation's sustainability strategic pillars. [...] We also initiated a project to establish a central Sustainability Data programme, enhancing our ability to collect quality data for managing sustainability-related disclosures. [...] We have also implemented sustainability training for employees and engaged with Chapter Zero for the training on sustainability matters for the Executive Committee and Board. A sustainability metrics framework was developed, refining the sustainability Group scorecard.

The Social, Sustainability and Ethics Committee monitors: i. Key organisational health indicators relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation ii. The Group's activities relating to its role as an active force for good in everything we do in Africa's growth and sustainability and the impact thereof on the Group's employees, customers, and the environment. [...] In 2021, the Committee held four meetings, lasting six to eight hours each. One additional meeting was held to discuss the first progress report on the Absa Group's implementation of the United Nations Environment Programme Finance Initiative's Principles for Responsible Banking. [...] The Social, Sustainability and Ethics Committee noted the adoption of a scorecard which would cover the four Role in Society strategic pillars i.e., i) Advance inclusive finance; ii) Promote environmental sustainability; iii) Advance education and skills development; and iv) Promoting a just society and received periodic reporting on outcomes against that scorecard. [...] Stakeholder engagement: We received regular updates on the challenging external environment, various public interest groups, along with several industry initiatives and the Group's responses. The Committee contributed to policy formulation both in response to COVID-19 and in anticipation of a post-COVID-19 world. A revised stakeholder strategy and Group Stakeholder Policy were approved, and management approved the related Business, Industry and Professional Association Standard.

Governance and culture

Sustainability and sustainability risk will be governed through:

a. assigning roles and responsibilities across all business and functional areas of the Group;

b. defining and implementing policies and standards to effectively manage sustainability through

adequate operational processes and controls;

c. implementing training and driving a culture of sustainability;

d. managing the oversight of our sustainability efforts through:

- the Enterprise Risk Committee (a management committee); and

- the Social and Ethics Committee (a Board sub-committee).

Transparency and accountability

Absa Group will periodically review implementation of our sustainability practices through:

a. internal monitoring and reporting against targets and Key Performance Indicators;

b. appropriate assurance mechanisms, utilising Absa's Combined Assurance approach; and

c. reviewing disclosures through the Group Disclosures Committee and publicly disclosing progress

in achieving our sustainability goals and targets.

### Our ESG governance

**Key:**

Social, Sustainability and
Ethics Committee

Group Risk and Capital
Management Committee

Remuneration Committee

**Board level governance**

Oversees our ESG work across the Group drives coordination and scales our impact across Africa

--NEW-PAGE--

### The Social, Sustainability and Ethics Committee

###### The purpose of the SSEC is to monitor the Group's activities, having regard to any relevant legislation, or prevailing codes of best practice on matters relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation. The Group has an ambition of shaping Africa's growth and sustainability. This ambition links to a variety of areas within the SSEC's mandate. The Committee also provide oversight and evaluation of management's performance against the balanced scorecard on all appropriate non-financial matters.[1]

**Francis** **Ihron Rensburg** **[63]** **Nonhlanhla** **Swithin Munyantwali** **[60]** **Sello Moloko [57]** **Rose**
**Okomo-Okello** **[73]** _BPharm, MA (Political and_ **Mjoli-Mncube** **[64]** _BSc, LLD, LLM_ Group Chairman

Chairman _Organisational Sociology),_ _PgCert (Engineering_ _BSc (Hons), PGCE, AMP_

_LLD (Hons Causa), PhD_ _Business Management),_

_LLB (Hons), Dip (Law),_

_(International Development_ _Fellowship in Urban_

_Certified Public Secretary_

_Education)_ _Development, Masters_

_in Regional and Urban_
_Planning_

As outlined in King IV and the Companies Act, the Committee applies the recommended practices and regulations in executing its mandate.

###### Attendees
• Group Chief Compliance
Officer

###### • Chief Executive: Corporate
and Investment Bank

###### • Chief Executive:

**Ihron Rensburg** **[63]** **Nonhlanhla** **Swithin Munyantwali** **[60]** **Sello Moloko [57]** **Rose** **Keanly** **[64]** **Arrie Rautenbach** **[58]** Relationship Banking

_BPharm, MA (Political and_ **Mjoli-Mncube** **[64]** _BSc, LLD, LLM_ Group Chairman _BCom (Hons), BSc_ Chief Executive Officer - Group Chief People Officer
_Organisational Sociology),_ _PgCert (Engineering_ - Chief Executive: Absa
_LLD (Hons Causa), PhD_ _Business Management),_ _BSc (Hons), PGCE, AMP_ _BBA AMP, MBA_ Regional Operations
_(International Development_ _Fellowship in Urban_ - Group Chief Strategy and
_Education)_ _Development, Masters_ Sustainability Officer

_in Regional and Urban_ - Group Chief Marketing
_Planning_ and Corporate Affairs.

Additional attention was given to several aspects in 2022:

###### • Understanding our starting point through a comprehensive assessment of gaps in our current
approach based on best practice globally

###### • Shaping our purpose and ESG focus areas by understanding the heart of the business and resulting
go-forward purpose, and shaping our ESG strategy accordingly (including the Voice of Stakeholder)

###### • Articulating our overall ESG strategy and ambition entailed prioritising three ESG focus areas to
differentiate ourselves and communicate our aims for priority areas, crystalising our strategy and
moving to action

###### • Focus on people, culture, B-BBEE, ESG and the Group's role in society

###### The purpose of the SSEC is to monitor the Group's activities, having regard to any relevant legislation, or prevailing codes of best practice on matters relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation. The Group has an ambition of shaping Africa's growth and sustainability. This ambition links to a variety of areas within the SSEC's mandate. The Committee also provide oversight and evaluation of management's performance against the balanced scorecard on all appropriate non-financial matters.[1]

###### • Approval of the Strategic, Sustainability and Reputational Risk Framework and Sustainability Risk
Policy, the Absa Way Code of Ethics Policy, and the Conduct Risk Management Framework

###### • Monitoring of existing standards and approval of new standards concerning extractive and other
environmentally sensitive industries, including the decarbonisation targets

###### • Finalisation of the Sustainable Development Goals (SDG) prioritisation and target setting
• Approval of customer measurement indexes and metrics
• Approval of the organisational health metrics for the long-term incentive (for 2022-2024) and
short-term incentive for 2022; and review and approval of the attainment of the prior incentive
schemes.

Our Board and management team have worked diligently this year to solidify our foundation for a sustainable future. Our efforts – led by the Group Strategy and Sustainability Function with oversight from the SSEC – have strengthened processes, introduced metrics for improved accountability and integrated sustainability initiatives into the Group strategy. [...] Our SSEC played an important role in overseeing our climate objectives, approving our strategy and goals. It reviewed key climate-related standards and scenario approaches, such as the International Energy Agency Announced Pledges Scenario, to ensure our Scope 3 financed emission reduction pathways are aligned with best practice and sound methodology. [...] Our Board has delegated authority to the SSEC for the management of sustainability related matters. To effectively manage sustainability related challenges, our organisation employs the "Three Lines of Defence" model. This framework provides a structured approach to risk management, ensuring clear roles, responsibilities, and accountability across different parts of the organisation. [...] The Group internal audit team specialises in assessing sustainability risks, providing independent assurance to the Social Sustainability and Ethics Committee and the Board. They play a critical role in evaluating the effectiveness of sustainability and climate risk governance.

The Social, Sustainability and Ethics Committee accepts responsibility for the integrity of this 2021 TCFD Report. [...] The Social, Sustainability and Ethics Committee approved this report on 16 May 2022. [...] The name of the board Social and Ethics Committee was changed to the Social, Sustainability and Ethics Committee in March 2022 to reflect the heightened importance of sustainability and ESG globally and with many of our stakeholders. The change also emphasises our commitment to sustainability in the Group. [...] The SSEC monitors: [...] Group activities relating to its role as an active force for good in everything we do in Africa's growth and sustainability and the impact thereof on the Group's employees, customers, and the environment. [...] The Sustainable Risk team also updated the SSEC on their progress in managing climate change risk, while Group Sustainability updated it on the group's external ESG ratings. In May 2022, the SSEC approved the lending targets to the fossil fuels sectors, which are published in this report. [...] In January 2022, a Sustainability Risk Working Group was established to act as a Principal Risk Forum to discuss, challenge, agree and create alignment and consistency on how Sustainability risk is implemented, managed, measured and reported across the organisation. Its first meeting was in February 2022 and it will initially meet monthly. [...] On the opportunity side of climate change, our Sustainable Finance Committee meets monthly. The committee includes employees from Risk, Treasury, Relationship Banking, Group Sustainability and numerous CIB teams. It is chaired by CIB's Head: Investment Banking Division. [...] Our Sustainability Principal Risk Framework outlines the sustainability risks in the financial sector, management approach, risk appetite and governance structures. It is supported by policies and standards to effectively manage climate change, environmental and social development risk. [...] The business and functional units where risks arise and activities are managed are primarily responsible for managing sustainability risk. The heads of these business functional units and management are required to implement appropriate: [...] Organisational structures to support managing sustainability risk; [...] Effective controls and processes to manage and mitigate sustainability risk; and [...] Innovative products and initiatives that add to the objectives of achieving sustainability within Absa, the environment, people and economies at large. [...] Our ESMS is a procedure with a reference manual and tool that is designed to identify and manage our exposure to environmental and social risks at onboarding and screening stage. It assesses and identifies the minimum environmental and social controls to consider when business decisions and transactions are processed. [...] Our Sustainability Risk Governance Working Group monitors and reports on implementation of the ESMS. [...] Environmental and social risks are assessed and screened in accordance with our ESMS in Ghana, Kenya, Mauritius, Mozambique, Seychelles, Uganda and Zambia, as well as in Corporate Bank, Business Bank and Retail Banking in South Africa. The remainder will be assessed and screened in 2022. [...] The mechanism outlined below is also aligned with the Equator Principles. Mechanisms for assessing and screening these risks include: [...] Customer-facing employees and credit analysts review the transaction for environmental and social risks as part of the credit review and approval process, guided by our specialist environmental credit risk management teams. [...] Credit analysts consider environmental and social risks when providing credit facilities as environmental credit risk is embedded in the credit risk process. They document applicable material risks and mitigating actions in the credit paper. [...] Transactions are referred to the appropriate committees for approval, as determined by our Credit Policy and business procedures, both for initial support and for final credit approval. [...] Financing requests for sensitive sectors are assessed on a case-by-case basis and the process includes various considerations, such as the need for critical power and the country's strategic development commitments. [...] Where appropriate, we appoint independent environmental consultants to assess and mitigate the identified risks. A transaction will be rejected based on a holistic decision that considers numerous factors, including environmental and social risks. Finance will only be provided if all requirements are met. [...] Moreover, identified gaps regarding environmental and social risks are included in action plans and covenanted in facility agreements, where appropriate. [...] We are progressively introducing exclusion lists into our lending operations, which prohibit or limit funding to identified high-risk environmentally and socially sensitive sector activities. [...] Within the environmental risk assessment process, our customer relationship, legal, transaction support and environmental credit risk teams engage with clients during the transaction life cycle to ensure environmental and social risks are appropriately mitigated and that financing opportunities that support the green finance economy are identified, for example, renewable energy opportunities. [...] The environmental credit risk function reviews the reports to ensure that environmental and social risks are satisfactorily managed. When required, we engage with our clients on environmental issues of concern or to address cases where unsatisfactory progress has been noted to agree an appropriate resolution or action plan. Where appropriate action is not taken, support for the finance application may be cancelled or revoked after following due process.

Governance and culture

Sustainability and sustainability risk will be governed through:

a. assigning roles and responsibilities across all business and functional areas of the Group;

b. defining and implementing policies and standards to effectively manage sustainability through

adequate operational processes and controls;

c. implementing training and driving a culture of sustainability;

d. managing the oversight of our sustainability efforts through:

- the Enterprise Risk Committee (a management committee); and

- the Social and Ethics Committee (a Board sub-committee).

Transparency and accountability

Absa Group will periodically review implementation of our sustainability practices through:

a. internal monitoring and reporting against targets and Key Performance Indicators;

b. appropriate assurance mechanisms, utilising Absa's Combined Assurance approach; and

c. reviewing disclosures through the Group Disclosures Committee and publicly disclosing progress

in achieving our sustainability goals and targets.

### Our ESG governance

**Key:**

Social, Sustainability and Ethics Committee

Group Risk and Capital Management Committee

Remuneration Committee

**Board level governance**

Oversees our ESG work across the Group drives coordination and scales our impact across Africa

--NEW-PAGE--

### The Social, Sustainability and Ethics Committee

###### The purpose of the SSEC is to monitor the Group's activities, having regard to any relevant legislation, or prevailing codes of best practice on matters relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation. The Group has an ambition of shaping Africa's growth and sustainability. This ambition links to a variety of areas within the SSEC's mandate. The Committee also provide oversight and evaluation of management's performance against the balanced scorecard on all appropriate non-financial matters.[1]

**Francis** **Ihron Rensburg** **[63]** **Nonhlanhla** **Swithin Munyantwali** **[60]** **Sello Moloko [57]** **Rose** **Okomo-Okello** **[73]** _BPharm, MA (Political and_ **Mjoli-Mncube** **[64]** _BSc, LLD, LLM_ Group Chairman

Chairman _Organisational Sociology),_ _PgCert (Engineering_ _BSc (Hons), PGCE, AMP_

_LLD (Hons Causa), PhD_ _Business Management),_

_LLB (Hons), Dip (Law),_

_(International Development_ _Fellowship in Urban_

_Certified Public Secretary_

_Education)_ _Development, Masters_

_in Regional and Urban_
_Planning_

As outlined in King IV and the Companies Act, the Committee applies the recommended practices and regulations in executing its mandate.

###### Attendees
• Group Chief Compliance
Officer

###### • Chief Executive: Corporate
and Investment Bank

###### • Chief Executive:

**Ihron Rensburg** **[63]** **Nonhlanhla** **Swithin Munyantwali** **[60]** **Sello Moloko [57]** **Rose** **Keanly** **[64]** **Arrie Rautenbach** **[58]** Relationship Banking

_BPharm, MA (Political and_ **Mjoli-Mncube** **[64]** _BSc, LLD, LLM_ Group Chairman _BCom (Hons), BSc_ Chief Executive Officer - Group Chief People Officer
_Organisational Sociology),_ _PgCert (Engineering_ - Chief Executive: Absa
_LLD (Hons Causa), PhD_ _Business Management),_ _BSc (Hons), PGCE, AMP_ _BBA AMP, MBA_ Regional Operations
_(International Development_ _Fellowship in Urban_ - Group Chief Strategy and
_Education)_ _Development, Masters_ Sustainability Officer

_in Regional and Urban_ - Group Chief Marketing
_Planning_ and Corporate Affairs.

Additional attention was given to several aspects in 2022:

###### • Understanding our starting point through a comprehensive assessment of gaps in our current
approach based on best practice globally

###### • Shaping our purpose and ESG focus areas by understanding the heart of the business and resulting
go-forward purpose, and shaping our ESG strategy accordingly (including the Voice of Stakeholder)

###### • Articulating our overall ESG strategy and ambition entailed prioritising three ESG focus areas to
differentiate ourselves and communicate our aims for priority areas, crystalising our strategy and
moving to action

###### • Focus on people, culture, B-BBEE, ESG and the Group's role in society

###### The purpose of the SSEC is to monitor the Group's activities, having regard to any relevant legislation, or prevailing codes of best practice on matters relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation. The Group has an ambition of shaping Africa's growth and sustainability. This ambition links to a variety of areas within the SSEC's mandate. The Committee also provide oversight and evaluation of management's performance against the balanced scorecard on all appropriate non-financial matters.[1]

###### • Approval of the Strategic, Sustainability and Reputational Risk Framework and Sustainability Risk
Policy, the Absa Way Code of Ethics Policy, and the Conduct Risk Management Framework

###### • Monitoring of existing standards and approval of new standards concerning extractive and other
environmentally sensitive industries, including the decarbonisation targets

###### • Finalisation of the Sustainable Development Goals (SDG) prioritisation and target setting
• Approval of customer measurement indexes and metrics
• Approval of the organisational health metrics for the long-term incentive (for 2022-2024) and
short-term incentive for 2022; and review and approval of the attainment of the prior incentive
schemes.

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?[…]Absa Group Limited (AGL) is one of several member banks of the Banking Association of South Africa (BASA). AGL's role is to participate in all BASA committees/ sub-committees/ task group meetings or exercises conducted by BASA to ensure that AGL's views on, including but not limited to, legislation, regulation, and social and economic issues that affect the industry encapsulate the best interests of AGL.

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