Absa Bank Kenya : 2022 Sustainability Report

Reading this report

Overview

Materiality

Governance

Resilient Institutional Capacity

Risk Management

Economic Impact

Environmental Impact

Social Impact

GRI Content

Checklist

About our Sustainability Report

Scope and reporting period

This is the Sustainability Report for Absa Bank Kenya, covering the finacial year 1 January 2022 to December 2022. It Complements the Company's Financial Report for the same period. The aim of this report is to disclose how our business is managing Environmental, Social and Governance risks, and how the maximisation of our risk management approach in this area creates opportunities for the Bank to enhance its ability to continue lending to Kenyans and preserve value for all our stakeholders. References in this publication to ', 'Absa', the 'Bank' 'we', 'us' and 'our' refer to Absa Bank Kenya PLC. This Sustainability Report matches the reporting period for the integrated annual report and financial statements, being 1 January 2022 to 31 December 2022. This report also covers the same reporting entities that are covered in the integrated annual report and form part of Absa Bank Kenya. They are Absa Securities Limited, Absa Kenya Nominees Limited, Absa Asset Management Limited, Absa Bancassurance Intermediary Limited and Absa Pension Services Limited, all of whom are owned 100% by Absa Bank Kenya.

We take our lead from our parent, Absa Group Limited, based in South Africa on how we approach ESG risk management. Our approach is, however, distinctly Kenyan in terms of how we engage with our stakeholders and the application of Kenyan regulatory requirements; including the Nairobi Securities Exchange (NSE) ESG Disclosures Guidance Manual.

This report was published in and is available for download on the Absa Bank Kenya website - www.absabank.co.ke

For any queries, please contact investor relations on [e-mail]

Our approach to ESG risk management was defined through our 13 Sustainability Commitments made in 2020. These commitments focus on our ability to achieve outcomes associated with:

• Diversification of our portfolio and increasing our funding and capital allocation for sustainable finance;
• Diversity of our supply chain;
• Investment in youth;
• Achievement of Net Zero commitments by 2040;
• Increase in biodiversity and responsible environmental management;
• Promotion of economic stimulus through current and future funding;
• Empowering our suppliers and creating awareness on corporate sustainability and responsible business practices;
• Being an employer of choice;
• Investment into future skills;
• Gender diversity in the workplace;
• Active management of our indirect environmental and social impacts;
• Adherence to governance control policies internally and through the supply chain; and
• Continued partnership for the SDG goals.

This report outlines the ways in which Absa aims to fulfil its purpose of "Empowering Africa's tomorrow, together … one story at a time" by using financial expertise to do good, thereby creating value for society. To this end, it includes information on the purpose-led investments that we have made to support our sustainability commitments and deliver positive societal and environmental outcomes.

Absa Bank Kenya PLC has prepared this report with reference to the GRI Standards, it covers the financial year ended December 2022.

Table of contents

This report is structured in line with the Global Reporting Initiative (GRI) index as outlined below.

About our Sustainability Report	1
Overview	4
Materiality	18
Governance	26
Resilient Institutional Capacity	38
Risk Management	46
Economic Impact	49
Environmental Impact	57
Social Impact	64
GRI Checklist	73

Absa Bank Kenya PLC 2022 Sustainability Report

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Reading this report

Overview

Materiality

Governance

Resilient Institutional Capacity

Risk Management

Economic Impact

Environmental Impact

Social Impact

GRI Content

Checklist

About our Sustainability Report continued

We have articulated this impact based on our contribution to the following Sustainable Development Goals (SDGs):

The organisation and its reporting practices

Organisational details

Absa Bank Kenya PLC, through its subsidiary entities, is a financial services provider with over 100 years of experience in the Kenyan market. A tier-one financier, the Bank offers an integrated set of products and services across retail, business and corporate banking, as well as bancassurance, investment, asset and wealth management services. Absa operates through an extensive network of 83 branches, 196 ATMs and 60 cash deposit machines countrywide supported by internet and mobile banking channels. Absa is a customer-obsessed and digitally enabled Bank that offers best-in-classtechnology-driven solutions and services. The Bank has built a strong track record in the corporate, business and retail space, enabling business growth, wealth preservation and customer journeys and aspirations. As one of the largest financial services institutions in the country, Absa is an integral player in the Kenyan economy and society. A purpose-led Bank, Absa seeks to have a shaping role in society and to support the developmental objectives of the country by creating social impact through its core business functions, thus being a force for good.

Reporting period and frequency

This report covers the financial year from 1 January 2022 to 31 December 2022. For a more detailed overview of the value we add to our stakeholders and our impact on society, this report should be read together with the 2022 Absa Kenya Integrated Report and Financial Statements.

Restatements of information

We report International Financial Reporting Standards (IFRS)-compliant financial results in our financial results and annual financial statements. We strive to improve our internal processes for our ESG data through internal and external reviews. We continuously monitor the environment for matters that may influence some, or all, of our material matters and socially, either fundamentally or in ways that require refinements to our responses to these issues.

External assurance

The Sustainability Reporting Disclosures at hand are not subject to standalone external assurance. The Audit and Risk Committe of the Board has the primary role of ensuring integrity in non-financial reportiign and audit and overseeing the maintenance of sound internal control and risk management systems. The Bank will comission external auditors, to provide assurance in subsequent ESG reports.

Responsibility for our reporting

The Board of Absa Kenya is responsible for ensuring that sustainability is at the heart of our overall business strategy. On behalf of the Board, we acknowledge that our responsibility is to ensure the integrity of this sustainability report and we are confident that it presents the progress we have made towards our goal of "Empowering Africa's tomorrow, together … one story at a time" by using financial expertise to do good, thereby creating value for society.

Materiality

This report provides context to what we deem are our material matters - those matters with the ability to significantly influence value creation and achievement of our business strategy over the short, medium and long term.

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Reading this report	Overview	Materiality	Governance

About our Sustainability Report continued

The Governance Framework's core principles are designed to ensure that the Board:

• Acts in the utmost integrity
• Upholds ethical behaviour
• Balances risk and opportunity when considering strategic plans
• Delivers sustainable value
• Has adequate oversight over risk and contols
• Promotes good corporate citizenship

The Board uses its

Governance Framework to:

• Set and monitor governance and responsibility objectives
• Identify opportunities for improvement
• Align activities with the business strategy
• Give assurance that Absa is a well-managed company

Resilient Institutional Capacity

Risk Management

Economic Impact

Environmental Impact

Social Impact

GRI Content

Checklist

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Reading this report

Overview

Materiality

Governance

Resilient Institutional Capacity

Risk Management

Economic Impact

Environmental Impact

Social Impact

GRI Content

Checklist

Overview

Chairman's message	5
Chief Executive Officer's message	6
Who we are	7
FY 2022 in review	9
Sustainability performance as at FY 2022	10
Ownership structure	13
Our client-facing structure	14
Partners and stakeholders	15

Reading this report

Overview

Materiality

Governance

Resilient Institutional Capacity

Risk Management

Economic Impact

Environmental Impact

Social Impact

GRI Content

Checklist

Charles Muchene

Chairman, Absa Bank Kenya PLC

It is our duty to create a prosperous and healthy world for the generations that come after us. As a proudly Kenyan corporate citizen, Absa adopts sustainable development as a means to create shared value for current and future generations.

Chairman's message

To begin, we have all observed a shift in global corporate reporting. It has moved beyond just financial success to a more comprehensive approach, considering both financial and non-financial aspects. In 2020, as an inceptive output in this regard, we launched our sustainability strategy, which highlighted 13 commitments as the core of our shared value strategy. Further to this, in 2022, the Bank's Board ratified the annual non-financial reporting strategy. As an outcome of these actions, we are pleased to issue our first Sustainability Report, which details our direct and indirect impact on the environment, society, and the economy.

By embracing a sustainable path across environment, society and governance, we purposefully fulfill our mission. We call this approach shared value, aligning our actions with our strategic vision. At Board level, we recognize our cardinal obligation to all our stakeholders to consider sustainability when developing our organization's overall strategy and risk management framework, as well as to undertake effective implementation supervision in accordance with best practices. Two Board subcommittees, the Strategy Committee and the Audit & Risk Board Committees, thus guide our sustainability agenda. These committees collaborate with the Sustainability Steering Committee, a management-level committee charged with overseeing the implementation of the Bank's sustainability strategy, centered on the triple bottom line of people, planet, and profit.

We acknowledge the significant responsibility we have as a financial institution to encourage industries, and economies to adopt more sustainable practices, such as energy efficiency, climate-smart agriculture, renewable energy, and green buildings. As such, we have revised our commitments to sustainability and are accelerating our efforts to build a relevant brand that drives a sustainable future.

Our commitments cuts across the expanse of sustainability actions including environmental stewardship, protection of biodiversity, youth empowerment and community investment, diversity and inclusion, supplier empowerment, workplace responsibility, direct and indirect contribution to the economy and climate action.

As part of this agenda, and in acknowledgement of the importance of climate change and the urgent need for global action to avert a climate disaster, we are working to improve our green credentials and climate approach, including reducing our carbon footprint and pursuing green funding opportunities. In line with this, we have purposefully chosen to collaborate with aligned partners who bring their financial expertise, influence, and resources to the table. This strategic collaboration accelerates the adoption of ESG standards and further our contribution to a more sustainable and inclusive economy.

As a proudly Kenyan corporate citizen, we are convinced that sustainable development is the only true road to achieving the future we all desire. We take it as our duty of care to create a prosperous and healthy world for the generations that come after us.

Over the last decade, the country has continued to embrace economic reforms that have contributed to sustained economic growth, social development, and political stability gains. However, our country continues to face a broad range of challenges, including poverty, inequality, youth unemployment, transparency and accountability, climate change, sustained poor private sector investment, and the economy's vulnerability to internal and foreign shocks.

While the macro-environment may be uncertain, Absa views these challenges are opportunities for the creation of shared value for the Bank, its stakeholders and the country. With this in mind, we are determined to realign our strategies with the country's long-term development agenda, including Kenya's Vision 2030, which aims to transform Kenya into a competitive and prosperous country with a high quality of life, prioritizing agriculture, healthcare, housing and manufacturing.

Reflecting on our journey, I am immensely proud of the entire Absa Bank Kenya PLC team. The Board remains resolute and clear in its mandate as far as the continuous integration of ESG principles into all aspects of our operations is concerned. We are intent on continuing to prove our commitment to living our beliefs and propelling our business forward on a path of sustainable growth.

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Reading this report

Overview

Materiality

Governance

Resilient Institutional Capacity

Risk Management

Economic Impact

Environmental Impact

Social Impact

GRI Content

Checklist

Abdi Mohamed

Managing Director and CEO, Absa Bank Kenya PLC

We are pleased to present our inaugural Sustainability Report. This is an account of our progress, and contains highlights of our environmental, social, and governance (ESG) programs for the financial year ending December 2022. Alongside the Taskforce on Climate Financing Disclosures (TCFD) report released this year, these publications demonstrate our unwavering commitment to the crucial ESG agenda, harmonizing seamlessly with our Sustainability Strategy launched three years ago.

Chief Executive Officer's message

For a start, we acknowledge that the success of our business and society are intertwined. This underpins our shared value approach, which recognizes the interconnected nature of the needs of society and the Bank's interests and encourages us to always answer to a greater purpose beyond the bottom line. As a result, we have a long-term interest in empowering Kenya's and the continent's progress, one story at a time.

Our shared value imperatives are espoused in our sustainability targets which have been determined in accordance with the UN Global Compact principles, UN Principles for Responsible Banking and are linked to the appropriate UN Sustainable Development Goals (SDGs), the Paris Climate Agreement, and regional and local frameworks such as the African Union Agenda 2063. Our top priorities are SDGs 4, 8, 9, 10, 11, 12, 15, 16, and 17.

Furthermore, we have expanded our future-oriented perspective to encompass four more Sustainable Development Goals (SDGs). These include SDGs 1 (No Poverty by targeting the unbanked through our Timiza platform, Women in Business, and MSME propositions), SDG 5 (Gender equality by empowering our female colleagues to hold 50% of leadership positions), SDG 7 (affordable and clean energy by greening our portfolio through renewable energy, energy-efficient, and green building products), and SDG 13 (Climate action by adhering to Central Bank of Kenya guidelines on climate-related risk management).

To positively influence national agendas, we promote government policies that benefit society as a whole and serve as strategic thought leaders in critical regulatory dialogues. Our dedication to governance and risk management excellence is also tangible. We have purposefully included climate change risk in our operations and are implementing our Net Zero Plan. Given the devastating drought that Kenyans have recently endured, the urgency of doing so has never been greater. In the medium term, we hope to strengthen our climate and sustainable financing activities and position Absa as a leader in sustainable finance.

Working with like-minded partners who share our vision of creating a more prosperous Africa for all is one of the ways we can find new strategies to innovate, compete, and contribute to sustainable and value-creating solutions to some of Africa's most pressing environmental and societal challenges. We will be there when our communities, employees, and clients need us the most. As part of our shared value strategy, we support education and skill development, promote diversity and inclusion, and provide inclusive financial services to women, young people, and small and medium-sized enterprises.

We are committed to banking the unbanked and have redesigned our Timiza product to make it easier for people and small businesses to access savings and loans. For the youth, we provide demand-driven and innovative interventions that align with national imperatives, addressing their employability needs and aiding them in envisioning their futures. Through collaborations with organisations such as the Kenya Private Sector Alliance, we have created initiatives such as Ajira Digital and Ready-to-Work, which equip Kenyan youth with digital skills and connect them with work prospects. This supports youth empowerment, economic inclusion, and the economy's overall competitiveness.

In line with our environmental responsibilities, we are committed to decreasing our own carbon footprint and developing new climate finance products for our clients. For example, we are actively supporting the Kenyan government's project by planting and growing 10 million trees across the country by 2025, with the goal of raising Kenya's forest cover to 10% and boosting biodiversity conservation.

In a landmark achievement, in September 2020, we became Kenya's first bank to join the Kenya Green Building Society as a champion for programs that promote the green economy by decreasing pollution and enhancing people's lives while supporting economic progress. We also actively encourage the circular economy by reducing waste streams from our operations. This involves recycling e-waste, furniture, billboards, plastic, and steel waste. As part of this, we have replaced previously used water dispensers with eco-friendly water filtration technology, eliminating the use of plastic water bottles and lowering our environmental impact.

For our suppliers, we are committed to raising their knowledge of corporate sustainability and ethical business practices. We provide training programs and progress-tracking tools that enable suppliers to enhance their sustainability performance and contribute to the accomplishment of the SDGs through partnerships with organisations such as B-Lab East Africa and Strathmore Business School.

In summary, and as this report will demonstrate, we have made significant progress on our sustainability journey, and we are committed to continuing to focus on creating shared value through our strategy. Anticipating the years ahead, we look forward to reporting on the success of our efforts. With the steadfast backing of our Board of Directors, management team, dedicated workforce, valued partners, and cherished friends, we are resolutely committed to forging a brighter future for all.

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Reading this report

Overview

Materiality

Governance

Resilient Institutional Capacity

Risk Management

Economic Impact

Environmental Impact

Social Impact

GRI Content

Checklist

Who we are

Absa Bank Kenya PLC is a member of Absa which is a pan-African Group, inspired by the people that we serve and determined to be a globally respected organisation of which Africa can be proud. We are committed to finding tailored solutions to uniquely local challenges, and everything that we do focuses on creating value for our stakeholders. As a financial services provider, we play an integral role in the economic life of individuals, businesses and governments. We help create, grow and protect wealth through partnerships in economic development while playing a shaping role in Africa's growth and sustainability.

Absa aspires to be a truly purpose-led organisation. This means making a proud and positive contribution to the world around us and putting our purpose at the heart of everything that we do.

Empowering Africa's tomorrow, together . . . one story at a time

Empowering

As a financial institution, we empower and enable - from investing in our employees to uplifting our communities and enabling our clients' ambitions. Empowering is active, every moment, walking together as partners. We unlock opportunities for our clients through imagination, energy and passion, and finding innovative solutions. Empowering ensures that we invest in people and their capabilities.

Africa's

Our heartbeat is African. We are committed to a Pan- African presence and contribution. We cherish our home; we care for it and invest in it. Africa is a home that we are proud of. Our organisation was born in Africa over 100 years ago.

Tomorrow

We value our heritage and embrace the challenge of reimagining a better tomorrow - for our colleagues, clients and communities. We know that every action that we take has a consequence for a meaningful tomorrow. We relentlessly deliver on our commitments today with a long-term mindset through good times and bad. We are stewards of a sustainably better world. Tomorrow embodies the aspiration of youth and future generations. Tomorrow represents one day or many years.

Together

We are a trusted and caring partner, committed to collaborate with all our stakeholders. We embrace diversity and inclusivity. This strengthens us, unleashes everyone's full energy and enables better outcomes. We are a collective, holding ourselves and one another accountable for our outcomes. We are stronger together. We listen to many perspectives while remaining decisive. We work together to bring our strategic ambitions to life.

One story at a time

Brick by brick, we build a masterpiece - no matter how big or small. We embrace Africa's heritage of storytelling. Stories bind us. We see you. We hear your story - it inspires us to act and grounds us in what is real.

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Reading this report

Overview

Materiality

Governance

Resilient Institutional Capacity

Risk Management

Economic Impact

Environmental Impact

Social Impact

GRI Content

Checklist

Who we are continued

Our purpose, values and aspirations focus our attention on business imperatives, activities and initiatives that are necessary to best serve our customers and stakeholders.

Our purpose	Our brand attributes
Empowering Africa's tomorrow, together … one story at a time	•	Accessible
	•	Dynamic
	•	Aspirational

83	196	2 070
branches	ATMs	employees

5 209

Values

We drive high performance to achieve sustainable results.

Our people are our strength.

We are obsessed with the customer.

We have an African heartbeat.

Our strategic priorities

• A market leader in business banking
• A leading corporate and investment bank in connecting ecosystems
• A digitally powered business
• A relevant brand driving a sustainable future
• A home of talent and diversity
• A modern-day consumer financial services business

point-of-sale (PoS) devices

Aspirations

Our attitudes

For our people, we will create a culture that appreciates, unifies and

•

Brave

differentiates us from our competitors.

•

Passionate

For our customers, we will create unprecedented, seamless experiences to

•

Ready

engage and delight them.

For society, all our employees will lead with a conscience, doing their best

for people and the planet.

Our impact

Our way of life

We have selected the following SDG goals as our primary focus.

•

Easier

•

Faster

•

Better

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Reading this report	Overview	Materiality	Governance	Resilient Institutional Capacity	Risk Management	Economic Impact

FY 2022 in review

Absa Bank Kenya PLC, a part of pan-African leading lender Absa Group, is listed on the Nairobi Securities Exchange and has a rich history in Kenya spanning over 100 years. The Bank is one of Kenya's largest financial services institutions, providing personal, business, and institutional banking, bancassurance, foreign exchange, wealth and investment, and advisory solutions.

The Bank has a regional and global footprint, allowing it to provide end-to-end financial services, and has been associated with a number of market firsts, including the launch of the first ATM, WhatsApp banking, Sharia-compliant banking, and unsecured lending.

66.8bn	14.6bn	303.8bn
Market capitalisation	Headline earnings	Deposits
(2021: Shs 64.4bn)	(2021: Shs 10.9bn)	(2021: Shs 269bn)
(2020: Shs 64.3bn)	(2020: Shs 4.2bn)	(2020: Shs 254bn)

22.9%	41%	283.6bn
Return on equity	Cost-to-income ratio	Net customer loans
(2021: 19.3%)	(2021: 46%)	(2021: Shs 234bn)
(2020: 14.1%)	(2020: 48%)	(2020: Shs 209bn)

2 070	50:50	1 009 287
Employees	Employee gender parity	Customers
(2021: 1 979)	(2021: 51:49)	(2021: 917 507)
(2020: 1 991)	(2020: 52:48)	(2020: 880 307 )

As one of the largest financial institutions in the country, Absa is an integral player in the Kenyan economy and society. A purpose-led Bank, Absa seeks to have a shaping role in society and support the developmental objectives of the country by creating social impact through its core business functions thus being a force for good.

Environmental Impact

Social Impact

GRI Content

Checklist

Absa Bank Kenya PLC 2022 Sustainability Report

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