National Bank of Kuwait K P : تقرير الاستدامة عن عام 2022

2022 ESG

Factsheet

In 2022, we took vital steps to integrate ESG into our business, operations, and culture. The Group transformed its ESG strategy from a six-pillar approach to four interrelated pillars: Governance for Resilience, Responsible Banking, Capitalizing on our Capabilities, and Investing in our Communities. This factsheet is designed to highlight our key achievements against our ESG strategy and focus on the most material indicators to our key stakeholders.

NBK Sustainability Report 2022

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2022 ESG Factsheet

1. About this Report

Welcome to NBK's seventh annual Sustainability report and the factsheet presented in this document. NBK's 2022 Sustainability Report summarizes the Bank's material ESG/Sustainability-related issues, risks, and performance data, as well as our Group-wide ESG policies, strategy, and commitments, for the reporting period January 1 to December 31, 2022. Our 2022 Sustainability Report is organized based on the four pillars of NBK's evolved ESG Strategy Framework. Additionally, this report is informed by a number of national and international Sustainability/ESG reporting standards and frameworks, including Global Reporting Initiative (GRI) standards, Sustainable Accounting Standards Board (SASB), UN

5. Responsible Banking

Contributing to economic, social and environmental development, whether through our operations or engaging with our clients to adopt sustainable practices by financing their transitions, has always been one of NBK's strategic focuses. Responsible Banking outlines NBK's approach to the net zero transition by channeling capital into the low-carbon economy while reducing our environmental impact from operations. NBK recently established its Sustainable Financing Framework, aligned with the Green Bond Principles (GBP), Social Bond Principles (SBP) and Sustainability Bond Guidelines (SBG), [ICMA, June 2021]. Additionally, as we have done for the last seven

Key Achievements of Our ESG Efforts

Sustainable Development Goals (UN SDGs), and others.

2. About NBK

2022 marked 70 years since NBK's founding in 1952 as the first local, domestic GCC bank and the first shareholding company in Kuwait. Today, NBK is one of the leading banking groups in Kuwait. NBK also ranks among leading regional banks in credit ratings and brand value. NBK has operations in 13 countries, with a total of 68 branches in Kuwait, having the Headquarters in Kuwait and various other international branches around the world.

The Bank's core businesses include (i) Consumer and private banking, (ii) Corporate banking, (iii) Investment banking and asset management, and (iv) Islamic Banking.

3. ESG at NBK

NBK's leadership is committed to the Bank's sustainability journey and views sustainability as integral to business performance. In 2022, we transformed our ESG Framework and Strategy, making a step-leap strategic commitment to more fully integrating ESG with our core business strategy, risk management, products and services, and operations. Our ESG Strategy focuses on promoting economic prosperity and serving as a model for sustainable development, organized around four pillars: Governance for Resilience; Responsible Banking; Capitalizing on our Capabilities; and Investing in our Communities

4. Governance For Resilience

NBK Group is committed to robust ethical standards that are hand-in-hand with comprehensive strategic planning and effective, transparent, and reliable governance structures, policies, and processes. In concert with our robust risk management to develop economic, environmental and social risk resilience, these foundational elements of governance at NBK provide assurance to our stakeholders about the strength of our leadership, oversight, and accountability.

years, in pursuit of our net zero ambitions, we continue to track and take steps to manage and report on our energy and water consumption, greenhouse gas (GHG) emissions, and materials consumption and disposal.

6. Capitalizing on Our Capabilities

The essential ambition of NBK's Capitalizing on our Capabilities strategy pillar is to drive sustainable business growth achieved through organizational resilience. This starts with our workplace management; our policies, culture, practices and programs that enable bank-wide ESG transformation through enhanced employee engagement and development programs. In addition to describing our Group Human Resource practices, we outline our commitment and initiatives to promote diversity, equity and inclusion (DE&I), promote health, safety and wellbeing, and establish a digital and agile work environment through innovative digital solutions.

7. Investing in Our Communities

Part of our mission is to contribute to our community. Investing in our Communities is one of the four key strategic pillars of NBK's ESG Strategy. NBK's community investment focuses on providing optimal customer service and advocacy, financial inclusion, accessibility and literacy, and ensuring customer protection and data privacy and security. Additionally, NBK has a long history

of having substantial financial contributions in community development. We are increasingly attentive to optimizing our positive social impact within our Corporate Social Responsibility (CSR) investments in line with the UN Sustainable Development Goals (UN SDGs).

Governance For Resilience

• Solidified Board and Executive Management ESG governance, oversight, and accountability.
• Committed to developing economic, environmental, and social risk resilience.
• Zero incidents of Corruption, Fraud, Money Laundering and Bribery.
• Received solid first-time score of 'C' from CDP, for both the Climate Change and Forest categories.
• 9.1% female Board representation.

Responsible Banking

Sustainable Finance:

• Launched NBK Sustainable Financing Framework with SPO from S&P.
• Launched Electric Vehicle (EV) consumer loan.

Net Zero Ambitions:

• 25% targeted reduction of gross operational emissions by 2025, compared to our baseline year 2021.
• Achieved the LEED Gold Certification for NBK Kuwait new Headquarters.
• Electricity consumption totaled 53,975,568 kWh, an 11% decrease from 2021.
• Water consumption totaled 38,223,713 Imperial Gallons (IG), a 9% decrease from 2021.
• Reduced Scope 1, 2, and 3 carbon emissions by 6% from 2021.
• 127.1 metric tons paper recycled.

Capitalizing on Our Capabilities

Diversity, Equity & Inclusion:

• 44.0% females in the workforce, 29.3% females in managerial positions.
• Launched 'NBK RISE' global leadership initiative for women.
• 39.4% of new hires are female.
• 85.5% of new hires are Kuwaitis.

Talent Development:

• 132 fresh graduates employed.
• 21,729 hours total training hours. On average, each employee received 5.7 training hours.

Investing in Our Communities

• 75.1% Nationalization rate.
• KD 23 (USD 75) million total community investments, a 45% increase from 2021.
• Launched 'Bankee' financial literacy program.
• KD 18.17 (USD 59.32) million SME lending.

Customers & Community:

• 90% Customer Satisfaction Index (CSI).

Data Security:

• Zero incidents of data leaks or breaches.
• Maintained ISO 27001 Certification.

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2022 ESG Factsheet

Data Performance Tables

Governance For Resilience

Disclosure Metric	NBK Performance	ESG Category
Percentage of Independent Board	36%. The Board consists of 11 members, 4 of whom are independent.	Governance
Members
Percentage of Board Members with	91%. 10 out of 11 Board members have substantial industry expertise.	Governance
Industry Expertise
Independent Board Committee Chairs	3 out of 5 Board Sub-Committees have independent Board Committee
Chairs, namely: Board Audit Committee, Board Risk & Compliance	Governance
	Committee, and Board Nomination and Remuneration Committee.
Board Attendance 2022	Average Board member attendance rate: 85.9%.	Governance
Female Director	1/11. First female director elected in 2022.	Governance
Number of flagged Board Members	0	Governance
Any disclosed related-party
transactions in either of two most	Yes	Governance
recently reported financial years
Business Ethics Risk & Controversies	No ethics related controversies raised. Additionally, NBK had zero	Governance
confirmed Whistleblowing cases and incidents reported in 2022.
Corruption Risk Exposure &	Zero confirmed incidents in 2022 of Corruption, Fraud, Money Laundering,	Governance
Controversies	or Bribery.
Percentage of long-tenured, aging	No. In compliance with Central Bank of Kuwait (CBK) requirements, NBK
directors suggests a problem with	elected 11 Board members for a three-year term; including two additional	Governance
board entrenchment	Independent members - totaling four independent members.
Composition of the board fails to	No, NBK elected its first female Board member in 2022. Female	Governance
include any female directors	representation in Board is 9%.
Audit committee lacks at least one
non-executive member with general	No, all (100%) Board members in NBK Board Audit Committee (BAC) have	Governance
expertise in accounting or financial	general expertise in accounting or financial management.
management
Audit committee lacks at least one	No, all (100%) Board members in the BAC have substantial industry
non-executive member who has	Governance
knowledge and experience.
substantial industry knowledge
Company executive(s) are serving on	No	Governance
the pay committee
Current company executives serve on	No	Governance
the pay committee's board
Lack a standing nomination committee	No	Governance
The nomination committee chair is not	No, NBK's Board Nomination and Remuneration Committee (BNRC) Chair is
independent of management or other	Governance
independent of management or other interests.
interests

	Yes, NBK has a Whistleblowing Policy accessible to all employees.
	The complaint is directly made to the Chairman of the Board and the
Whistleblower Protection	information remains confidential and is saved anonymously to provide	Governance
	protection to the employee. This mechanism is subject to review by Group
	Internal Audit.
	Yes, we have an independent AML/CFT unit reporting to the Board Risk and
Policies Related to Anti-Money	Compliance Committee. Our AML/CFT Policy, Anti-Fraud Policy, and Anti-	Governance
Laundering	Bribery and Corruption Policy are reviewed annually and approved by the
	Board.
	Yes, we offer mandatory annual or bi-annual trainings to ensure all
Employee Training on Ethical	employees' acknowledgment and understanding of NBK commitments and
expectations, including but not limited to, Legal Compliance requirements,	Governance
Standards
Code of Business Ethics and Conduct, Anti -Corruption and Bribery, Anti-
	Money Laundering.
	Group Internal Audit conducts an annual audit of Corporate Governance
Regular audits of ethical standards	based on the requirements of the CBK. Group Internal Audit's scope of the	Governance
Corporate Governance audit includes the review of the Bank's ethics related
	policies and practices.
Incorporation of links to sustainability	Yes, NBK recently introduced ESG metrics into the KPIs of the members of
performance in its current executive	Governance
the Executive Management.
pay policies
	• Integrated ESG metrics into the Board of Directors', Board Sub-
Board & Executive Management	Committees, and Executive Management's responsibilities, oversight,	Governance
Responsibility & Oversight of ESG	charters, and affairs.
	• Finalized and approved the new Group ESG Strategy.
	• Committed to supporting the transition to sustainable economy into our
Management or ESRM Integration and	ESG Strategy as an integrated core of NBK business strategy.
• Committed to developing formal systems to assess and manage ESG-	Governance
Risk Management
related risks and opportunities.
	• In 2022, ESG-related risk limits were defined by Group Risk Management.
Support SDGs (United Nations	Identified SDGs relevant for NBK business and Governance for Resilience	Governance
Sustainable Development Goals)	strategy pillar.

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