FirstRand Ltd

The group's board and management are deeply cognizant that a systemic financial services business such as FirstRand needs to play a significant role in a just energy transition, and we have been focused on where we can bring solutions to different components of the journey. We want to support job creation through industrialisation and by funding entrepreneurial small businesses, in the green economy. We will also fund new energy generation in the public and private sectors as we reduce the funding of carbon-generative businesses, in line with the public commitments we have made in our climate and fossil fuels policies. [...] FirstRand has also engaged extensively with industry experts and think-tanks such as the National Business Initiative to understand the nuances of the overall transition process, and with government departments and regulators on envisaged policy approaches. [...] The group is actively working with clients to better understand their transition plans and needs. We are also encouraging our clients to adopt TCFD and to increase their public disclosure of climate strategies and metrics (including scope 1, 2 and 3 emissions), as we believe this increased market transparency will allow for better product design to support the transition.

Ultimate oversight of environmental and social risk rests with the board. The board delegates authority to board committees and management committees for oversight at a group level. Environmental and social risks are reported to the board through the FirstRand risk, capital management and compliance committee (RCCC) and the FirstRand social ethics and transformation committee (Setcom). Risk management progress and monitoring reports are submitted on a quarterly basis to the relevant governance committees, which are also responsible for the approval of related frameworks. [...] To ensure the continued effectiveness, enforcement and success of this policy, the environmental and social risk management team in Enterprise Risk Management, along with other management teams, will continually monitor and report on a quarterly basis on the status of environmental sustainability risks and opportunities to the: - segment/operating business ethics and conduct committees; - FirstRand sustainability and governance executive committee; and - relevant FirstRand board committees, i.e. RCCC and Setcom. The responsibility of ensuring that all FirstRand employees are aware of and comply with the requirements of this policy and supporting frameworks rests with line management and the executive teams in the various group segments/operating businesses.

The FirstRand Limited board is ultimately accountable for climate change governance. Board oversight rests with two board subcommittees, these being Setcom and RCCC. **+ Setcom focuses on ensuring that FirstRand's impact** on the climate, both operational and financed, is appropriately considered, and supported with clear policies against the backdrop of its societal commitments and its broader ESG policy. **+ RCCC focuses on risk management and** measurement oversight of the impact of climate change on the group's risk profile. Feedback on climate-related topics is provided to these board committees at least quarterly. A key area of engagement during the financial year was board training, which covered the background to climate change, unpacked relevant transition scenarios, provided an overview of climate risks and opportunities and discussed the impact of climate risk on credit risk for the group. Other focus areas for the 2021 financial year are highlighted below. |Committee|Key focus|Frequency during 2021 financial year| |---|---|---| |FirstRand board|Board training on climate risks and opportunities|Semi- annually| |RCCC|Climate risk profile|Quarterly| |Setcom|Climate change policy and energy and fossil fuels policy Progress against climate roadmap|Quarterly| [...] Responsibility for execution of strategic focus areas that relate to climate change lies with the FirstRand strategic executive committee (Stratco) which is chaired by the group CEO and is the most senior executive forum of the group. The Stratco member tasked with driving the overall climate change approach is the group chief risk officer (CRO) who reports back periodically to Stratco on progress. The group CRO chairs the CSC, which supports the coordination of climate-related risks and opportunities. The committee comprises senior representation from risk management, capital management, group finance, business and investor relations. As a material cross-cutting risk, the identification, monitoring, management and mitigation of environmental and climate risks are fully integrated as part of enterprise risk management (ERM). The group CRO is functionally supported by a specialist central climate risk team within the ERM function, and by climate risk champions in each business segment. The dedicated team of climate specialists in ERM provides technical input and advice on risk quantification matters, climate risk policy, transaction due diligence and group-wide training. Implementation of the climate strategy is owned and driven by each client segment and subsidiary through dedicated climate working groups and business development forums.

In line with the TCFD recommendations, FirstRand's board and board subcommittees provide robust and regular oversight of climate-related risks and opportunities. The board has put the necessary policies, systems and processes in place to enable delivery of the group's climate roadmap and ensure that the corresponding performance is reflected in external reporting. Management of climate-related risks and opportunities resides with FirstRand's sustainability and governance committee, a subcommittee of FirstRand's strategic executive committee. Climate change considerations have also been incorporated into existing executive and management committee structures. [...] Delivery against climate risk and opportunity management objectives has been incorporated into the performance scorecards for executive directors and prescribed officers, key environmental and social risk teams, and teams focused on sustainable finance. A detailed analysis of climate rating calibration included in performance scorecards can be found in the group's remuneration report at https://www.firstrand.co.za/investors/integrated-reporting-hub/governance/.

#### Governance structure

###### This TCFD report covers all material areas of the group's climate performance and management of climate-related risk. Ultimate oversight of environmental, social and climate risk rests with the board. It delegates further oversight to appropriate board subcommittees and management committees. The board has put the necessary policies, systems and processes in place to enable delivery of the group's climate roadmap and ensure that the corresponding performance is reflected in external reporting.

The schematic below demonstrates where these responsibilities and accountabilities lie.

|FirstRand board|Col2|
|---|---|
|Risk, capital management and Asset, liability and capital Social, ethics and transformation compliance committee: Oversight committee: Oversight of committee: Oversight of the of climate risk profile, measurement, sustainability bond framework and group's climate strategies with quantification, scenario analysis, climate balance sheet regard to impact on both stress testing and impact on other environment and social risk types stakeholders||
|Risk, capital management and compliance committee: Oversight of climate risk profile, measurement, quantification, scenario analysis, stress testing and impact on other risk types|Social, ethics and transformation committee: Oversight of the group's climate strategies with regard to impact on both environment and social stakeholders|

|FirstRand Stratco|Col2|
|---|---|
|Climate steering Financial resource Sustainability and committee: Sets and management executive governance executive measures broad strategic committee: Manages committee: Oversees climate risk management pricing, funding and asset strategic response of objectives categorisation principles for business to climate change climate-related risks and and other environmental and opportunities social imperatives.||
|Climate steering committee: Sets and measures broad strategic climate risk management objectives|Sustainability and governance executive committee: Oversees strategic response of business to climate change and other environmental and social imperatives."

"###### BOARD COMMITTEE FOCUS AREAS AND ACHIEVEMENTS DURING THE 2022 FINANCIAL YEAR

Committee Focus areas and achievements

FirstRand board Board training on:

- Climate risk appetite

- Proposed transition path

- Summary of COP26 outcomes

RCCC - Reviewed and approved climate risk appetite statement

- Monitored progress against climate roadmap

- Reviewed

– Overall climate risk profile
– Deep-dive assessment of sectors with elevated climate risks

Setcom - Reviewed and approved updated climate change policies

- Monitored progress against climate roadmap

- Received and deliberated on reports on strategic and emerging climate and ESG risks

ALCCO - Approved

– The FirstRand sustainability bond framework
– The FirstRand climate balance sheet principles

- Oversaw climate stress testing

Key board-mandated committee focus areas and priorities for 2022 – 2023 are expanded on in the climate roadmap (page 8).

|Committee|Focus areas and achievements|Frequency|
|---|---|---|
|FirstRand board|Board training on: > Climate risk appetite > Proposed transition path > Summary of COP26 outcomes|Semi-annually|
|RCCC|> Reviewed and approved climate risk appetite statement > Monitored progress against climate roadmap > Reviewed – Overall climate risk profile – Deep-dive assessment of sectors with elevated climate risks|Quarterly|
|Setcom|> Reviewed and approved updated climate change policies > Monitored progress against climate roadmap > Received and deliberated on reports on strategic and emerging climate and ESG risks|Quarterly|
|ALCCO|> Approved – The FirstRand sustainability bond framework – The FirstRand climate balance sheet principles > Oversaw climate stress testing|Ad hoc at its quarterly meetings

There are dedicated governance structures embedded in the operating businesses with climate change as a standing agenda item. Full disclosures of these structures and processes are included in the 2023 Basel Pillar 3 and corporate governance reports, however key committees attended by senior executives responsible for strategy execution would include: – the group sustainability and governance exco (a subcommittee of the strategic executive committee (Stratco), the most senior executive committee in the group); – the retail and commercial segment sustainability and governance executive committee; and – RMB's sustainability executive committee. [...] In addition, RMB implemented the following during the year: - A more detailed assessment of clients' climate risk awareness, with a climate tag assigned to each client (with advances exposure), enabling classification according to the group's climate balance sheet. - An enhanced climate risk management and governance process, including the constitution of the ESG Desirability Forum (EDF), which oversees transactions and clients with elevated climate risk. – Climate-naïve clients with high emissions are subjected to an enhanced assessment by the EDF. If the client shows an unwillingness to proactively address their transition risk after engagement with RMB, the EDF will reassess the transition risk related to the exposure. This risk will be incorporated into the client's credit rating, which may result in limited funding appetite.

Ultimate oversight of environmental, social and climate risk rests with the board. It delegates further oversight to appropriate board subcommittees and management committees. The board has put the necessary policies, systems and processes in place to enable delivery of the group's climate roadmap and ensure that the corresponding performance is reflected in external reporting. [...] Risk, capital management and compliance committee: Oversight of climate risk profile, measurement, quantification, scenario analysis, stress testing and impact on other risk types [...] Social, ethics and transformation committee: Oversight of the group's climate strategies with regard to impact on both environment and social stakeholders [...] Climate steering committee: Sets and measures broad strategic climate risk management objectives [...] Sustainability and governance executive committee: Oversees strategic response of business to climate change and other environmental and social imperatives.

Delivery against both climate risk management and growth opportunity objectives has been incorporated into the remuneration scorecards for executive directors and prescribed officers, key environmental and social risk teams and sustainable finance focused teams. [...] Various working groups and formal steering committees were formed to oversee these focus areas and to cascade the guidance and intent to the relevant teams within the business. Part of the steering committees' oversight responsibilities include compliance with the Principles and tracking progress against the strategic initiatives. [...] Climate and other environmental, social and governance (ESG) metrics have been included in executive director and prescribed officer scorecards.

Delivery against both climate risk management and growth opportunity objectives has been incorporated into the remuneration scorecards for executive directors and prescribed officers, key environmental and social risk teams and sustainable finance focused teams. Lack of progress on the group's climate roadmap can result in a downward adjustment of the long-term incentive vesting outcome. The board recognises the need to hold business accountable to delivering on its stated climate-related commitments, so in 2023 climate was elevated to the strategic section of senior leadership's remuneration scorecards and accorded the same weighting as other material growth strategies FirstRand is pursuing. Other focus areas: Various working groups and formal steering committees were formed to oversee these focus areas and to cascade the guidance and intent to the relevant teams within the business. Part of the steering committees' oversight responsibilities include compliance with the Principles and tracking progress against the strategic initiatives.

Various working groups and formal steering committees were formed to oversee these focus areas and to cascade the guidance and intent to the relevant teams within the business. Part of the steering committees' oversight responsibilities include compliance with the Principles and tracking progress against the strategic initiatives. [...] Climate and other ESG metrics have been included into executive director and prescribed officer scorecards. [...] Delivery against both climate risk management and growth opportunity objectives has been incorporated into the remuneration scorecards for executive directors and prescribed officers, key environmental and social risk (ESR) teams and sustainable finance-focused teams.

In line with climate disclosure guidance, FirstRand's board and board subcommittees provide robust and regular oversight of climate-related risks and opportunities. [...] Management of climate-related risks and opportunities resides with FirstRand's sustainability and governance committee, a subcommittee of FirstRand's strategic executive committee. Climate change considerations have also been incorporated into existing executive and management committee structures. [...] The board has put the necessary policies, systems and processes in place to enable delivery of the group's climate roadmap and ensure that the corresponding performance is reflected in external reporting. [...] Delivery against climate risk and opportunity management objectives has been incorporated into the performance scorecards for executive directors and prescribed officers, key environmental and social risk teams, and teams focused on sustainable finance.

Ultimate oversight of environmental risk rests with the board. The board delegates authority to board committees and management committees for oversight at a group level. Environmental risks are reported to the board through the FirstRand risk, capital management and compliance committee (RCCC) and the FirstRand social, ethics and transformation committee (Setcom). Risk management progress and monitoring reports are submitted on a quarterly basis to the relevant governance committees, which are also responsible for the approval of related frameworks. [...] Contributing to thought leadership and awareness of environmental sustainability in the financial services sector and the countries in which the group operates, through: o active participation in industry associations; and o engagement and collaboration with regulatory authorities and non-governmental organisations. [...] To ensure the continued effectiveness, enforcement and success of this policy, the environmental and social risk management team in Enterprise Risk Management, along with other management teams, will continually monitor and report, on a quarterly basis, on the status of environmental sustainability risks and opportunities to the: - FirstRand environmental risk committee; - FirstRand sustainability and governance executive committee; and - relevant FirstRand board committees, i.e. RCCC and Setcom.

Although seal hunting is an illegal activity in South Africa, it is understood that this activity may be a legitimate and legal industry in other regions. However, in considering the various identified risks and the non-financing position taken by South Africa, FirstRand requires a case-by-case enhanced assessment and motivation for all proposed transactions and escalation to the segment social, ethics and conduct committee for approval.

The FirstRand Limited board is ultimately accountable for climate change governance. Board oversight rests with two board subcommittees, these being Setcom and RCCC. **+ Setcom focuses on ensuring that FirstRand's impact on the climate, both operational and financed, is appropriately considered, and supported with clear policies against the backdrop of its societal commitments and its broader ESG policy. **+ RCCC focuses on risk management and measurement oversight of the impact of climate change on the group's risk profile. Feedback on climate-related topics is provided to these board committees at least quarterly. A key area of engagement during the financial year was board training, which covered the background to climate change, unpacked relevant transition scenarios, provided an overview of climate risks and opportunities and discussed the impact of climate risk on credit risk for the group. Other focus areas for the 2021 financial year are highlighted below. |Committee|Key focus|Frequency during 2021 financial year| |---|---|---| |FirstRand board|Board training on climate risks and opportunities|Semi- annually| |RCCC|Climate risk profile|Quarterly| |Setcom|Climate change policy and energy and fossil fuels policy Progress against climate roadmap|Quarterly| [...] Responsibility for execution of strategic focus areas that relate to climate change lies with the FirstRand strategic executive committee (Stratco) which is chaired by the group CEO and is the most senior executive forum of the group. The Stratco member tasked with driving the overall climate change approach is the group chief risk officer (CRO) who reports back periodically to Stratco on progress. The group CRO chairs the CSC, which supports the coordination of climate-related risks and opportunities. The committee comprises senior representation from risk management, capital management, group finance, business and investor relations. As a material cross-cutting risk, the identification, monitoring, management and mitigation of environmental and climate risks are fully integrated as part of enterprise risk management (ERM). The group CRO is functionally supported by a specialist central climate risk team within the ERM function, and by climate risk champions in each business segment. The dedicated team of climate specialists in ERM provides technical input and advice on risk quantification matters, climate risk policy, transaction due diligence and group-wide training. Implementation of the climate strategy is owned and driven by each client segment and subsidiary through dedicated climate working groups and business development forums.

Delivery against both climate risk management and growth opportunity objectives has been incorporated into the remuneration scorecards for executive directors and prescribed officers, key environmental and social risk teams and sustainable finance focused teams. Lack of progress on the group's climate roadmap can result in a downward adjustment of the long-term incentive vesting outcome. The board recognises the need to hold business accountable to delivering on its stated climate-related commitments, so in 2023 climate was elevated to the strategic section of senior leadership's remuneration scorecards and accorded the same weighting as other material growth strategies FirstRand is pursuing. Other focus areas: Various working groups and formal steering committees were formed to oversee these focus areas and to cascade the guidance and intent to the relevant teams within the business. Part of the steering committees' oversight responsibilities include compliance with the Principles and tracking progress against the strategic initiatives.

The FirstRand social, ethics and transformation committee (Setcom) is a mandated board subcommittee. Its role is to assist the board with ensuring responsible social and ethical business practices across the group, and monitoring group activities with regard to the Companies Act, King IV, the committee terms of reference and other legal requirements or prevailing codes of best practice in respect of social, transformation and economic development matters. [...] Setcom, by means of its social and ethical lens, tracks and monitors the societal commitments of the business. It is mandated to ensure that the group behaves responsibly – socially, commercially and environmentally. [...] Setcom constitutes a formal structure which ensures appropriate attention to the group's value system, in particular its ethical standards. [...] Setcom is responsible for monitoring the group's activities regarding social and economic development, good corporate citizenship, the natural environment, health and public safety, consumer relationships and labour and employment practices. [...] The FirstRand sustainability and governance executive committee is a subcommittee of the FirstRand strategic executive committee (Stratco). The committee's primary objective is to support Stratco and Setcom in carrying out their mandates to ensure group activities are appropriately calibrated to identified environmental, social, economic and corporate governance outcomes. [...] The scope of the committee covers all of the group's activities and operating businesses/segments or those it is affiliated to, as well as the jurisdictions where the group conducts business, whether this takes place by utilising the group's licences or whether it takes place via intermediary-affiliated entities.

After establishing a governance structure in 2022, we opted to maintain it throughout 2023 to ensure important updates were raised for the attention of the Executive Committee and the Board of Directors. The only changes made were to reconstitute the Sustainability Steering Committee (SteerCo) to allow for broader presentation from all functions across the Group and to add additional Diversity, Inclusion and Wellbeing work streams.

Ultimate oversight of environmental and social risk rests with the board, reported through the risk, capital management and compliance committee (RCCC) and the social, ethics and transformation committee (Setcom). Progress and monitoring reports on risk management are submitted on a quarterly basis to the relevant committees, which are also responsible for the approval of related frameworks. [...] The matter is referred to the group Chief Risk Officer (CRO) and applicable business risk official for consideration and approval in line with the group ESRA guideline requirements. [...] If further discussions are required, an ad-hoc segment risk committee can be called for an out-of-policy decision. [...] If an agreement cannot be reached at the ad-hoc committee, the matter will be referred to the group Executive Risk Committee before escalation to the group sustainability and governance executive committee. [...] The outcome of the decision is noted at the applicable segment ethics and conduct committee, the FirstRand sustainability and governance executive committee and at Setcom.

The board, through Setcom, has ultimate responsibility for stakeholder engagement. The management of stakeholders is proactive and decentralised, given FirstRand's multi-branding approach. However, the group's governance structures are designed to ensure that material stakeholder concerns are escalated to group committees to be addressed. To ensure that group representatives have an appropriate mandate for engagement, and that potential risks are managed, guidelines and policies are in place to govern engagement with specific stakeholders. [...] In line with climate disclosure guidance, FirstRand's board and board subcommittees provide robust and regular oversight of climate-related risks and opportunities. The board has put the necessary policies, systems and processes in place to enable delivery of the group's climate roadmap and ensure that the corresponding performance is reflected in external reporting. Management of climate-related risks and opportunities resides with FirstRand's sustainability and governance committee, a subcommittee of FirstRand's strategic executive committee. Climate change considerations have also been incorporated into existing executive and management committee structures.

Responsibility for strategic focus areas that relate to climate change lies with the group's strategic executive committee (Stratco) which is chaired by the group CEO and is the most senior executive forum of the group. Stratco delegates climate risk oversight to the chief risk officers (CROs) of FirstRand Limited and FirstRand Bank, as climate change is considered a strategic risk. The CROs are responsible for the management of climate risk as it relates to the business process risk management framework. Board oversight rests with the Social, ethics and transformation committee and the Risk, capital management and compliance committee. These board committees are supported by the Environmental, social and climate risk committee, which consists primarily of segment/operating business CROs and risk specialists across the group. The climate steering committee (CSC) is mandated by Stratco to manage climate-related risks and opportunities, and comprises senior representation from risk management, capital management, group finance and investor relations. The objectives of the CSC are outlined in the schematic below.

In line with the TCFD recommendations, FirstRand's board and board subcommittees provide robust and regular oversight of climate-related risks and opportunities. The board has put the necessary policies, systems and processes in place to enable delivery of the group's climate roadmap and ensure that the corresponding performance is reflected in external reporting. Management of climate-related risks and opportunities resides with FirstRand's sustainability and governance committee, a subcommittee of FirstRand's strategic executive committee. Climate change considerations have also been incorporated into existing executive and management committee structures. [...] Delivery against climate risk and opportunity management objectives has been incorporated into the performance scorecards for executive directors and prescribed officers, key environmental and social risk teams, and teams focused on sustainable finance. A detailed analysis of climate rating calibration included in performance scorecards can be found in the group's remuneration report at https://www.firstrand.co.za/investors/integrated-reporting-hub/governance/.

- There are dedicated governance structures embedded in the operating businesses, with climate change as a standing agenda item. Full disclosures of these structures and processes are included in the 2024 Basel Pillar 3 disclosure and corporate governance reports. Key committees attended by senior executives responsible for strategy execution would include:

– the group sustainability and governance executive committee (exco) (a subcommittee of the strategic executive committee, the most senior exco in the group);

– the group climate risk committee;

– the newly established shared prosperity FRM committee, a subcommittee of the group FRM committee, which provides enablement for climate and social solutions;

– the retail and commercial sustainability and governance exco (covering FNB and WesBank); and

– RMB's sustainability exco.

- The management of climate change risk and execution on climate-related strategies are captured in remuneration practices.

– Climate is a standalone item in executive scorecards under the strategy category, with the same weighting as other material growth initiatives. These scorecards are disclosed in FirstRand's remuneration report available at https://www.firstrand.co.za/investors/integrated-reporting-hub/governance/.

– Lack of progress on the group's climate roadmap can result in a downward adjustment of the long-term incentive vesting outcome.

Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]FirstRand's long-term emissions ambition is to be net zero by 2050. This includes the group's financed emissions. As articulated in its climate change policy, the group will work towards this ambition through proactive and influential engagement with corporate and industry role players (financial and real economy) on their plans, as well as regulators on their public policies, with the aim to support a socially responsible transition of high-impact sectors.

It has also been shaped by ongoing active engagement with a range of stakeholders, including:
• the group's large corporate and state-owned enterprise (SOE) clients on their transition plans;
• FirstRand's local and foreign institutional shareholders to understand their mandates regarding climate change;
• NGOs active in the climate change movement to understand their focus areas;
• industry experts and think-tanks such as the National Business Initiative to understand the nuances of the overall transition process, and
• government departments and regulators on envisaged policy approaches.