BIMB ESG RISK FRAMEWORK BIMB has developed and is currently at the early phase of implementation of its overall ESG Risk Framework that is targeted to enable us to better identify, monitor and manage its ESG risk exposures across its areas of business. ESG Risk Area ESG Impacts Mitigation Strategies Internal Operations Internal material impacts including carbon emissions from electricity, travel, paper and water usage Assessing our carbon footprint , planning carbon mitigation strategies, implementing energy ef f iciency, adopting best practices, and technology External Environmental and Social Footprint (i.e. Financing customers, investment advisory, vendors, fund management) Environmental and social risk including deforestation, waste management, fossil fuel usage, displacement of indigenous people ESG risk management framework, sector guidelines, onboarding checklist, portfolio mapping, stress testing and CCPT External Governance Risk ( i . e . Retai l cus tomers , vendors , depositors, investment advisory, fund management) Ethical business, Anti-Money Laundering Act (AMLA), Politically Expased Personas (PEPs) Policies and controls on ethics and governance Phase 1: Where we are now in our journey In 2021, BIMB embarked on a multi-phase plan to develop and implement a comprehensive ESG risk management framework covering all aspects of our sustainable finance activities. The implementation plan covers two (2) phases, where Phase 1 was completed in 2021 and Phase 2 is currently ongoing. Key Milestones: ESG Assessment BIMB has measured and assessed its ESG performance against best practices in sustainable finance, including reference to the UN SDG, and global standards on sustainable finance. The assessment of our baseline ESG performance was guided by a detailed exercise with our key knowledge partner, and was complemented by other assessments and benchmarks including the widely-accepted FTSE4Good, WWF Sustainable Banking Assessment, and other queries raised through our stakeholder engagement activities with investors and regulators. Portfolio Profiling and Physical Risk Identification Through the activities with our knowledge partners, BIMB has gained insight into the climate vulnerability of our internal and external assets and operations and better identified the key ESG risks that exist in our financing portfolio. These risks are varied in nature, including the physical and transition risk arising from long-term climate impacts, as well as the business and operational risks arising from our business relationships with customers. Knowledge of these risks has enabled us to better understand key priorities in managing our direct and indirect climate impacts. Scenario Analysis and Stress Testing In Phase 1 of the project implementation, BIMB obtained an initial view of the potential climate scenarios and its impacts to the Group. The key output was utilising forward-looking climate adjusted scenarios to determine impacts to the Bank’s portfolio under different Network for Greening the Financial System (“NGFS”) baseline scenarios. These serve as building blocks towards a more comprehensive view of various climate scenarios and how the Bank may adapt and prioritise actions in view of long-term transition risk. INTEGRATED ANNUAL REPORT 202 1 Key Messages Overview Value Creation MD&A Sustainability Leadership Accountability Financial Additional Information 113
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