ABSA BANK BOTSWANA : SUSTAINABLE FINANCE ISSUANCE FRAMEWROK MAY 2023

Absa Bank Botswana Limited

Sustainable Finance

Issuance Framework

May 2023

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Table of contents

Contents

1	Introduction	3
	1.1	Purpose of the framework	3
	1.2	Absa Bank Botswana Profile	3
	1.3	An active force for good in everything we do	3
	1.4	Absa Bank Botswana's priority SDGs	4
	1.5	Absa's environmental and social risk management policies and systems	4
	1.6	Instruments to be issued and listed under this framework	5
2	Sustainable Finance Issuance Framework	6
	2.1	Scope	6
	2.2	Use of proceeds	6
	2.3	Process for project evaluation and selection	10
	2.4	Management of proceeds	11
	2.5	Reporting	12
3	External review	13
4	Abbreviations	14
5	Disclaimer	15

Introduction

1 Introduction

Sustainable Finance Issuance Framework

Abbreviations

Disclaimer

1.1 Purpose of the framework

This document outlines the criteria under which Absa Bank Botswana Limited and its subsidiaries (Absa) intend to issue thematic liability instruments such as green, social and/or sustainable bonds and loans referred to as sustainable instruments in this framework (the framework). The proceeds of these issuances will be used to finance or refinance activities or assets, loans, project financing and project investments ("projects") aligned to Absa's purpose of - empowering Africa's tomorrow, together, one story at a time - and its strategic priority to lead with purpose and deliver shared value to a broad range of stakeholders.

The framework is aligned to international best practice and guidance issued by the International Capital Markets Association (ICMA), Green Bond Principles (GBP), Social Bond Principles (SBP), the Sustainability Bond Guidelines (SBG), Green Loan Principles (GLP) and Social Loan Principles (SLP).

1.2 Absa Profile

Absa is a diversified financial services provider publicly listed on the Botswana Stock Exchange (BSE). Absa has an extensive offering of products and services across retail, business, corporate and investment banking, as well as insurance. Absa, headquartered at Plot 74358, Building 4 Prime Plaza, New Gaborone CBD, Gaborone, Botswana.

1.3 An active force for good in everything we do

Absa has a vested interest in creating inclusive growth and delivering financial products and services in a socially responsible manner. Opportunity and success can only be enabled through all people being treated equitably, having good health, and having access to housing, education, and income opportunities. This is where Absa sees its most significant impacts and noteworthy contribution to the Sustainable Development Goals.

Embedding Environmental Social Governance (ESG) aspiration in its core business strategy is vital for delivering true long-term value linked to its purpose of empowering Africa's tomorrow, together, one story at a time. Absa aims to be an active force for good in everything it does, prioritizing business activities with the most positive ESG impact while mitigating negative effects. Absa's strategic theme of being" an active force for good in everything we do" encapsulates this ambition. Absa's ESG strategy includes the following pillars:

Environmental

Managing climate change and biodiversity risks and opportunities, including:

• Becoming Botswana's leader in sustainable finance
• Proactively incorporating climate change risk into the business

Social

Contributing meaningfully to the societies in which we operate, including:

• Providing inclusive financial services to small and medium enterprises (SMEs), women and youth
• Supporting education and skills development, e.g., financial literacy, tertiary education, and vocational training
• Being there for communities, employees, and clients when they need Absa most
• Championing diversity and inclusion.

Absa Bank Botswana Limited Sustainable Finance Issuance Framework

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Introduction	Sustainable Finance	Abbreviations
Issuance Framework

Governance

Committed to the highest standards of governance and ethics, including:

• Committing to excellence in governance and risk management
• Ensuring fair outcomes and transparency with all stakeholders
• Enabling a resilient and robust control environment.

Disclaimer

Public policy and regulation

Active influence on public policy and regulation, including:

• Strengthening trust-based regulatory relationships
• Acting as a strategic thought leader in crucial regulatory debates and influencing national agendas
• Supporting government policies in the collective interest of societies.

1.4 Absa's priority Social Development Goals (SDGs)

Absa has prioritized six SDGs representing the most relevant goals and targets to Absa's strategy, business model and operating context.

1.5 Absa's environmental and social risk management policies and systems

Absa actively manages current and emerging risks through the implementation and continued operating effectiveness of the Enterprise Management Risk Framework (ERMF) which has been approved by Absa's Board of Directors (Board), which includes sustainability risk as a principal risk (comprising environmental, climate change, premises environmental, indirect investment, and social risks). Within the ERMF, risks associated with customer loans that could be impacted by climate change through transition and/or physical risks fall under credit risk, Absa's most significant risk type. Absa measures and monitors its exposure to climate-sensitive industries. Where these exposures are material, Absa aims to manage the risk over the short and medium term, including using stress testing and scenario planning.

The local Sustainability Policy requires that the business strategy considers appropriate climate mitigation strategies, as expressed in the Paris Climate Agreement, and prioritizes business activities that could generate the most significant positive environmental, social, and economic impacts while mitigating adverse effects. It also requires forward-looking,sustainability-related risk assessments at a portfolio and strategic level and the management and mitigation of significant risks identified. In addition, Absa is working with its customers to encourage sustainable practices and economic activities. Absa promotes and supports sustainable behavior and consumption choices, facilitates a responsible transition to a more sustainable economy, and, in its lending practices, considers customers' environmental and social impacts to drive positive outcomes.

As a steward of responsible banking, Absa has, and will continue to, incorporate industry best practice into:

• Policies with specific environmental and social components applied to business lines
• Procedures for assessing and screening environmental and social risks in business lines

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Introduction

Sustainable Finance Issuance Framework

Abbreviations

Disclaimer

• Processes for monitoring customers' implementation of and compliance with environmental and social requirements included in agreements or transactions
• Processes for improving employee competency to implement the environmental and social policies and procedures as applied to business lines
• Interactions regarding environmental and social risks and opportunities.

1.6 Instruments to be issued and listed under this framework

This framework aims to provide a foundation under which Absa can execute and, where applicable, list green, social and/or sustainable liabilities (sustainable instruments) including, but not limited to, bonds, loans, and deposits. Absa's sustainable instruments offer investors an opportunity to invest in assets that create positive environmental and social impact in Botswana.

Absa Bank Botswana Limited has a Domestic Medium-Term Note Programme listed on the BSE. Absa may utilize the programme in accordance with the principles set out in this framework to issue green, social and/or sustainable bonds.

Absa Bank Botswana Limited Sustainable Finance Issuance Framework

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