QALA For Financial Investments : QH 2023 ESG Report

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ESG 30-6 (EN) - ةيلاملا ةباقرلل ةماعلا ةئيهلا

Thank you.. The annual report on the Environmental, Social And Governance Disclosures has been successfully registered and your registration code number is 35237. You are kindly requested to print the report and attach it to the annual report of the Board of Directors attached to the annual financial statements for the year 2023/2024.

Annual report for FY 2023/2024

on Environmental, Social and Governance Disclosures Related to Sustainability (ESG)

In implementation of the authority's Decrees no. (107) and (108) for the year 2021

First: Introduction

This report on the disclosure of Environmental, Social and Governance (ESG) reflects the strength of the company's management to implement the principles of sustainable development and integrate sustainability practices into the company's activities and operations, which generates confidence among investors that enables them to make informed investment decision, By identifying risks and opportunities that may not be monitored by traditional financial reports, especially in light of the increasing demand by investors for ESG Data and how companies integrate sustainability practices into the daily operations and activates in order manage the risks and opportunities associated with the various dimensions of sustainability, and thus enhance its financial position. Based on the FRA responsibility towards NBFI including listed Companies on the Egyptian Stock Exchange, and within the framework of assisting these companies to submit annual reports to disclose ESG sustainability standards in accordance with the FRA decisions No. 107 and 108 of 2021, and to facilitate them, the FRA has prepared this electronic form to companies to fulfill the KPIs for the disclosure of sustainability standards ESG.

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ESG 30-6 (EN) - ةيلاملا ةباقرلل ةماعلا ةئيهلا

Therefore, please be careful, accurate and transparent when filling out this form, and please attach the report form within the annual report prepared by the Board of Directors attached to the annual financial statements for the year 2023/2024 In case of any inquiries related to this matter, you can contact sustainable development department via email

[e-mail]

Secand: Basic Data on The Status of Company

1. Select the company's name:QALA For Financial Investments
2. Select the company's sector:Non-bank financial services

Third: Basic Data of The Person Responsible for Completing The Report

1. Name :Ahmed Salman
2. Job Title:Sustainability Specialist
3. Email:[e-mail]

Fourth: Environmental KPIs

1.Environmental Operations & Oversight (E1)

1. Has the company developed any official Environmental and Social (E&S) or Sustainability policies?

Yes

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Qalaa Holdings has embraced a multifaceted investment strategy guided by a balanced economic, environmental, social, and governance (EESG) framework, central to our multi-pronged investment approach. From the outset, we've prioritized responsible investment practices, considering economic, environmental, and social factors, this triple bottom line approach has allowed us to build a diverse portfolio of companies spanning various sectors, fostering sustainable economic growth and job creation across Egypt and Africa.

As part of our responsibility to "Lead by Example", we continue to adopt sound, sustainable, efficient, and inclusive practices, and policies throughout our operations. Additionally, we also focus on setting goals and targets that incorporate sustainable and responsible practices into strategic business activities across the Group, its subsidiaries, and its various stakeholders.

Qalaa, along with its major subsidiaries, has developed several policies for environmental sustainability, safety, quality, and community development. These policies include performance indicators for monitoring and improving performance, with ongoing efforts to implement them across all subsidiary companies. This aligns with the company's efforts and sustainable environmental and social practices in its various projects, which serve environmentally friendly policies and significantly contribute to climate adaptation and mitigation efforts.

We remain deeply committed to incorporating international best practices across our operations, and our sustainability efforts are guided by the United Nations Sustainable Development Goals (SDGs). As such, we continuously refine and enhance our practices to ensure full compliance with the SDGs and Egypt's Vision 2030, especially in the fields of education, human rights, labor, gender equality, governance, and environmental sustainability.

Furthermore, as a founding member of the United Nations Global Compact (UNGC), we strive to firmly uphold the global compact's 10 principles and contribute to the collective global action it seeks to achieve. Accordingly, we apply robust codes of conduct, regulations, and procedures that have been drafted in compliance with the principles at the holding and subsidiary levels.

The energy sector represents 87% of Qalaa's consolidated revenues; thus, the majority of examples provided in this disclosure will focus on Qalaa Holdings' subsidiaries operating in this sector.

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For example:

• Egyptian Refining Company (ERC) has issued its operational Health & Safety, Community Development, Environment, and Quality policy that includes sustainability and governance standards according to ISO 9001, 14001, 45001, and GRI Sustainability Standards. The company provides a leading model in the energy sector as the first company in the oil & gas sector to issue the first sustainability and governance report that includes gender equality and women's empowerment standards, concepts of Social Responsibility and environmental sustainability, as well as preparing GHG inventory report and emissions reduction roadmap.
• TAQA Arabia is committed to integrating environmental protection, community development, and governance issues into all its activities and services provided to customers and aspires to strengthen governance practices, promote equality among the employees, and reduce carbon emissions resulting from their operations.
• The Egyptian Company for Solid Waste Recycling (ECARU) aims to participate and remain at the forefront of all waste management, treatment, and recycling projects, specializing, and focusing on all aspects related to this field. The company works on several environmental activities that promote environmental sustainability and help in achieving social sustainability goals.
• Engineering Tasks Group (ENTAG) is specialized in the design, construction, manufacture, supply, and installation of systems and equipment for sorting, processing, and disposal of rejects resulting from waste by burying them in sanitary landfills, which the company also designs and has its own environmental policies in the Project Management process in accordance with international standards.

2. Is this policy originating from within the company or derived from global or national policies?

Yes

This policy is formulated internally within the company, deriving from both internal sources and external references such as national policies, best practices, and international standards. The policies of Qalaa and its subsidiaries primarily adhere to the following principles:

• The company's commitment as a responsible investor to the Triple Bottom Line and Lead by Example strategies focusing on the economic,

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environmental, and social aspects which is embedded in our DNA. Qalaa Holdings voluntarily became a founding member in the United Nations Global Compact (UNGC) in 2015 and published its first sustainability report spanning from 2015 to 2016. Additionally, it proudly joined the "Business Ambition for 1.5°C" initiative, marking its position as the first Egyptian company and among the initial 177 global firms confronting climate change challenges. This strategic commitment underscores our corporate responsibility and leadership in mitigating carbon emissions, thus paving the way for a more sustainable future for generations to come.

• Aligning all our operational practices with the United Nations Sustainable Development Goals (SDGs) and Egypt's Vision 2030 which reflects our steadfast commitment to integrating globally recognized best practices into every aspect of our operations.
• KPIs of the International Finance Corporation (IFC) for managing environmental, social, and governance risks.
• Qalaa upholds the highest standards of governance and corporate responsibility, emphasizing the significance of precise reporting that upholds transparency and integrity values across reporting mechanisms and frameworks. Compliant with the mandates set forth by the Financial Regulatory Authority, the company maintains unwavering dedication to environmental and social sustainability standards, alongside governance principles.
  For Example:
• Egyptian Refining Company (ERC) is steadfast in adhering to its sustainability policies, rooted in its self-imposed commitment to local environmental standards, encompassing Egyptian environmental law, waste management regulation law, and other pertinent legislations and ministerial directives. Furthermore, ERC aligns its practices with international benchmarks, including those established by the International Finance Corporation (IFC), the United Nations Sustainable Development Goals (SDGs), and Egypt's National Vision for Sustainability 2030.
• TAQA Arabia has developed environmental sustainability, social participation, and governance policies in line with Egypt's Vision 2030 and its alignment with the United Nations Sustainable Development Goals (UNSDGs).
• The Egyptian Company for Solid Waste Recycling "ECARU" operates in alignment with the national strategy for solid waste management, contributing to the fulfillment of the United Nations Sustainable Development Goals (SDGs). Its initiatives are strategically linked to various SDGs, including Gender Equality (Goal 5), Affordable and Clean Energy

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(Goal 7), Sustainable Cities and Communities (Goal 11), Responsible Consumption and Production (Goal 12), Climate Action (Goal 13), and Partnerships for the Goals (Goal 17).

3. Does the company identify and assess the environmental and social risks arising from its economic activity?

Yes

Within the Qalaa Holdings group, the dedicated risk management officer systematically conducts thorough assessments of risks that influence economic activities and their outcomes. The company diligently identifies and appraises environmental and social risks stemming from its economic endeavors across its diverse portfolio of companies and investments in various sectors, exemplified by but not limited to:

• Egyptian Refining Company ERC conducted a full-fledged study to assess environmental and societal risks, in addition to implementing a set of advanced reporting tools to evaluate projects, which included, but not limited to
  o The company is dedicated to rigorously managing greenhouse gas (GHG) risks by studying and identifying strategies to minimize GHG emissions. This includes calculating GHG emissions and maintaining an inventory for the base year, with ongoing monitoring through GHG inventory reports and decarbonization plans. Recognizing the significance of proactive environmental measures, the company actively engages in issuing pertinent reports and voluntarily participates in various initiatives aimed at reducing GHG emissions. It also prioritizes energy and fuel consumption rationalization, as well as reporting and disclosing the environmental impacts of projects. Additionally, the company joins mandatory reporting programs and actively participates in carbon markets.
  o ERC was the first refinery that published a GHG inventory report in the Oil & Gas sector, in addition to issuing its first Sustainability Report in 2021.
  o The company began to issue an annual report to monitor the volume & inventory of (GHG) and electricity consumption. It's worth noting that the system for preparing this report is in strict accordance with the standards and guidelines of the Greenhouse Gas Protocol (GHG), corporate accounting and reporting standards, the International Finance Corporation, the Intergovernmental Panel on Climate Change (IPCC) standards, and the American Petroleum Institute (API) memorandum. The report also complies with ISO 16064.
  o As part of its keenness to issue this report with the highest levels of

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integrity and transparency, one of the major consulting offices conducts a comprehensive review of all the data contained in the report before publishing it; to ensure the correctness and quality of the data and the integrity of the procedures followed to ensure and control quality.

o The company has implemented a comprehensive set of procedures and an environmental management system to regularly identify and monitor environmental aspects and components of project operations. This includes assessing environmental impacts during normal operations and planned maintenance activities, both major and minor. Through these measures, the company conducts a thorough review of all data included in the report prior to its issuance, ensuring the accuracy and quality of the data and the integrity of the procedures followed to ensure and monitor quality.

• TAQA Arabia's key principles in the sustainability policy are to establish a framework for environmental and social risks, including but not limited to: o Ensure that all applicable laws and regulations are followed.
  o Respect human rights, support diversity and inclusion, and ensure that TAQA's business activities and operations are not associated with any practices that could be considered contrary to this.
  o Acknowledges that its operations may have direct and indirect effects on the environment and society and is committed to developing measures to mitigate these impacts whenever feasible.
  o Support the transition to a green economy and adopt sustainable business practices.
• The Company for Solid Waste Recycling (ECARU) works by conducting the environmental impact studies necessary for the company's economic activities, which identify and assess the environmental and societal risks arising from its economic activities and help the company to reduce these risks and mitigate their effects on society and the environment.

4. Does the company follow specific policies concerned with waste recycling, water consumption, or energy consumption?

Yes

Qalaa Holdings and most of its subsidiary companies have implemented tailored policies focused on waste recycling and resource conservation, with a particular emphasis on water and energy. Ongoing initiatives aim to establish a uniform approach to be uniformly applied and enacted throughout all entities, alongside standardized reporting protocols. For example:

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• Egyptian Refining Company (ERC) adheres to a waste management plan, based on the Egyptian environmental law, waste management regulations, and World Bank standards, conducting an environmental and social impact assessment study for the company. In this context, approximately 331.6 tons of municipal solid waste and over 3000 tons of hazardous waste resulting from ERC's operations have been collected and redirected to licensed waste management facilities.
• As part of its sustainable consumption and production policy, the company operates a cooling system using an environmentally friendly closed-loop water cycle, with water reuse facilitated by cooling towers, thereby enhancing water efficiency. Additionally, the company collects gases generated from refining processes, processes them, and subsequently reuses them as fuel to reduce natural gas consumption. Furthermore, the Egyptian Refining Company regularly updates its systems, including the installation of environmental measurement systems by Cairo Petroleum Refining Company in accordance with the contract terms between them.
• TAQA Arabia manages waste through a set of procedures to ensure its disposal and minimize potential risks. These include waste reduction, reuse, recycling, treatment, and finally, safe disposal. Furthermore, the company implements a document shredding process for obsolete or unused documents, redirecting them for recycling purposes. Additionally, it upholds various policies focused on waste recycling and water conservation, integral to the company's sustainability strategy and its commitment to environmental stewardship and enhancing quality of life.
  o Waste Management Policies:
   Supplying support, encouragement, and guidance to employees for proper waste management.
   Offering training and awareness programs for employees regarding the importance of recycling and how to do it effectively.
  o Water Consumption Policies:
   Setting objectives to reduce water consumption and improve water use efficiency.
   Raising awareness among employees about the importance of conserving water.
  o Energy Consumption Policies:
   Implementing procedures to reduce energy consumption in buildings and facilities.
   Encouraging the use of renewable energy sources such as solar and wind power.

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• Providing educational and guidance programs for employees on how to reduce energy consumption in their daily activities.
  • TAWAZON: Specializes in providing waste management solutions and environmentally friendly alternatives to coal and natural gas.
  o The Egyptian Company for Solid Waste Recycling "ECARU" implements a policy focused on solid waste recycling, aiming to increase the recycling rates through the adoption of the latest global technologies and strategies in solid waste management. This aims to reduce the sanitary burial rate of non-recyclable materials significantly. This has been achieved with high efficiency in waste recycling in Dakahlia Governorate, where burial rates have generally reached only 29%, and 22% in some facilities.
  o Engineering Tasks Group ENTAG adopts a policy of increasing recycling rates by embracing the latest global technologies and strategies in solid waste management, aiming to reduce the sanitary burial rate of non- recyclable materials, in addition to reducing consumption rates of fossil fuels and promoting reliance on clean energy.
  • Nile Logistics contracts waste management transportation companies of all types to remove waste from sites. These companies operate under the supervision of the related governmental bodies, which determine safe waste disposal methods, whether through recycling or burial.
  • Dina Farms:
  o Energy Consumption Policies:
• Dina Farms utilizes cutting-edgehigh-efficiency irrigation systems to reduce water consumption.
  o Energy Consumption Policies:
• The company promotes energy conservation by establishing a 6- megawatt solar power station, implemented by TAQA Arabia, funded by the European Bank for Reconstruction and Development. This solar power station meets approximately 20% of Dina Farms' total energy consumption. o Waste Recycling Policies:
• Animal manure is utilized as organic fertilizer for agricultural fertilization.
  • Al-Badar: Utilizes recycled materials in the manufacturing of printing and packaging products to produce a diverse range of printing and packaging products.
  • Uniboard: The company represents one of Qalaa Holdings' environmentally friendly strategic investments and is considered a key element in achieving vertical integration within the group of subsidiary companies. The company benefits particularly from the abundance of paper waste. The total production capacity of the company's factory is 135

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thousand tons annually, and the company holds a significant market share in the production of duplex cardboard.

5. Does the company set any goals related to reducing greenhouse gas (GHG) emissions?

Yes

Qalaa is exerting efforts to accelerate the transition to a low-carbon economy, leveraging its role in mobilizing capital and committing to the successful challenge of achieving a carbon-neutral future, alongside its rigorous implementation of carbon emission prevention plans. Within this strategic framework, the company is committed to implementing an environmental monitoring program to assess air quality in its surrounding areas, aiming to preserve air cleanliness in adjacent communities. Additionally, the company is working on enhancing its resources, energy efficiency, and completing benchmarking to set carbon reduction goals towards net-zero emissions by 2050. To achieve this goal, Qalaa and its subsidiaries have established the necessary infrastructure to measure and manage their progress, such as climate, water, and waste-related policies that play a crucial role in regulating how Qalaa utilizes its resources. Notably, Qalaa was among the early Egyptian companies to commit and join the "Business Ambition for 1.5°C" campaign to address the challenge of climate change. By joining this campaign, the company reaffirms its responsibility and leadership in efforts to reduce its carbon footprint, achieve decarbonization, and build a more sustainable future.

At the subsidiary level, most of the companies measure and monitor emissions, seeking to reduce them, and ensure prudent resource consumption and optimal use of energy sources, gradually transitioning to clean and renewable energy.

For example:

• Egyptian Refining Company ERC: The company's environmental teams have initiated the implementation of the "Sustainability Reporting and GHG Monitoring & Accounting System" program, aligning with the attainment of Goal 13 within the UN Sustainable Development Goals. This implementation encompasses the following stages:
  o Appointing key personnel from each department to be the focal point regarding GHG & Sustainability related data.
  o Development of all relevant administrative procedures establishing a framework for measuring and monitoring greenhouse gas emissions and disclosing sustainability practices to ensure their consistent

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