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About our Sustainability Report

About our theme

Absa’s 2023 Sustainability Report theme Banking on a Better, Sustainable Future is inspired by the Bank’s commitment to sustainable development and responsible banking practices. Through its partnerships, initiatives, and investments, Absa is actively contributing to the advancement of sustainable practices and the creation of a more inclusive and sustainable economy in Kenya and beyond. By aligning its operations with the United Nations Sustainable Development Goals (SDGs) and investing in initiatives that promote clean energy, responsible construction, and climate-smart agriculture, Absa is actively working towards a better and more sustainable future for Kenya and the region.

Scope and purpose

Our Sustainability report aims to communicate our impact on material Environmental, Social and Governance (ESG) issues, such as climate change, customer well-being, governance, human rights and diversity, equity and inclusion. It discloses how our business is managing ESG risks, and how the maximisation of our risk management approach in this area creates opportunities for the Bank to enhance its ability to continue lending to Kenyans and preserve value for all our stakeholders. The report outlines the ways in which Absa aims to fulfil its purpose of “Empowering Africa’s tomorrow, together ... one story at a time” by using financial expertise to do good, thereby creating value for society.

Reporting period

This report covers the financial year from January 1, 2023 to December 31, 2023. For a more detailed overview of the value we add to our stakeholders and our impact on society, this

report should be read together with the 2023 Absa Kenya Integrated Report and Financial Statements.

Disclosures

The ESG reporting disclosures at Absa Bank Kenya PLC at hand are not subject to standalone external assurance. The Audit and Risk Committee of the Board has the primary role of ensuring

integrity in non-financial reporting and audit and overseeing the maintenance of sound internal control and risk management systems. The Bank will commission external auditors, to provide assurance in its ESG reports. We have taken proactive steps in defining a structured approach for disclosing material climate-related risks, opportunities, and strategic decisions to all stakeholders, including investors and regulators. The Bank submitted the first Task Force on Climaterelated Financial Disclosures (TCFD) report to the Central Bank of Kenya (CBK) by June 30, 2023, and will be part of our annual reporting practice going forward. In a bid to reduce our carbon emissions, the Bank started measuring and disclosing Scope 1 and Scope 2 emissions in our 2022 TCFD report.

Audiences

This report is published for all our stakeholders. Our stakeholders include, but are not limited to, current and prospective clients, investors, employees, suppliers, governments, regulators and non-governmental organisations.

Reporting Frameworks

Absa Bank Kenya PLC has prepared this report with reference to the Global Reporting Initiative (GRI) Standards as well as other regulations and legislative frameworks; including the Nairobi Securities Exchange (NSE) ESG Disclosures Guidance Manual and Central Bank of Kenya’s Guidance on ClimateRelated Risk Management (Guidance) to commercial banks and mortgage finance companies. Furthermore, as the nature of ESG matters, frameworks, and reporting obligations continue to evolve, we refine our reporting approach over time to ensure that it is providing stakeholders with relevant, transparent, and timely information on our ESG performance and impact.

Absa has standardised reporting metrics for Sustainability and climate risks and opportunities. Externally, these metrics are communicated annually through the Sustainability and TCFD report (Climate report), and internally, quarterly to the Sustainability Steering Committee.

Message from the Chairman

Introduction

Over the years, we have incorporated sustainable practices into our operations through environmental stewardship and responsible banking. Through partnerships, initiatives, and investments, we actively contribute to sustainable practices and the creation of a more inclusive economy. Our goal is to have a significant positive impact on society and establish Absa as a responsible financial institution. The Absa Kenya Board plays a critical role in implementing our sustainability strategy, “Active force for good,” focusing on 13 key areas. We are committed to transitioning our scope 1 and 2 emissions to net zero by 2040 and Scope 3-financed emissions by 2050. Recognizing the importance of addressing climate change risk, we prioritize reducing our carbon footprint.

Laying the foundation through the best governance practices

Our governance framework is instrumental in our financial and non-financial accomplishments. It aids us in fulfilling responsibilities, identifying improvement opportunities, aligning activities with our strategy, and ensuring effective management. The Board delegates authority to standing committees including Audit and Risk, Credit, Corporate Governance Nominations and Remuneration, Strategy, ad hoc, and Crisis Response. This

comprehensive oversight strengthens our governance structure and contributes to our success.

Force for good

Absa Kenya is committed to being a “force for good” in our communities. We have trained 20,274 youth through the Ready to Work program, supported 574 needy students in accessing university education, and installed computer labs in 65 schools. Additionally, we have allocated KES. 150 million for sustainability and citizenship initiatives. Our commitment to diversity and inclusion is demonstrated by having 15.5% of our active suppliers as women, youth, and persons with disabilities.

Aligning our sustainability commitments to the SDGs

Aligned with our sustainability strategy, we are acutely aware of the importance of achieving all the Sustainable Development Goals (SDGs) within the next six years. We are proud of the progress we have made as a bank towards achieving the SDGs. Our accomplishments include taking immediate action towards ensuring financial inclusion, environment conservation and climate action, diversity & inclusion, education, and enterprise development.

Our approach to managing climate-related risks

Absa Kenya is committed to addressing climate-related risks through its sustainability risk policy and climate sensitive sector standards. The management team’s efforts in executing the Bank’s strategy are acknowledged by the Board, bringing them closer to their 2030 environmental action plan. Their strategy focuses on incorporating sustainable financing into their lending envelope and aligning with the Central Bank of Kenya’s Guidance on Climate-Related Risk Management. In 2023, they allocated KES 60 billion to sustainable finance, with 84% of the allocated KES 26 billion for climate financing taken up. KES 2 billion was specifically allocated for climate-smart agriculture.

Impact of Absa on customers

Absa Bank Kenya is dedicated to offering convenient, safe, and easily accessible solutions to meet the diverse needs of our customers. Our top priority is safety, and we maintain strong safeguards to protect customer accounts and data. Through ongoing engagement, we continuously innovate to remain relevant, inspire confidence, and drive customer growth.

In 2023, we were honored to be the 1st runners-up in the Best Internal Customer Experience category at the Service Excellence Awards. This achievement highlights our commitment to delivering exceptional customer experiences. We have made significant improvements compared to 2022, with a retail banking composite score of 69% in 2022 increasing to 93% in 2023. The customer experience index also rose impressively from 86% in 2022 to 110% in 2023.

To sustain our growth momentum, we understand the importance of serving our customers with excellence. This includes resolving grievances promptly, enhancing system reliability, and providing the flexibility to transact through preferred channels.

Looking ahead, our commitment to sustainability remains unwavering. We will continue to address socio-economic challenges, ensuring a brighter and greener future for Kenya and beyond. We appreciate the support and trust of our customers.

Thank you sincerely for being a part of our journey

Message from the CEO

In 2023, Absa Bank Kenya made significant strides in our sustainability efforts, advancing our agenda with dedication. We remain steadfast in our commitment to translating words into action, implementing strategies aimed at positively impacting the environment, enhancing customer experiences, and supporting the communities we engage with.

Strengthening our commitment to our environmental agenda

In 2023, we made significant strides in environmental conservation. Partnering with the Kenya Forest Service (KFS), we launched a nationwide tree-planting initiative involving Community Forest Associations, including groups representing women, youth, and persons with disabilities (PWDs). Through this project, we not only aim to plant 10 million trees by 2032 but also create employment opportunities within these special groups as they nurture the trees to maturity.

Aligning with the Kenyan government’s ambitious goal to plant and grow 15 billion trees by 2032, we adjusted our target and have already planted 10,000 trees at Njukiini Forest in Embu County through various partnerships. Recognising the importance of a conducive environment for sports, especially athletics, we collaborated with Athletics Kenya, Safaricom PLC,

and the Stockholm Environment Institute to plant over 2,500 trees at Kasarani Stadium. Additionally, we’ve engaged with the Gazi Women’s Group in Kwale County to protect mangrove forests, demonstrating our commitment to environmental sustainability across diverse ecosystems.

Driving financial inclusion, diversity and inclusion

At Absa Bank Kenya, we prioritize diversity and financial inclusion. Through our See Her Empowered (SHE) Star Programme, we’ve empowered over 35,000 women entrepreneurs, fostering financial inclusion and access to finance. Our commitment to gender equality is reflected in our safe and inclusive workplace, providing ergonomic furniture and first aid training for employees’ nannies. We also support women entrepreneurs through the SHE programme, offering practical skills and capacity-building opportunities.

Additionally, we’ve launched a Women in Business proposition with a KES 10 billion fund to enhance credit access for women-owned SMEs by 2025. Our revamped Timiza platform simplifies savings and loans for the underbanked, attracting over five million customers since 2018. In 2023, Timiza disbursed approximately

KES 21 billion, including 1.5 million loans to about 300,000 women customers. Furthermore, our policies under the PWD Roadmap ensure physical and digital accessibility, and financial inclusion for PWDs. We aim for PWD-owned firms to comprise 5% of our suppliers by 2025.

Delivering economic impact

Our comprehensive initiatives reflect our commitment to community impact. Using the UNCTAD economic contribution model, our total economic contribution increased from KES 372.76 billion in 2022 to KES 478.9 billion in 2023. We prioritized our workforce by increasing total employee wages and benefits to KES 11.7 billion, inclusive of taxes, levies, pensions, insurance, and employee support like interest-free loans. Payments to capital providers, including dividends and debt servicing, reached KES 8.4 billion in 2023. Corporate tax payments to the government increased to KES 16.2 billion. We also invested KES 26.9 billion in green initiatives and increased local procurement spending to KES 4.5 billion. Additionally, we equipped and furnished 65 computer labs in selected schools and donated KES 25 million to support computer labs in primary and secondary schools nationwide, providing them with fully networked desktop computers and furniture.

Corporate tax payments to the government increased to KES 16.2 billion. We also invested KES 26.9 billion in green initiatives and increased local procurement spending to KES 4.5 billion. Additionally, we equipped and furnished 65 computer labs in selected schools and donated KES 25 million to support computer labs in primary and secondary schools nationwide, providing them with fully networked desktop computers and furniture.

Commitment to ongoing innovation and continuous improvement

At Absa Kenya, we are deeply committed to driving innovation and fostering a culture of continuous improvement in addressing sustainability-related risks and opportunities. This is not only a moral imperative but also a strategic imperative, as we recognise the profound impact our actions have on the environment, society, and the long-term success of our business. We are unwavering in our pursuit of sustainable practices, leveraging cutting-edge technologies and insights to mitigate risks, seize opportunities, and create lasting value for all stakeholders.

Moving forward, we are dedicated to championing a sustainable and equitable future where responsible banking practices form the foundation of our success and prosperity alongside our valued partners and stakeholders.

Our Values

Our values act as guiding lights, providing direction and inspiration. As we embark on this journey of sustainable outperformance, our culture becomes the foundation upon which we engage with the world and shape our future.

Absa Kenya at a glance

Overview of Sustainability Performance in 2023

Corporate Governance

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Effective governance is at the core of Absa’s ability to navigate the volatile and complex operating environment successfully. Absa’s Board of Directors (“the Board”), ultimately responsible for governing the Company, believes that good corporate governance and strategic decision-making are inextricably linked.

The Board is committed to the highest standards of corporate governance, which it believes are critical to achieving the business objectives and maintaining the trust of its investors, customers and other stakeholders. Please refer to pages 81-109 of our 2023 Integrated Annual Report for a detailed discussion of our governance practices.

Sustainability Risk Policy Overview

Our Sustainability Risk Policy specifies the broad principles and control requirements for managing sustainability and climate-related risk management
“At Absa Kenya, we strive to be an active force for good in everything we do”

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Materiality Topics

Our organisation focuses on the most significant environmental, social, economic, and governance issues that have an impact on us and our stakeholders. This section explains these important topics, how they affect us, and how we address them. In line with our dedication to the Sustainable Development Goals (SDGs), we have identified and included references to the SDGs that we prioritise and that are most applicable to each chapter

The Global Reporting Initiative (GRI) updated its standards in 2023 to align with the new Universal Standards. The GRI Topic Standards have been revised, and the previous groupings of 200 (Economic), 300 (Environmental), and 400 (Social) were eliminated. Instead, there are now 31 separate Topic Standards that companies should follow when reporting on Material Topics

The material topics for Absa Kenya have been prepared in accordance with the relevant GRI Topic Standards. These standards guide reporting material topics and disclosing the impacts identified through the materiality process. By following the GRI Standards, we are able to demonstrate our commitment to transparency and sustainability reporting.

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Environment KPI Summary

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2023 Citizenship Achievements

Diversity and Inclusion

Equal Opportunity and Diversity at Absa At Absa, we are committed to being an equal-opportunity employer that values and promotoes diversity and inclusion. These principles are integral to our sustainability agenda and are deeply ingrained in our people’s function policy. Beginning with the recruitment process, we strive to attract and onboard individuals from all backgrounds.

Inclusion of the Differently Abled In our efforts to foster inclusivity, we have actively encouraged differently-abled individuals to apply, increasing the number of differently-abled employees within our workforce. Currently, we are proud to have 29 colleagues with disability, accounting for approximately one percent of our entire workforce. However, our target is to achieve a 5% representation of persons with disabilities (PWDs).

Gender Diversity Milestones In terms of gender diversity, we have made significant strides. Among our total workforce, 51% are women and 49% are men. We are committed to maintaining gender balance at all levels of management, aiming for a 50% representation of women. We have already made progress in this area, with 51% of women in junior management roles, 47% in middle management, and 40% at the board level in 2023. Our ultimate goal is to achieve a 50% representation of women by 2025.

Employment & Wellbeing

At Absa, employee wellness and safety are top priorities. We have developed various programmes to support the emotional and mental health of our employees. These initiatives extend to colleagues who work remotely as well. For example, we provide support for purchasing ergonomic furniture to ensure their comfort.

To promote emotional intelligence, we organise regular sessions led by our HR department. These sessions aim to equip employees with the necessary skills for emotional well-being. In 2023, our employee wellness programmes focused on promoting work-life balance. We encouraged employees to engage in physical exercise for their mental and physical fitness. As part of this initiative, we provided equipment such as skipping ropes to help them stay fit. Additionally, we hired a physical fitness coach who conducted virtual training sessions for employees between 5pm and 6pm.

We also extended our wellness initiatives to include employees’ nannies by offering training on first aid. Furthermore, we facilitated the process of obtaining new car number plates for our employees to reduce the inconvenience caused by a recent directive from the National Transport and Safety Authority. Post-pandemic, we have implemented flexible working hours