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2022 Report on Green Finance of Bank of Nanjing Bank of Nanjing CONTENTS 5 Talent Training, Research and Application Support 44 5.1 Training Professional Talent, Strengthening the Foundation for Business Development 5.2 Deepening Green Finance Research, Accelerating Green and Low-Carbon Transition 1 2 About This Report 02 XinDong Green and Going with Stability and Sustainability 04 5.3 Expanding Exchange and Cooperation in Green Finance, Collaboratively Exploring Cutting-Edge Paths 6 Risk Management, Long-term Mechanisms 1.1 Overview of Green Finance 6.1 Analyzing Environmental Risks and Opportunities, Taking Active Response Measures 1.2 Highlights of the Reporting Year 6.2 Improving Environmental Risk Identification Process, Guarding against "Greenwashing" Risk 1.3 Key Performance of the Reporting Year 6.3 Establishing ESG Risk Management and Control Mechanisms, Achieving Differentiated Client Management Strategic Leadership and Well-supported Governance 16 7 Green Operations, Demonstrated Benefits 52 58 7.1 Green Loans of the Bank and Their Environmental Impact 2.1 Precise Decisions and Proper Strategic Directions by the Board of Directors 7.2 Environmental Benefits of the Bank's Environmental Protection Measures 2.2 Resource Coordination by Senior Management for Well-coordinated System Work 2.3 Steady Implementation by Specialized Departments for Further Institutional Development 2.4 Active Cooperation by Branches for Better Quality and Efficiency 8 3 Strengthened Institutional Systems and Optimized Allocation Data Governance, Enhanced Systems 66 8.1 Establishing Internal and External Data Management Systems 24 8.2 Conducting Data Security Classification and Grading 8.3 Establishing Information System Data Emergency Plans 3.1 Top-Level Guidance: Well-coordinated Planning of Green Finance Development Strategy 3.2 Business Management: Improved Management System of Green Finance Business Processes 3.3 Product Systems: New and Diverse Development Models of Green Finance Products 9 3.4 Resource Allocation: Well-established Implementation and Assessment Standards for Green Well-established Plans for A Promising Future 70 Appendix: Index of References to International Information Disclosure Guidelines 73 Finance Businesses 4 Product Innovation and Service Upgrade 4.1 Enriching the Green Finance Product System, Demonstrating Financial Creativity 4.2 Innovating Green Finance Service Models, Ensuring Sustainable Financial Services 30 Index of Guidelines for Environmental Information Disclosure of Financial Institutions Index of Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) Bank of Nanjing Principles for Responsible Banking Report 2022 Report on Green Finance in 2022 About This Report This report is a dedicated publication on Green Finance, independently released by Bank of Nanjing Co., Ltd. (hereinafter referred to as "Bank of Nanjing", "the bank," or "we"). It highlights the bank's primary initiatives and achievements in Green Finance for the year 2022. It underscores our proactive stance in addressing climate change, improving environmental performance and aligning with the expectations and concerns of all stakeholders. This report is offered to continually enhance our capacity in green and low-carbon development. Report Scope This report covers Bank of Nanjing Co., Ltd., including its head office and all branch structures, unless otherwise stated. It reports on the period from 1 January to 31 December 2022, with some information relating to previous years. Basis of Preparation This report complies with the disclosure requirements outlined in the Guidelines for Environmental Information Disclosure of Financial Institutions issued by the Technical Committee of Financial Standardization of the People's Bank of China. It also follows the environmental disclosure requirements and recommendations from the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) . Data Declaration The data presented in this report come from internal statistical data, regulatory reports, and other sources. Should any discrepancies arise with the annual report, the data from the annual report will take precedence. The currency unit is the Chinese Yuan (CNY), unless otherwise stated. Report Dissemination We publish this report electronically and provide printed copies at the bank’s Finance Department. The electronic version of this report can be downloaded from the bank's website at www.njcb.com.cn. The content and data in this report are subject to copyright and not for reproduction without authorization. Compiled by: Bank of Nanjing Co., Ltd. Contact No.: 025-83079128 Address: No.88, Jiangshan Street, Jianye District, Nanjing City Postal code: 210005 Email: guocj@njcb.com.cn Website: www.njcb.com.cn 01 02 1 XinDong Green and Going with Stability and Sustainability 1.1 Overview of Green Finance 1.2 Highlights of the Reporting Year 1.3 Key Performance of the Reporting Year 03 04 Report on Green Finance in 2022 1.1.2 About the Green Finance Development at Bank of Nanjing Bank of Nanjing is one of the earliest financial institutions in China to establish a Green Finance 1.1 Overview of Green Finance Department and engage in green finance businesses. It considers green finance a strategic focus and has constructed a comprehensive system for the development of green finance at various levels, such as policy systems, development mechanisms, risk management processes, product services, digital technology, and information disclosure. The bank has been dedicated to promoting sustainability through green, lowcarbon, and circular economy initiatives, contributing to the sustainability of the environment and society. 1.1.1 About Bank of Nanjing Bank of Nanjing is a joint-stock commercial bank and a publicly listed bank with independent legal status, established on 8 February, 1996. It operates under a one-tier legal person governance structure. Since its founding, the bank has consistently emphasized the importance of development, strengthened strategic Focus on Three Main Tenets of Green Finance implementation, deepened institutional construction, and enriched its operational layout. By the end of 2022, The bank's core philosophy is to support the high-quality transition and development of the real economy. We have focused on the three main aspects of green finance businesses, specifically, pollution reduction, carbon offset, and green expansion. The key development directions have been "clean energy, green manufacturing and ecological restoration"， with a strong emphasis on supporting enterprises in achieving green and low-carbon development. the total number of the bank's outlets reached 242, achieving full coverage of counties in Jiangsu Province; the assets, total deposits, annual operating income, and net profits attributable to shareholders of listed companies amounted to CNY 2 trillion, CNY 1.2 trillion, CNY 44.6 billion, and CNY 18.4 billion respectively; and its total loans were nearly CNY 1 trillion. The bank currently takes the 91st place among the 1,000 largest banks in the world published by The Banker, a British magazine, and the 21st place in the 2022 "Top 100 Chinese Banks List" selected by the China Banking Association. Establish and improve a comprehensive green finance development system The bank has closely aligned with the strategic arrangements of the Central Committee of the Communist Party of China for building a modern socialist country. We have actively integrated into the overall development of the Party and the country's undertakings, fully embodied the political and people-oriented nature of financial work, leveraged our own resource endowments, deeply advanced strategic transition, enhanced the awareness We have regarded a multi-level, multi-dimensional green finance institutional system as a key safeguard. We have built a systematic framework that covers top-level guidance, business management, product systems, and resource allocation. This system is implemented from top to bottom to implement the strategy of green and low-carbon development. We have used green branches as focal points and diverse product innovations as pivot points to steadily enhance the effectiveness of green finance development. of reform and innovation, elevated technological empowerment, stimulated innovative vitality among talents, actively fulfilled social responsibilities, and focused on creating a "Commercial Bank + Investment Bank + Transaction Bank + Private Bank" business service model. In strengthening our financial capabilities for the real Enrich green finance with comprehensive product levels economy and providing high-quality financial services to the people, the bank has further enhanced its overall With the strategic vision of becoming a leading provider of comprehensive financial services among small and medium-sized commercial banks, we have crafted a comprehensive green finance product system. It includes foundational products, distinctive products, investment banking products, carbon finance products, bank-government products, monetary policy tools, and "green plus" specialized service solutions. strength, distinctive competitiveness, and market influence. The bank is committed to becoming a modern commercial bank with responsibility, sentiment, and warmth. Enhance green finance development and support infrastructure construction Commercial Bank Investment Bank Transaction Bank Business service model 05 Private Bank The bank has emphasized improving infrastructure for green finance. We have engaged extensively in green finance research, empowered specialized talent development mechanisms from various dimensions, actively leveraged digital financial technology methods, refined the process of identifying environmental risks, promoted collaborative efforts among industry, academia, and research, and accelerated the transition and upgrade of the bank's business. Pursue sustainable development goals and promote the impact of our Green Finance Brand The bank has focused on actively pursuing sustainable development as a primary objective. Specifically, we have integrated sustainable development into our strategy and comprehensive operational process. By building a multi-stakeholder ecosystem, we have strived to make the bank a benchmark in the green finance industry. The bank has followed the United Nations' Principles for Responsible Banking , explored international collaborative topics, and advanced the high-quality development of social and economic sectors. 06 Report on Green Finance in 2022 2021 The development of green finance Became a member of the United Nations' Principles for Responsible 2019 Banking Collaborated on green finance initiatives with the French Development Agency 2015 2012-2013 Established the Green Finance Department 2017 Successfully issued the bank's first CNY 5 billion green finance bond Collaborated with the International Finance Corporation (IFC) to initiate green finance activities 2022 Released the inaugural ESG report, leading to a substantial increase in ESG rating to BBB 2020 2016 年 Formulated the Green Finance Development Strategy of Bank of Nanjing 2014 Established the Green Finance Leadership Group and Green Finance Working Group 07 2018 Established the first government-approved and certified Green Branch in Jiangsu Province Signed the first "Green Finance" cooperation agreement between city commercial banks with Bank of Huzhou 08 Report on Green Finance in 2022 2022 Green Finance Awards of Bank of Nanjing 2021 2021 Green Finance Bank with Excellent Competitiveness China Business Journal 202 0 Advanced Institution in Green Finance Development Achievements for High-Quality Development of Jiangsu's Financial Industry Jiangsu Financial Association 09 Best Innovation Practice Award Green Finance Forum of 60 (GF60) 2021 Best Green Regional Bank Asiamoney 202 0 2021 2021 Outstanding Institution in Jiangsu Province for Green Finance Jiangsu Financial Association 20 20 One of the Top 10 Outstanding Green Finance Institutions in Jiangsu Province in 2020 Jiangsu Financial Association 20 1 9 One of the Top 10 Excellent Projects Award for Financial Support in Nanjing's High-Quality Economic Development Best Green Finance Effectiveness Award in the 2019 Top 100 Social Responsibility Fulfilling Institutions Assessment in China's Banking Industry Nanjing Financial Society China Banking Association 2 01 8 Best Green Regional Bank Asiamoney 2021 Annual Innovation Institution Award in 2021 China ESG Frontier Awards China Financial Advancement Forum 2 02 0 One of the Top 10 Innovative Cases for Green Finance in 2020 Jiangsu Financial Association 2 01 8 Pioneer Award for Chinese Small and Medium-sized Banks - Green Finance Award National Business Daily 10 Report on Green Finance in 2022 1.2.3 Expand business innovation and enhance the value of the Green Finance Brand 1.2 Highlights of the Reporting Year In 2022, the bank pursued sustainable development, actively implemented the "Carbon Peaking and Carbon Neutrality" initiative, and focused on the green and environmental protection sectors. We have deepened our presence in the green finance market and achieved remarkable results in asset allocation, collaborative partnerships, business innovation, and international exchanges. 1.2.1 Enhance asset allocation and focus on key green finance areas Guided by the national "Carbon Peaking and Carbon Neutrality" initiative, China's green finance sector has grown rapidly. The bank has strategically selected key areas and high-quality tracks in the green finance sector. We have achieved remarkable progress by issuing the Guiding Opinions of Bank of Nanjing on Developing Green Finance in Response to the Carbon Peaking and Carbon Neutrality Initiative in 2022 , innovatively developed "Carbon Peaking and Carbon Neutrality" project loans, and seize opportunities in green asset allocation. The growth rate of green loans was notable. By the end of 2022, the bank's total green finance loan balance reached CNY 132.956 billion, up 34.61% or CNY 34.183 billion from the beginning of the year. The number of green credit clients reached 2,400 households, up 51.13% or 812 households from the beginning of the year. In 2022, we continuously innovated the varieties and paths of green finance businesses. Through a series of business product innovation initiatives, our market value and brand influence in the green finance sector increased. We have proactively implemented the development goal of green finance and focused on the innovation and service of differentiated financial products. We have launched China's first green finance on-lending initiative from policy banks, executed China's first real estate green medium-term note (sustainability-linked), and issued CNY 5 billion green finance bonds, becoming the largest city commercial bank in Jiangsu Province. 1.2.4 Strengthen international exchanges and promote the influence of our Green Finance Brand We have valued communication with international organizations and foreign financial institutions, and strengthened international cooperation in green finance. In 2022, we published our first PRB[ PRB: Principles for Responsible Banking, PRB for short. In November 2021, Bank of Nanjing officially signed the United Nations' Principles for Responsible Banking] report and conducted online exchanges with the United Nations Environment Programme to discuss the bank's sustainable development goals and paths. The bank, together with BNP Paribas2 , held a green finance work exchange meeting to strengthen the international 1.2.2 Closely cooperate with all parties for further development of green finance To strengthen cooperation in green finance, we have communicated closely with government departments, China Development Bank and associations to promote the coordinated development of green finance. First, we signed a strategic cooperation agreement with the Department of Ecology and Environment of Jiangsu Province, and issued the Comprehensive Financial Service Plan of Bank of Nanjing for A "Zero-Waste City" implement the bank-government cooperation. Second, we promoted cooperation with the Jiangsu Branch of China Development Bank and successfully completed the first green finance on-lending initiative from policy banks in China. Third, we joined the Jiangsu Province Renewable Energy Industry Association, further exchanged opinions on the market trends, promoted the cooperation of relevant enterprises and institutions, and advanced the application of renewable energy in sustainable development. influence of our Green Finance Brand. We have proactively participated in various training and research organized by PRB, carried out business analysis, goal setting, information disclosure and other work, and produced PRB information disclosure reports, PRB Internal Work Guide and other outcome documents. 2022 The bank made a green finance work exchange with BNP Paribas, focusing on how to conduct green finance businesses and effectively manage environmental risks in response to the "Carbon Peaking and Carbon Neutrality" initiative. 1. PRB：Principles for Responsible Banking, PRB for short. In November 2021, Bank of Nanjing officially signed the United Nations' Principles for Responsible Banking 2. BNP Paribas：a world-class financial group headquartered in Paris, France. In March 2022, Bank of Nanjing held an online meeting with the head office of BNP Paribas. 11 12 Report on Green Finance in 2022 Green bond Related Performance of Bank of Nanjing in 2022 Green bond Cumulative amount of green finance bonds issued (CNY 100 million ) 1.3 Key Performance of the Reporting Year Green Credit Related Performance of Bank of Nanjing in 2022 150 Green credit Proportion of green credit (%) 987.73 12.50 12 9 900 600 6 300 3 2022 2021 Number of green credit clients (Nr. ) 2500 14.06 15 1,329.56 1200 0 1000000 120 Green credit balance (CNY 100 million) 1500 150 2,400 1500 1000 600000 60 400000 30 200000 447,674 0 2021 2022 2021 Green branch Related Performance of Bank of Nanjing in 2022 Green branch 0 2022 2021 Number of green credit transactions (Nr. ) 3500 1,588 90 2022 887,195 800000 100 0 3,268 3000 2000 Balance of green bonds purchased and held (CNY 10,000 ) 2,277 2500 7 Nr. Cumulative number of green branches established in 2022 1 Nr. Cumulative number of green branches established in 2021 2000 Environment Related Performance of Bank of Nanjing in 2022 1500 E nv i ro n me n ta l b en e fi ts 3 1000 500 0 165,202.89 500 2022 2021 0 2022 2021 Equivalent to carbon dioxide emission reduction 3,899.91 Ton Equivalent to chemical oxygen demand emission reduction 13 Ton 30,783.01 Equivalent to standard coal emission reduction 987.43 Ton Equivalent to sulfur dioxide emission reduction Ton 314.51 Ton Equivalent to ammonia nitrogen emission reduction 141.11 Ton Equivalent to oxynitride emission reduction 50.32 Ton Equivalent to total phosphorus emission reduction 3. Environmental benefits: the amount of energy-saving and emission reduction resulting from the bank's loans, calculated based on the proportion of the bank's loan balance to the total investment of projects. 14 2 Strategic Leadership and Well-supported Governance 2.1 Precise Decisions and Proper Strategic Directions by the Board of Directors 2.2 Resource Coordination by Senior Management for Well-coordinated System Work 2.3 Steady Implementation by Specialized Departments for Further Institutional Development 2.4 Active Cooperation by Branches for Better Quality and Efficiency Great virtue Pursue green development 15 16 Report on Green Finance in 2022 Bank of Nanjing has integrated the fulfillment of social responsibilities into its own development, to achieve the organic unity of economic, social and ecological benefits. The bank has set short-, medium- and long-term goals for the development of green finance, defined the direction of development, and promoted the strategic measures and action plans of green finance in stages. By strengthening support for green, low-carbon and circular economy, we have steadily improved our environmental and social performance. 2.1 Precise Decisions and Proper Strategic Directions by the Board of Directors The bank's Board of Directors, as the core of the green finance governance system, plays a leading role in strategic decision-making, supervision and management. It is responsible for planning the bank's green finance development strategy and defining the strategic objectives of Short-term goals Medium- and long-term goals Guide the development of the bank's green finance business through policy formulation, product innovation, process design, assessment and evaluation, customer management and other measures. Establish and adhere to the concept of green development, comprehensively improve our own environmental and social performance, and achieve a win-win situation with customers through the guidance of the bank's policies and business. green operations. It oversees the implementation of the bank's green finance strategies to ensure that green finance businesses align with the strategic development direction and objectives. Under the Board of Directors, there are six special committees, including the Development Strategy Committee, Risk Management Committee, Nomination and Compensation Committee, Audit Committee, Related Party Transaction Control Committee and Consumer Rights and Interests Protection Committee. All these committees together provide institutional guarantee for the high-quality development of green finance of the bank. We have practiced the concept of green development, viewed green finance as a strategic business of the whole bank, and made continued efforts to promote the construction of a professional operation system of green finance. At present, a green finance organizational structure system has been established, including strategic decision-making by the Board of Directors of the head office, coordination and leadership by the senior management of the head office, professional guidance by the management of the head office, and simultaneous promotion by branches. 2.2 Resource Coordination by Senior Management for Wellcoordinated System Work The senior management of the head office has played an important role in implementing green finance development strategies made by the Board of Directors and coordinating the specific work of green finance carried out by each professional department. The bank has set up a Green Finance Green Finance Organizational Structure System of Bank of Nanjing Leadership Group headed by the bank leader at the senior management level to lead the development of green finance businesses of the bank. This group coordinates the development and implementation of the key work of green finance in the whole bank, clarifies the assessment standards of indicators related to green finance business strategies, focuses on solving systemic problems in the development of green Board of Directors finance, and plans the development path for green finance in the bank. Development Strategy Committee Senior management Green Finance Leadership Group Finance Department of the Head Office Green Finance Department Green Finance Working Group Branches Green Finance Liaison Post Green branches M an a g e m e n t Stra te g y M e e t in g o f B a n k o f N a n j in g 17 18 Report on Green Finance in 2022 Topic - Green Branches: Strive to achieve and take advantage of being "green" 2.3 Steady Implementation by Specialized Departments for Further Institutional Development To improve the organizational structure of professional departments, enhance team strength, assessments, and more. Subsequently, the first green branch was established at Nanjing Jiangbei New Area Industrial Technology Research and Innovation Park. This marked the start of the journey towards regional innovation and distinctive development in green finance. Gradually, we have begun to establish our competitive edge and brand in the green finance sector. and strengthen the bank's special support for green finance businesses, the Finance Department In 2022, to speed up the specialization of green finance, we decided to systematically of the head office has set up a green finance department to be responsible for promoting business advance the construction of green branches. Thus, the bank issued the Notice on Further organization and formulating green finance assessment indicators. The department also undertakes Advancing Green Branch Construction. The notice outlines a three-step strategy of "experience product innovation, information system construction, personnel training, industry research and other summarization, pilot project expansion, and holistic implementation." Specifically, the strategy tasks to promote the coordinated development of green finance businesses. involves phased and hierarchical development of green branches, leading to a unique operational model characterized by specialized teams, optimized processes, and resource assurance. The objective is to set a benchmark for green development. In response, branches 2.4 Active Cooperation by Branches for Better Quality and Efficiency have proactively participated, and rewardingly, six new green branches have been established in Taixing, Yixing, Changshu, Hongze, Haimen, and Suqian Hubin New Area. The Finance Department of the head office has assigned green finance contacts in each branch. Through the overall management of these contacts in each branch, it has grasped the direction of green finance business development, coordinated resource allocation, and promoted the implementation of green finance businesses. To serve the development of local green finance and promote the improvement of the quality and efficiency of green finance throughout the bank, the head office has proactively encouraged branches to set up green finance sub-branches. These green branches, as green franchises, on the one hand, serve the characteristic development of local green industries and help the construction of local ecological civilization. On the other hand, they promote the prioritized trial of innovative green finance products, promote the successful model of service Green Branch Inauguration Ceremony of Bank of Nanjing innovation to the whole bank in a progressive way, and achieve improved quality and efficiency. Topic - Green Branches: Strive to achieve and take advantage of being "green" To align with the national strategy of green development and enhance the quality and efficiency of green finance, the bank has actively engaged in the innovation construction of green branches. Supported by our green finance products and services, we have prioritized the support for green industries and clients and carried out pilot programs for innovative green finance products and services, enabling our green branches to serve as "bridgehead". Standardize institutional management and establish green branches We have proactively promoted the construction of a professional green finance operation system, built a green branch featured brand, and strengthened our institutional guarantee. In 2020, we formulated and released the Implementation Plan for Constructing Green Branches of Bank of Nanjing. This plan outlines clear strategies and guidelines for the development of green branches, including criteria for admission, routine management, instruction Green Branches of Bank of Nanjing 19 20 Report on Green Finance in 2022 Topic - Green Branches: Strive to achieve and take advantage of being "green" Optimized Business Development and Improved Regional Acknowledgment Building upon a well-established system, each green branch has continued to explore and optimize its organizational structure, development direction, and management methods. This effort has propelled our green finance businesses, helping us gain recognition and honors from local governments and industries. Nanjing Jiangbei New Area Industrial Technology Research and Innovation Park Branch "Three-Star" Green Bank, "Green Finance Demonstration Team" Topic - Green Branches: Strive to achieve and take advantage of being "green" Nanjing Jiangbei New Area Industrial Technology Research and Innovation Park Branch Investment in the first national "carbon neutral" green tech innovation bonds In April 2021, a technology investment group in Jiangbei New Area issued the first batch of green tech innovation corporate bonds. We subscribed for 30% of their total amount. These bonds, China's first carbon-neutral green tech innovation bonds, are currently the only dual-concept bond combining "carbon neutral" and technological innovation, with a view to integrating green and technological development. In May 2022, Jiangbei New Area conducted expert evaluations for the annual assessment of green banks. Our Nanjing Jiangbei New Area Industrial Technology Research and Innovation Park Branch received a "Three-Star" green bank rating. Additionally, in the Summary and Evaluation Activity of the 2021 Nanjing Financial Industry Labor Competition for Boosting the City as a Pioneering National Innovative City, this branch was awarded titles like "Nanjing Worker Pioneer" and "Green Finance Demonstration Team." Nanjing Jiangbei New Area Industrial Technology Research and Innovation Park Branch Pioneering the first nationwide "Carbon Performance"-linked loans Bank of Nanjing innovatively introduced the first nationwide "CarbonPerformance"-linked loan product named "Xin Jian Tan", granting a CNY 30 million loan to a thermal power company. The loan's interest rate is tied to the company's carbon performance, decreasing as the carbon performance improves. This Achieving Outstanding Performance and Forging a Featured Brand encourages proactive enhancement of carbon performance and supports the steady All our green branches have continually explored development paths, innovated green advancement of the "Carbon Peaking and Carbon Neutrality" goals. According to finance products and services, and aligned closely with local green economies. Notably, estimates, if the company achieves its expected carbon reduction targets during branches such as the Nanjing Jiangbei New Area Industrial Technology Research and the loan period, it can save nearly CNY 100,000 of financial costs and generate an Innovation Park Branch and the Taixing Branch have scored remarkable accomplishments in additional revenue of nearly CNY 15 million based on carbon quota market prices. these regards. Future plans involve refining the green branch system and establishing more green branches to solidify our green finance featured brand. 21 22 3 Strengthened Institutional Systems and Optimized Allocation 3.1 Top-Level Guidance: Well-coordinated Planning of Green Finance Development Strategy 3.2 Business Management: Improved Management System of Green Finance Business Processes 3.3 Product Systems: New and Diverse Development Models of Green Finance Products 3.4 Resource Allocation: Well-established Implementation and Assessment Standards for Green Finance Businesses Robust Strive for self-improvement 23 24 Report on Green Finance in 2022 Our green finance institutional system supports green finance development. We issued policy documents on green finance, covering top-level guidance, business and product management, and resource allocation. These policies are closely aligned with national standards and industry trends, focusing on establishing a multi-level, multi-dimensional green finance management system. Basically, a framework for the institutional system from top-level management to operational aspects has been in place. Marketing guidance 3.1 Top-Level Guidance: Well-coordinated Planning of Green Finance Development Strategy We have made continued efforts to refine our top-level design by releasing a package of normative documents, including the Guiding Opinions of Bank of Nanjing on Developing Green Green Finance Marketing Guide of Bank of Nanjing Specify key industries and fields of green credit development, guiding branches to conduct green finance businesses in a more targeted way. Marketing Guidelines for Green Finance Business in the Demonstration Zone of Green and Integrated Ecological Development of the Yangtze River Delta Specify key industries and sectors to drive green finance businesses. Green Finance Business Accreditation Management Measures of Bank of Nanjing Standardize the accreditation procedures of green finance businesses, improving green finance service quality. Credit Policy Guide of Bank of Nanjing for the Photovoltaic Power Generation Industry, Credit Policy Guide of Bank of Nanjing for the Petrochemical Industry Apply differentiated credit policies for key industries and industries with significant environmental risks. Finance in Response to the Carbon Peaking and Carbon Neutrality Initiative in 2022 . These documents have enhanced the green finance development strategy and system construction, actively responding to sustainable development goals. Document Main content Green Finance Policy of Bank of Nanjing Provide fundamental principles and guidance for green finance development. Implementation Plan and Overall Development Plan for Bank of Nanjing's Green Finance System Enhance systems covering green finance strategic planning, procedural frameworks, products and services, business development, and environmental and social risk management. Guiding Opinions of Bank of Nanjing on Developing Green Finance in Response to the Carbon Peaking and Carbon Neutrality Initiative in 2022 Strengthen the layout of business related to the "Carbon Peaking and Carbon Neutrality" goals, vigorously build a green finance featured brand, and support the achievement of the "Carbon Peaking and Carbon Neutrality" goals. 3.2 Business Management: Improved Management System of Green Finance Business Processes For better business management, we have issued a package of regulatory documents, such as the Green Finance Marketing Guide of Bank of Nanjing, the Green Finance Business Accreditation Management Measures of Bank of Nanjing, and the Credit Policy Guide of Bank of Nanjing for the Photovoltaic Power Generation Industry . These documents were issued to improve the management of green finance businesses, enhance the green finance management system, standardize marketing service operations, identification and certification, credit approval, and other business processes, and ultimately cement the institutional foundation for the development of green finance. 25 Business management Identification and certification Credit guidelines 3.3 Product Systems: New and Diverse Development Models of Green Finance Products We have continuously enriched our "Xindong Green" product system, anchoring on policy documents such as the Loan Management Measures of Bank of Nanjing for the Dual-carbon Initiative and the Loan Management Measures of Bank of Nanjing for Solid Waste Treatment Projects . Through these measures, we have offered specialized product services to various enterprises engaged in pollution reduction, carbon reduction, and green transition, thus driving the diversified development of our green finance products. 26 Report on Green Finance in 2022 Document Significance Loan Management Measures of Bank of Nanjing for Solid Waste Treatment Projects Provide preferential green loan interest rates to eligible solid waste enterprises, helping these enterprises effectively improve their resource utilization. Loan Management Measures of Bank of Nanjing for Photovoltaic Power Generation Projects Support the implementation of photovoltaic power generation projects, fueling the development of the green energy sector and promoting the transition of China's energy structure. Loan Management Measures of Bank of Nanjing for Contract Energy Management Alleviate financial stress of energy-saving service enterprises, promote the green transition and development of traditional energy-intensive enterprises, and boost the energy conservation, environmental protection, and clean energy industries. Loan Management Measures of Bank of Nanjing for Emission Right Pledge Support enterprises with emission rights put into good use their existing assets, lower financing thresholds, and help China's environmental pollution control. Loan Management Measures of Bank of Nanjing for Carbon Quota Pledge Expand the functionality of green finance services, facilitate corporate participation in the carbon finance market, and make green finance play a role in reducing carbon emissions. Loan Management Measures of Bank of Nanjing for the Dual-carbon Initiative Facilitate enterprises in implementing energy conservation and emission reduction projects, effectively boost their enthusiasm and advance pollution reduction and carbon reduction. Management Measures of Bank of Nanjing for Carbon Performance Linked Loans Pioneer to launch China's first carbon performance linked loan product, encourage emission-controlled enterprises to proactively reduce their operational carbon emissions and contribute to the "Carbon Peaking and Carbon Neutrality" goals. Assessment measures of performance indicators Resource allocation Transfer pricing Special quotas 2022 Assessment Measures for Key Performance Indicators of Branches of Bank of Nanjing Notice on Adjustments to Certain Internal Fund Transfer Prices Utilization Plan of Special Quotas for Green Finance Outline the bank-wide promotion plan and targets of green finance in 2022, ensuring timely implementation and periodic outcomes. Further leverage internal fund transfer pricing to optimize resource allocation and guide business development. Allocate special quotas for green finance, offer preferential pricing, and prioritize resource allocation, thus advancing green finance. 3.4 Resource Allocation: Well-established Implementation and Assessment Standards for Green Finance Businesses We have formulated policy guidelines and management measures for the allocation of green finance assets from the dimensions of performance indicator assessment, pricing transfer, and special quotas. By establishing customized assessment programs, we have optimized the allocation of resources related to green finance, enhanced support for green financial businesses, offered new and featured green finance services, and thereby promoted the high-quality development of our green finance businesses. 27 28 4 Product Innovation and Service Upgrade 4.1 Enriching the Green Finance Product System, Demonstrating Financial Creativity 4.2 Innovating Green Finance Service Models, Ensuring Sustainable Financial Services Reform Be innovation-driven 29 30 Report on Green Finance in 2022 Aligned with the national strategy of "Carbon Peaking and Carbon Neutrality", the bank has continuously explored innovative product paths and enriched the "Xindong Green" product system across seven key categories, including foundational products, distinctive products, investment banking 4.1 Enriching the Green Finance Product System and Demonstrating Financial Creativity products, carbon finance products, bank-government products, monetary policy tools, and "green plus" specialized service solutions. In this way, the bank has offered comprehensive support for green, low-carbon, and circular economy initiatives, driving environmental and social sustainability, and establishing itself as a pioneer green bank. 4.1.1 Introduction of New Carbon Finance Products to Foster Financial and Ecological Integration Under the "Carbon Peaking and Carbon Neutrality" initiative, we have capitalized on crucial opportunities in green finance. In the realm of carbon finance, we have proactively driven innovation by introducing novel models such as "photovoltaic power project loans", "Carbon Peaking and Carbon Neutrality Loans", and "Carbon-performance-linked Loans", all with a strong environmental focus. Our unwavering commitment lies in supporting the growth of the real economy by continually diversifying our green finance products and services. We are dedicated to advancing pollution reduction, carbon offset, Green Finance Product System of Bank of Nanjing green expansion, and sustainable economic development. In doing so, we leverage our financial prowess to contribute to the ongoing effort to build a more environmentally sustainable China. Nantong Haimen Branch Facilitating Corporate Carbon Emission Reduction Through Photovoltaic Power Project Loans In 2022, our Nantong Branch extended a project loan of CNY 300 million to a company located Foundational products Green project loans Green working capital loans Distinctive products Contract energy management loans Emission right pledge loans Investment banking products Green debt financing tools Transition bonds Carbon finance products Carbon sink loans Carbon quota pledge loans Bank-government products Environmental protection loans Environmental protection guarantees Monetary policy tools "Green Plus" specialized service solutions Carbon emission reduction supporting tools Special Service Plan for the Preservation of the Yangtze River Su Carbon Finance Special Service Plan for A ZeroWaste City Construction in Rudong County. This funding was allocated to support a 118MW distributed photovoltaic power generation project situated in eastern Rudong County. By investing in this strategically significant emerging industry, we played a pivotal role in advancing the green transition and fostering highquality development in Rudong County. Taizhou Branch Promoting Corporate Energy Conservation and Emission Reduction Through Carbon-Performance-Linked Loans In February 2022, our Taizhou branch successfully issued a CNY 40 million carbonperformance-linked loan. This specialized loan program specifically targets emission-controlled enterprises participating in the national carbon market. Its primary objective is to incentivize these enterprises to proactively reduce emissions, thereby contributing to collaborative efforts among Solid waste loans Sustainable development linked bonds Carbon performance linked loans Water conservation loans Special Service Plan for Biodiversity Conservation corporations to achieve carbon reduction goals. 4.1.2 Introduction of Investment Banking Products to Diversify the Green Finance Landscape EOD project loans Dual-carbon initiative loans In our efforts to expand the horizons of green finance investment and financing, fostering the steady growth of green industries like clean energy, green manufacturing, and ecological restoration has Photovoltaic power project loans been a paramount objective. To achieve this, we have consistently introduced innovative green finance investment banking products. Among these, our product portfolio now includes sustainability-linked bonds, carbon neutrality bonds, and green finance bonds. These additions have not only enriched our "Xindong Green" product suite but also strengthened our presence in the green finance market. 31 32 Report on Green Finance in 2022 Bank of Nanjing Pioneering China's First Real Estate Green Medium-Term Note (Sustainability-Linked) Bank of Nanjing: CNY 5 Billion Green Finance Bond Issuance, Leading in Jiangsu Province Building on previous successes with CNY 5 billion green finance bond issuances in both 2017 In 2022, we proudly launched China's and 2021, we achieved another significant milestone by issuing an additional CNY 5 billion in inaugural real estate green medium-term green finance bonds in 2022. By the close of 2022, our cumulative green finance bond issuance note with sustainability-linked features. This reached CNY 15 billion, solidifying our position as the largest city commercial bank in Jiangsu pioneering issuance marked a significant Province in terms of the scale of green finance bond issuance. milestone as the first of its kind for a Nanjingbased company in 2022, with a total issuance volume of CNY 1.5 billion. This successful i s s u a n c e u n d e r s c o re s o u r u n wa v e r i n g 4.1.3 Introduction of Bank-Government Products to Enhance Our Green Finance Portfolio commitment to serving the real economy, The "Environmental Protection Loan" and "Environmental Protection Guarantee" are financial advancing the goals of "Carbon Peaking and Carbon Neutrality", and showcasing our practical innovation within the realm of green finance. Bank of Nanjing executed China's first real estate green medium-term note (sustainability-linked) products collaboratively introduced by the Department of Finance and the Department of Ecology of Jiangsu Province, along with Jiangsu Credits Re-guarantee Group Co., Ltd. As one of the pioneering banks in Jiangsu Province to implement these financial policies, we have actively utilized these products to propel the green transition and development of SMEs. Furthermore, we have partnered with the Shanghai Branch: Joint Lead Underwriter for Carbon Neutrality Bonds Enhancing Green Projects' Carbon Emission Reduction Benefits In 2022, we had the privilege of serving as a joint lead underwriter for the inaugural tranche of green medium-term notes, known as carbon neutrality bonds, issued by a corporate entity. This Department of Water Resources of Jiangsu Province to launch water conservation loans aimed at supporting water-saving enterprises within the province. These loans have played a pivotal role in promoting a range of projects, including resource utilization, energy and water conservation, pollution prevention and control, and ecological restoration, thus contributing significantly to the advancement of green development initiatives. milestone marked the first issuance of its kind in Shanghai in 2022, aimed at incentivizing corporate efforts towards emission reduction and effectively meeting the financial requirements of the power industry's carbon reduction objectives. Bank of Nanjing Launch of Water Conservation Loans to Incentivize Water-Saving Enterprises In direct response to the national water-saving initiative and the financing challenges faced by watersaving enterprises, we have conducted research in collaboration with the Department of Water Resources of Jiangsu Province to introduce water conservation loans. These loans have facilitated the provision of highquality and efficient financial services tailored to the needs of water-saving enterprises. They have further promoted the implementation of water-saving and B a n k o f N a n j i ng rol le d o ut wat e r c o n s e r vat io n loa ns environmental protection projects, thus contributing to the growth of water-saving enterprises and fostering green development within the city. This initiative has garnered notable environmental and social benefits. 33 34 Report on Green Finance in 2022 Bank of Nanjing aspects, including biodiversity, Zero-Waste urban development, and the preservation of the Yangtze River. Cooperative Launch of "Environmental Protection Guarantee" and "Environmental Protection Loan" to Strengthen Credit Support for Environmental Protection Enterprises In parallel, we have championed an innovative inter-industry collaborative service model, uniting the We have taken proactive steps to promote cooperation between the bank and the government, enhancing support for ecological development and driving the implementation of "Environmental Protection Guarantee" and "Environmental Protection Loan" initiatives. These products have effectively provided credit enhancement services, characterized by low entry barriers and costs, to environmental protection enterprises. Leveraging comprehensive financial service models such as guarantees and credit enhancements, these initiatives have successfully met the capital requirements of enterprises involved in environmental protection projects. As a result, they have played a pivotal role in facilitating the normal progression of environmental protection projects, including those focused on energy conservation and emission reduction, yielding significant ecological benefits. strengths and resource advantages of peers to collectively drive green finance development within the sector. Furthermore, we have actively promoted high-quality regional development through green finance, offering comprehensive service solutions such as the financial and environmental protection initiative and the Park Support Program. These initiatives have delivered a diverse range of green financial services, thereby supporting the sustainable growth of parks and corporations. 4.2.1 "Green Plus" Specialized Service Solutions Special Service Plan for Biodiversity Conservation Adhering to the principles of eco-friendliness, green ethics, and sustainability, we have proactively explored the green finance model supporting biodiversity. Since the signing of the Joint Declaration of Financial Institutions of the Banking Industry in Support of Biodiversity Protection in 4.1.4 Monetary Policy Tools for Precisely Supporting Green Projects Our introduction of "Su Carbon Finance" represents a significant stride in inclusive green finance, linking refinancing with an enterprise's "carbon account." This innovative product is designed to encourage small and micro businesses to ramp up their investments in energy conservation and emission reduction, featuring favorable pricing and a streamlined approval process. As of December 2022, we disbursed a total of 371 loans, amounting to CNY 2.39 billion, for 371 "Su Carbon Finance" projects. This substantial financial support has not only facilitated enterprise growth at reduced costs but has also effectively targeted and 2021, we have introduced the Special Service Plan for Biodiversity Conservation at Bank of Nanjing. This plan is designed to provide comprehensive financial products and services to enterprises engaged in ecological restoration, ecological protection, and biological disaster prevention and control. It aims to bolster regional biodiversity protection and risk mitigation. Yancheng Branch: "Ocean Blue Carbon Sink Loan" Launched to Enhance Biodiversity Services Our Yancheng Branch has successfully implemented the "Ocean Blue Carbon Sink Loan bolstered green and low-carbon initiatives. - Laver Loan" in Dafeng District of Yancheng City, marking the first in Jiangsu Province. By Dachang Sub-branch: "Su Carbon Finance" Extends Financial Support to Enterprises laver cultivation, the Carbon Sink Loan has established a green finance channel to realize In a notable example, an environmental company based in Nanjing primarily specializes in the incineration, collection, storage, and disposal of medical waste (HW01). To expand its medical waste treatment capacity, the company embarked on the second phase of its project in March 2022. During this critical phase, the Dachang Sub-branch of Bank of Nanjing successfully granted a "Su Carbon leveraging the long-term usufruct of carbon reduction and carbon fixation generated through the value of marine ecological products. This innovative approach effectively contributes to financial assistance aimed at realizing the concepts that "Lucid Waters and Lush Mountains Are Invaluable Assets," as well as the "Carbon Peaking and Carbon Neutrality" goals and the "Green Yancheng" initiative across four key dimensions. Finance" loan totaling CNY 10 million to the company, backed by a credit guarantee. This loan played Comprehensive Financial Service Plan for a "Zero-Waste City" a pivotal role in addressing the company's financial challenges, including pressing capital needs The bank has innovatively introduced a comprehensive and high-interest expenses, ultimately enhancing the liquidity of its day-to-day working capital. financial service plan tailored for the realization of a "ZeroWaste City" in Jiangsu Province. This plan encompasses enterprises and projects engaged in providing deep services related to solid waste treatment, resource 4.2 Innovating Green Finance Service Models, Ensuring Sustainable Financial Services Remaining steadfast in our commitment to green and sustainable development principles, we have consistently led the way in pioneering innovative green finance services. We have systematically devised specialized "green plus" financial solutions, concentrating on various environmental conservation 35 recycling, and the transition towards a low-carbon recycling model. It actively promotes the development of urban, low-carbon living standards by offering high-quality and efficient financial services. These services include special quota allocations, exclusive interest rate discounts, and an Comprehensive Financial Service Plan of Bank of Nanjing for a "Zero-Waste City" expedited green approval channel. 36 Report on Green Finance in 2022 Bank of Nanjing Financial Support for Waste Metal Treatment Projects Advancing the "Zero-Waste City" Initiative Waste metal crushing and processing constitute essential components of China's circular economy, representing a sunrise industry aimed at reducing environmental pollution and increasing renewable resources. A Jiangsu-based company embarked on the construction of a "Waste Metal Crushing and Processing Project." Upon completion, this project was expected to have an annual processing capacity of 300,000 tons of waste metal. To facilitate the virtuous resource cycle and support the establishment of a "Zero-Waste City," the bank extended a project loan of CNY 50 million. Special Service Plan for Yangtze River Preservation In an active endeavor to promote Nanjing's green transition and contribute to the high-quality development of the Yangtze River Economic Belt, we have initiated a Special Service Plan for Yangtze River Preservation . This plan is founded on the principles of high-quality green finance services, charting a new course towards ecological priority and green development. It underscores the responsibilities of Bank of Nanjing in advancing the green transition of the Yangtze River Economic Belt. The plan concentrates on domains like ecological restoration, environmental governance, water source conservation, and industrial transformation. It introduces innovative green finance service models and allocates resources, including dedicated credit lines, preferential interest rates, and expedited approval channels. These measures aim to facilitate industrial transition and propel the sustainable development of the Yangtze River Economic Belt. Bank of Nanjing Financing Expansion Project for Nanjing Wastewater Treatment Plant to Mitigate Yangtze River Water Pollution Bank of Nanjing Pioneering China's First Green Finance On-lending Initiative from Policy Banks In 2022, in collaboration with the Jiangsu Branch of China Development Bank, our bank successfully implemented China's inaugural green finance on-lending initiative from policy banks, totaling CNY 100 million. This specialized on-lending initiative was exclusively designed to bolster the growth of small and micro businesses operating in clean energy, energy conservation, green transportation, and clean production sectors, thereby advancing their transition towards sustainability. Yangzhou Branch Syndicated Loans Facilitate the PPP Project for the Relocation of an Ecological Corridor in Binhu, Gaoyou City Our Yangzhou Branch spearheaded innovative approaches to syndicated loans by executing the PPP Project for the Relocation of an Ecological Corridor in Binhu, Gaoyou City. CRCC Chongqing Investment Group Co., Ltd. signed a syndicated loan cooperation agreement with the Gaoyou Sub-branch of Bank of Nanjing and the Gaoyou Sub-branch of China Construction Bank, with a total investment amount of CNY 14 million. This project provided substantial support for local environmental preservation and Signing Ceremony for the Syndicated Loan Cooperation Agreement with the Yangzhou Branch contributed to the sustainable development of the regional ecological landscape. In an effort to alleviate the strain on water resources and improve the water environment in Nanjing, a wastewater treatment plant initiated an expansion project. This expansion aimed to address the issue of direct tailwater discharge into the Yangtze River by the plant's original process. To support the project's execution and operation and contribute to alleviating water pollution along the Yangtze River while advancing the construction of an eco-city, we provided a loan of CNY 43.89 million. 4.2.3 Construction of the Comprehensive Service System To enhance support for regional high-quality development through green finance, Bank of Nanjing introduced a new comprehensive service plan in 2022, encompassing financial and environmental protection initiatives and Park Support Program. The bank has established a platform for collaboration between banks and enterprises, along with a robust green finance product system, to offer systematic services to parks, enterprises, individuals, and various other entities. 4.2.2 New Industry Cooperation Models Financial and Environmental Protection Initiative In alignment with the trends of industry development, the bank has proactively ventured into Under the financial and environmental protection initiative, the bank has undertaken a series of new models of green finance cooperation, harnessing the collective capabilities of our industry peers activities focusing on ecological environment development. These initiatives target crucial areas such to drive the high-quality development of China's green transition. as the construction of major ecological and environmental infrastructure projects within the province, the realization of a "Zero-Waste City" in Jiangsu Province, and the promotion of green and low- 37 38 Report on Green Finance in 2022 carbon park development. Collaborations with provincial and municipal environmental departments, as well as organizations like the Jiangsu Province Renewable Energy Industry Association, have been pivotal in these efforts. Leveraging the bank's specialized green finance products and services, these initiatives have delivered high-quality financial support to eco-friendly businesses within the Topic: "Xindong Green - Park Support Program" The Park Support Program of Bank of Nanjing aims at helping parks and enterprises to achieve green transition and the green life concept of individuals. To offer service plans for parks, province, fostering green, low-carbon, and high-quality development in Jiangsu. enterprises and individuals, the bank has provided all-round supporting services for parks and Multi-party collaboration: Bank of Nanjing signed an agreement with provincial and municipal environmental departments manner from the perspectives of green investment, green mortgage and green life. By the end of enterprises from financial and non-financial aspects and helped individuals to live in a green 2022, the bank signed green finance cooperation agreements with 12 parks, with more than 120 cooperative clients and a total loan amount of nearly CNY 6 billion. The bank has actively communicated with government departments to enhance its relationship with them. In 2022, the bank signed a strategic cooperation framework agreement Park Support Program of Bank of Nanjing with provincial and municipal environmental departments to build an effective communication and cooperation platform, pool the power of both the bank and the government, and promote local green and low-carbon development. The connection among the bank, the government and enterprises: Bank of Nanjing deeply explored the development needs of green finance in the government and enterprises The bank has further strengthened communication with the government and enterprises to learn their needs and provide quality financial services by visiting government departments Park Service Plan Enterprise Service Plan Business services Business services Individual Service Plan Green mortgage Green transition support Financial services Non-financial services Green mortgage Financial innovation Working capital needs Industrial chain business connection Green life Consultancy Project capital needs Green public welfare Green consumption Investment promotion Green bond issuance Green publicity Green travel Personnel training Off-balance sheet financial services Full-cycle service in the carbon market field and green enterprises and holding theme-matching activities such as low-carbon transition and green development. For example, our Xuzhou Branch held a "Dialogue on Finance and Environmental Protection" with the Xuzhou Municipal Ecology and Environment Bureau. With the theme of "Assisting enterprises in relieving difficulties and empowering them in developing", the dialogue discussed problems such as the capital needs of enterprises and put forward cooperative solutions. Xuzhou Branch participated in the "Dialogue on Finance and Environmental Protection" "Park Support Program" Publicity and construction WWith a keen focus on the ecological development of industrial parks, the bank has launched the innovative "Xindong Green - Park Support Program". With the help of the bank, the government and enterprises, the plan focuses on green enterprises and projects after learning the financing needs of parks and enterprises through face-to-face communication between the bank and enterprises, and gives full play Offer excellent park services and help "green" upgrade and transition to the advantages of the "Xindong Green" product system. In this way, the bank has delivered comprehensive, Based on "Xindong Green", the bank has created a new comprehensive business service system, efficient, and competitively-priced green finance services for parks, enterprises and individuals and practiced which covers green transition support, consultancy, investment promotion, personnel training, publicity the development concept that "Lucid Waters and Lush Mountains Are Invaluable Assets". and construction, etc., to promote the green upgrade of parks. 39 40 Report on Green Finance in 2022 Case I: Taizhou Branch: Bank-enterprise connection activities held in Jingjiang Economic and Technological Development Zone to expand green finance cooperation medium-term notes for Nanjing Finance City Construction Development Co., Ltd. These notes, the Park" in Jingjiang Economic and Technological Development with a total issued amount of CNY 1.2 billion, of which the bank underwrote CNY 900 million, were Zone, announced the latest green finance preferential policies channeled into vital areas such as energy conservation, pollution control, resource management, and service system of Bank of Nanjing, guided enterprises to clean transportation, ecological preservation, and climate adaptation. This successful issuance develop energy-saving and carbon-reducing projects, and Case II Pioneering Green Medium-Term Notes to Guide Capital into Sustainable Ventures As part of our sustainable finance initiatives, we played a pivotal role in underwriting green Our Taizhou Branch held an activity of "Green Finance into helped the park to make low-carbon transition. Bank of Nanjing Bank-enterprise exchange meeting of Bank of Nanjing to build a green park Lianyungang Branch: Systematic service plans formulated to support the construction and operation of green parks Our Lianyungang Branch created a park service plan and provided a credit fund of CNY 25 underscores our proactive stance and responsibilities in sustainable finance, directing funds towards environmental protection and sustainable development. Zhenjiang Branch Advancing Energy-Saving Transitions for Enhanced Green Enterprises million for a company funded by the government of Donghai County to assist in building a circular A Zhejiang-based company sought to eliminate outdated coke gas production processes to economy industrial park there. At the same time, the bank provided financial support to enterprises significantly mitigate its environmental risks. In response, our Zhenjiang Branch, in line with our in the park, and provided a working capital loan of CNY 10 million to a company in Jiangsu Province park service plan, participated in a syndicated loan and extended a CNY 60 million loan to support to support its green transition and upgrading. the company's energy conservation and emission reduction project. This financial assistance bolsters regional green development. Case III Jiangbei New Area Branch: Professional consulting services provided to help the green and low-carbon development of enterprises Our Jiangbei New Area Branch actively organized consulting activities in several parks to provide professional services for enterprises there, such as Nanjing Intelligent Manufacturing Industrial Park and Nanjing Jiangbei New Area Industrial Technology Research Our Suzhou Branch has taken an active role in providing comprehensive financial support to accelerating the optimization and upgrading of their industrial structures to promote sustainable fields were invited to introduce subject contents, such as the growth in the green economy. For instance, the branch issued a CNY 5 million working capital loan development prospects of green industries, preferential policies to an electronics company specializing in energy-saving LED packaging. This funding facilitated the for green operation of enterprises, and financial policy reform purchase of essential raw materials, furthering their commitment to environmental sustainability. of small and micro businesses, to help enterprises grasp the the green development of parks. Fostering Structural Transition and Working Capital Needs green enterprises and technology-based small and micro-businesses within parks. This includes and Innovation Park. At these activities, experts from various development opportunities of low-carbon transition and promote Suzhou Branch Interpretation of preferential policies for enterprises' green operation in parks Providing Tailored Services to Promote Green Lifestyles Supporting Enterprise Transition with Tailored Green Finance Services To deeply support the green development of enterprises, the bank has created a service plan for enterprise employees simultaneously in the Park Support Program. Surrounding the themes of green In line with our commitment to fostering green development and facilitating the low-carbon transition travel, green consumption, green investment, green mortgage, green life, etc., the plan provides of enterprises within industrial parks, the bank has been offering a range of financial services. These services professional, exclusive and special green services for individual clients. On green finance, it provides encompass project loans, working capital loans, and innovative green debt financing tools to meet the diverse high-quality wealth management products, Ncard, payroll credit and other services for enterprise needs of our corporate clients. Furthermore, our support extends beyond financial aid. We have been providing employees. On green life, it enhances personal green and low-carbon awareness by carrying out non-financial services to enterprises, including guidance on green finance policies and technical training. This outdoor hiking fitness and promoting green travel, helping create a beautiful home with practical actions holistic approach ensures comprehensive support for their green and sustainable development initiatives. and promoting high-quality regional development. 41 42 5 Talent Training, Research and Application Support 5.1 Training Professional Talent, Strengthening the Foundation for Business Development 5.2 Deepening Green Finance Research, Accelerating Green and Low-Carbon Transition 5.3 Expanding Exchange and Cooperation in Green Finance, Collaboratively Exploring Cutting-Edge Paths Self-improvement Be people-oriented 43 44 Report on Green Finance in 2022 To improve the professional abilities of all our employees, we have explored the training system of green finance talents, followed closely the research trend of green finance, deepened domestic and international exchanges and cooperation, integrated various resources to build a team of green finance professionals, and promoted our service quality and efficiency. Training program of "Xin Qi Dian" to create a new starting point of business development The bank has focused on the talent training system with "Xin Qi Dian" program, and laid a solid foundation for the construction of the talent training system by mechanism construction, system construction and project construction. In 2022, we proactively carried out the preliminary investigation of the "Xin Qi Dian" program, and created a "Competency Model for Corporate Client Managers" combining with business philosophies and strategic targets of entity transition. The model put forward four post 5.1 Training Professional Talent, Strengthening the Foundation for Business Development In order to grasp opportunities from the rapid development of green finance, we have organized activities such as special training, knowledge contests and series of lectures, and actively explored training modes conforming to our own characteristics and development targets. We have also initially established capabilities for corporate client managers, including "basic capability, product capability, risk control capability and marketing capability", and further clarified the sub-items of 12 capability indicators, providing technical model support for talent training evaluation. In addition, with the help of five-sphere training mode of "study" + "practice" + "application" + "review" + "examination", we incorporated green finance into routine training courses by combining course training and practical guidance. In this way, we gradually improved corporate client managers' capabilities to serve green transition enterprises. a training system of green finance talents, including talent definition, training methods and routine management, providing support for the next stage of training green financial marketing and management talents for the bank. Two-pronged training both online and offline to fuel the development of green finance businesses We helped our staff better understand key areas and products through online special training. The Marketing personnel of green finance Management personnel of green finance county-wide photovoltaic industry, energy-saving technological transition of high energy-consuming Scope of talents Training system of green finance talents training content mainly made a systematic explanation on the marketing and practice guidelines in the industries, green development of industrial parks and other fields, and made a detailed interpretation on the innovative green finance products such as "Su Carbon Finance", "Environmental Protection Training mode Internal training External training Guarantee" and "Environmental Protection Loan". With the help of special training, we improved the green finance service capabilities of all our staff and helped the development of the bank's green finance business. Routine management Marketing of green finance Management of green finance 5.1.1 Carry out special training to improve professional competence In 2022, we conducted systematic training for corporate client managers through the "Xin Qi Dian" program, and carried out special training on green finance both online and offline, promoting the development of green finance businesses of the whole bank and building a professional team of green Green finance business training in Suqian Branch Special exchange meeting of green finance in Jiangbei New Area Branch finance. 45 46 Report on Green Finance in 2022 5.1.2 Hold a knowledge contest to improve our staff's skills and expertise The bank has conscientiously implemented the decisions and deployments of the "Carbon Peaking and Carbon Neutrality" initiative, actively practiced the concept of green development, promoted green finance businesses as a major strategic target of the bank, created a learning atmosphere of green finance through holding knowledge contests, and strengthened the cultivation of staff's green finance concept and capacity. Promote learning through contests and enhance professional skills of green talents Hold special sharing sessions to put green, low-carbon and high-quality development into practice We have proactively organized experts in the industry to popularize green finance-related knowledge, offering new ideas for driving forward green finance businesses and practicing highquality development. In 2022, we organized a series of seminars on carbon finance and green finance, helping our staff learn much more professional knowledge. In the special lecture on carbon finance, centered on the theme of "focusing on the 'carbon' opportunities of banks and taking over the start advantages of carbon finance", the experts popularized carbon finance knowledge and discussed the business strategies of small and medium-sized banks in the carbon finance To improve the professional capabilities and level of green finance practitioners and promote market against the backdrop of the "Carbon Peaking and Carbon Neutrality" initiative. In the special personnel training and team building, the bank held "Green Finance Knowledge Contest of Bank lecture on green finance, we specially invited experts in the field of climate change and sustainable of Nanjing in 2022" to promote learning and training through competitions. By organizing all the development to share on the theme that "green finance supports small and medium-sized banks to corporate client managers to learn the knowledge of green finance-related policy documents and realize the "Carbon Peaking and Carbon Neutrality" goals and practice high-quality development". In participate in both online preliminary competition and offline final competition. The contest gave this way, our staff knew well the concept of green finance and increased their green finance expertise. full play to the incentive function of skill competition, practiced the concept of green development, strengthened our staff's understanding on the professional knowledge of green finance, and enhanced our client managers' service capabilities in the green industry. 5.2 Deepening Green Finance Research, Accelerating Green and Low-Carbon Transition We have proactively conducted green finance innovation research, heightened professional cooperation at home and abroad, and grasped the development trend of the green finance industry and improved our professional strengths in green and low-carbon transition. 5.2.1 Carry out internal research and innovation to improve our research level in the green finance field We have conducted subject research focusing on photovoltaics, lithium batteries, new energy and other hot areas to improve our level of green finance innovation. Meanwhile, we took a proactive stance to explore frontier fields such as carbon finance, carry out research on the construction of a carbon account system and risk assessment of carbon finance businesses and others, and followed closely the development trend of green finance. Also, we have formulated marketing guidelines for the county-wide photovoltaic industry, energy-saving technological transition of high energy-consuming industries, and Green Finance Knowledge Contest of Bank of Nanjing 5.1.3 Organize a series of lectures to broaden our staff's knowledge horizons green development of industrial parks. With all these efforts, we have provided professional support for better serving clients in key industries of green finance. Research fields Analysis and Business Model Research in the Distributed Photovoltaic Industry To tread on the heels of the development trend of green finance, explore the development path of green Research on the Lithium Battery Industry and Strategic Choice of Commercial Banks finance for financial institutions, and enhance the professional quality of all our staff in green finance, we have invited well-known green finance experts, scholars, and institutional representatives at home and abroad to hold a series of green finance activities, with a view to spreading the concept of green finance, leading the direction of green development, and helping achieve the "Carbon Peaking and Carbon Neutrality" goals. 47 Name New energy industry Development Situation of the Charging Pile Industry and Strategic Choice of Commercial Banks Development Situation of the Energy Storage Industry and Strategic Choice of Commercial Banks 48 Report on Green Finance in 2022 Research fields Name Construction and Application Research of Carbon Account Systems Carbon finance Research on Risk Evaluation of Commercial Banks' Carbon Finance Business - A Case Study of Bank of Nanjing 5.3.1 Carry out domestic exchanges and cooperation to contribute to resource sharing We have actively connected with relevant associations and green finance professional committees in the field of sustainable development, and became council members of several institutes. While taking in resources shared by the platform, we have taken a positive stance to share practical experience in green finance development and fuel the high-quality development of green finance. Transition finance Marketing Guidelines for Energy-saving Technological Transition of High Energyconsuming Industries Standing Director Unit of Jiangsu Province Renewable Energy Industry Association Deputy Director Unit of Green Finance Professional Committee of Jiangsu Banking Association Green park Development and Marketing Guidelines for Green Parks Council Member of Green Finance Professional Committee of China Society for Finance and Banking A Member of the Third Standing Committee of the Green Credit Business Professional Committee of the China Banking Association 5.2.2 Carry out research cooperation with partners to expand the field of green finance research We have actively participated in external research and policy formulation, conducted green finance research and practices, and shared our latest progress and achievements in green finance with the public 5.3.2 Conduct international exchanges to expand the brand influence by deep cooperation and information exchange. We have deepened our research cooperation with the To keep up with the international development trend of green finance, we have actively explored Central University of Finance and Economics and the Yangtze River Delta Green Value Investment Research international communication channels with the aid of our shareholder institutions, gradually tapped Institute in the area of green finance. Specifically, we have participated in the research on the zero-carbon cooperation opportunities with other international financial institutions, and learned from the experience transition and development of banking green finance, carbon financial products and business innovation of international green finance development. under the "Carbon Peaking and Carbon Neutrality" goals initiated by China Banking Association, and took part in the formulation of management measures such as Operational Guidelines for Carbon Asset Pledge Financing in Jiangsu Province Channel of cooperation Partner (Provisional) and Operational Guidelines for Pledge Loan Business of Expected Income Right of Ecosystem Carbon Sink in Jiangsu Province . Besides, through external cooperation, we have explored the leading Shareholder institution BNP Paribas Maintain regular exchanges and cooperation in green finance product innovation, ESG, green syndications and other aspects. Sumitomo Mitsui Trust Bank, BNP Paribas Securities (Japan), CIMB Bank, etc. Sign a strategic cooperation agreement or memorandum, and drive forward in-depth cooperation and business innovation between the two parties in green investment and financing, risk management and other aspects. International Finance Corporation (IFC), French Development Agency (AFD) Cooperate in areas such as energy conservation and emission reduction projects for SMEs, technical assistance, and non-sovereign loans. United Nations Environment Program Finance Initiative (UNEP FI) Join the Principles for Responsible Banking (PRB) edge fields of green finance to improve the influence of Bank of Nanjing in the green finance industry. 5.3 Expanding Exchange and Cooperation in Green Finance, Collaboratively Exploring Cutting-Edge Paths International financial institutions We have made continuous efforts to explore domestic cooperation opportunities and international communication channels for green finance, and put into place a green financial exchange and cooperation circle consisting of industry associations, shareholder institutions, interbank financial institutions, and international organizations. We have also carried out industry-university-research cooperation in multiple Non-profit organizations Exchange results directions to jointly explore the development path of green finance. 49 50 6 Risk Management, Longterm Mechanisms 6.1 Analyzing Environmental Risks and Opportunities, Taking Active Response Measures 6.2 Improving Environmental Risk Identification Process, Guarding against "Greenwashing" Risk 6.3 Establishing ESG Risk Management and Control Mechanisms, Achieving Differentiated Client Management 51 52 Report on Green Finance in 2022 6.1 Analyzing Environmental Risks and Opportunities, Taking Active Response Measures On the one hand, this risk may result in increased mediumterm operating costs of the bank due to failure to keep up with the development of financial technology; on the other hand, elimination may be caused by the untimely lowcarbon technology transition of investees, causing mid- andlong term bad debt losses of the bank. We have fortified our foundations, enhanced technological governance, advanced a digital transition strategy centered around "cloud-based + online + intelligent" approaches, and bolstered technological empowerment. Market changes These risks might result in midterm increases in operating costs of the bank due to shifts in client preferences, market prices (e.g., water, electricity, carbon), and asset pricing. We have formulated market risk management strategies to enhance their roles in policy guidance, continually refined our market risk limits and authorization management systems, optimized market risk measurement frameworks, and strengthened overall risk control. Reputation changes These risks, originating from negative subjects in the investment environment, could bring about long-term reputational hazards for the bank. We have effectively conducted public opinion monitoring and assessment, innovatively promoted branding efforts, reinforced comprehensive reputation management, and conducted impactful internal training. Resource efficiency and energy source changes These opportunities that may occur in routine operations could result in reduced operating costs of the bank by utilizing recycling techniques, reducing water usage and consumption, or investing in renewable energy projects. We have strictly adhered to relevant national laws and regulations, upheld the concept of "green operations and offices," and strived to mitigate the environmental impact of their operations. These opportunities, stemming from the development and/ or expansion of low-emission goods and services, could diversify the bank's sources of revenue and demand. We have centered on the national carbon market, enhanced our research in green finance, developed financial products related to carbon emissions rights, and concurrently advanced innovation in green finance products within the investment banking and capital market sectors. Technological innovation The bank has based on the "Carbon Peaking and Carbon Neutrality" goals and the relevant requirements of climate risk management, comprehensively considered the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) , and took countermeasures against potential physical risks and transition risks. In this way, a strategic management mechanism applicable to the green finance strategic development has been put into place. Transition risks Analysis of the Bank's Environment and Response Mechanism Risk/Opportunity impact analysis Countermeasures of the bank These risks may cause shortterm disasters in the bank in some areas severely hit by typhoon weather, increasing the bank's operating costs. We have paid attention to any possible extreme weather continuously, and improved our risk response capabilities through targeted disaster prevention training for clients. Chronic climate change or environmental issues These risks may occur during the investment process, which would result in a mid-and-long impact on the bank's income and may cause bad debt losses. We have deeply explored the green finance market to support green development with practical actions, and focus on the main tracks and innovation fields of green finance, strengthen coordination and cooperation, and seize the layout of assets. Policy and legal changes These risks may have a midand long-term impact with the promulgation of relevant policies and regulations by the regulatory authorities, which in turn would lead to an increase in the bank's operating costs. We have conducted followup research on laws and regulations continuously, accurately identified and evaluated the impact of legal amendments and new laws on our business activities, and grasped the changing trend of legal risks. Risk/Opportunity factor Extreme weather (such as typhoons and floods) or environmental pollution events Physical risks Transition risks 53 Opportun ities Product, service, and market changes 54 Report on Green Finance in 2022 mechanism, issues have been identified, errors corrected, and processes improved. Comprehensive retrospective examination and verification of past business operations, decisions, and risk management 6.2 Improving Environmental Risk Identification Process, Guarding against "Greenwashing" Risk measures have been taken to ensure compliant and controllable business operations, promoting sustainable development in credit management. We have incorporated the identification and management of environmental-related risks into our overall risk management framework and processes, rigorously controlling "high-emission, energyintensive, and overcapacity" industries. We have also established a dynamic tracking mechanism, enhancing monitoring of environmental-related risks, promptly learning the risk status of credit assets, and adopting differentiated management for different levels of environmental risks. 6.3 Establishing ESG Risk Management and Control Mechanisms, Achieving Differentiated Client Management In response to the requirements of Guidelines on Green Finance for the Banking and Insurance 6.2.1 Identify green credit for standardized credit process Differentiated management has been practiced to strictly control financing to "high-emission, energyintensive, and overcapacity" industries. We have enforced environmental standards in our credit operations based on national industrial policies and energy conservation and environmental protection policies, and employed differentiated industry authorization management. For businesses that aligned with the green finance classification criteria, a green approval channel has been established to improve approval efficiency, allocate credit resources, and ensure business deployment. For enterprises and projects that do not meet environmental requirements, a "one-vote veto system" has been adopted to strictly control loans to "high-emission, energy-intensive, and overcapacity" industries. Industries issued by the China Banking and Insurance Regulatory Commission, we have formulated policies and systems for environmental, social, and governance risk management to achieve differentiated client management. We have established assessment criteria for environmental, social, and governance risks associated with clients and dynamically categorizes and assesses their risks. Significant ESG risks have been managed through a list-based approach. We have initiated the construction of the management system for ESG risks as part of its green finance plan, which entails integrating risk management throughout the investment and financing process and using as a pivotal reference in each phase. ESG Risk Management Process of Bank of Nanjing 01 Due diligence phase 6.2.2 Practice green credit management to mitigate credit risks Establish a dynamic tracking mechanism to monitor environmental credit ratings The bank has implemented a dynamic green attribute tracking and identification mechanism throughout the entire credit granting process in our green credit management practices. During business review, our personnel have conducted compliance audits of project establishment, environmental We have authenticated the environmental, safety, and legal compliance status of clients and projects within the context of their respective industries and regions. 02 Compliance investigation phase We have entailed meticulous scrutiny of the authenticity, effectiveness, and comprehensiveness of environmental impact assessment documents. 03 Credit approval phase impact assessments, and necessary permits. Additionally, environmental and social risk prevention and We have practiced dynamic management and differentiated credit processes based on the management have been integrated into post-loan management, and a dynamic tracking mechanism environmental, social, and governance risk assessments of clients. On this basis, green and low- has been established to issue timely warnings for enterprises and projects not meeting environmental carbon project credit applications received preferential treatment. standards. For clients with red or black environmental credit ratings, corrective actions or withdrawal requirements have been enforced. Practice a review mechanism through retrospective examination to strengthen internal credit supervision To further enhance risk management and the accuracy of business decisions, we have strengthened our review mechanism through retrospective examination. By integrating environmental and social risk prevention and management into post-loan management and establishing a dynamic tracking 55 04 Contract management and fund disbursement phase Relevant constraint clauses have been added to contracts for clients and projects with significant ESG risks. 05 Post-loan management phase Post-loan dynamic assessments have been strengthened. A risk warning mechanism has been established based on environmental credit information and environmental penalty data to enable timely risk mitigation measures for clients engaged in green finance businesses. 56 7 Green Operations, Demonstrated Benefits 7.1 Green Loans of the Bank and Their Environmental Impact 7.2 Environmental Benefits of the Bank's Environmental Protection Measures 57 58 Report on Green Finance in 2022 The bank has proactively promoted innovative development in green finance businesses and offered From the perspective of industry allocation of green credits, the bank's green industry financing in funds for various industries for green and low-carbon, and sustainable development, as well as improving 2022 was mainly directed towards green infrastructure upgrading, ecological environmental industry, and social livelihood and supporting national environmental and climate strategies. Simultaneously, the energy conservation and environmental protection industries. bank has been engaged in green office initiatives, green public welfare projects, and green awareness campaigns, accelerating our comprehensive transition towards environmental friendliness and effectively reducing the negative impact of operational activities on the environment. 7.1 Green Loans of the Bank and Their Environmental Impact 7.1.1 Overview of green credit In the past three years, the bank's green credit business maintained steady growth. By the end of 2022, the bank achieved a green credit balance of CNY 132.956 billion, representing an increase of 34.61% over the beginning of the year, with a total of 3,268 green credit transactions in 2022. Throughout 2022, the bank issued a green bond with a substantial scale of CNY 5 billion. By the end of 2022, the bank held a 2022 Green Credit Balance and Proportion of Bank of Nanjing Green industries Loan balance (CNY 100 million) Proportion (%) Green infrastructure upgrading industry 672.32 50.57 Ecological environmental industry 386.00 29.03 Energy conservation and environmental protection industry 169.43 12.74 Clean energy industry 54.13 4.07 Clean production industry 43.24 3.25 Green service industry 4.45 0.33 balance of approximately CNY 8.872 billion of green bonds, spanning sectors including, but not limited to, green transportation equipment, efficient energy system operations, wind power generation infrastructure construction and operations, and green building initiatives. Overview of Green Credit of Bank of Nanjing Classification Unit 2022 2021 2020 Total loan balance CNY 100 million 9,459.13 7,903.22 6745.87 Green credit balance CNY 100 million 1,329.56 987.73 674.71 Proportion of green credit % 14.06 12.50 10.00 Number of green credit clients Nr. 2,400 1,588 1,230 Number of green credit transactions Number of transaction 3,268 2,277 1,837 Green bond issuance scale CNY 10,000 500,000 500,000 0 Balance of green bonds purchased and held4 CNY 10,000 887,195 447,674 154,775 4. Balance of green bonds purchased and held: Balance of green bonds purchased and held: It refers to the balance of green bonds that are issued by non-financial enterprises and invested by our bank's own funds. 59 60 Report on Green Finance in 2022 7.1.2 Environmental benefits of green credits In accordance with the Guidelines for Calculating Energy Conservation and Emission Reduction of Green Credit Projects provided by the China Banking and Insurance Regulatory Commission in the Notice of the Office of the China Banking and Insurance Regulatory Commission on the Relevant Work of the Green Financing Statistical System (YBJBBH No. 2020739), we calculated the environmental benefits of our green credit projects.The specific environmental benefits generated by the Bank's green credit delivery in 2022 are shown in the table below. 7.2 Green Loans of the Bank and Their Environmental Impact 7.2.1 Energy-efficient office, green environmental protection The bank has strictly adhered to the provisions of laws and regulations such as the Environmental Protection Law of the People's Republic of China, the Water Law of the People's Republic of China, the Atmospheric Pollution Prevention and Control Law of the People's Republic of China, the Energy Environmental Benefits of Bank of Nanjing's Green Credits in 2022 Conservation Law of the People's Republic of China and the Law on Promoting the Circular Economy of the People's Republic of China . We have upheld the concept of green operation and office, striving to create a green and low-carbon office environment from aspects such as conservation of water, Equivalent energy conservation and emission reduction Unit 2022 Carbon dioxide equivalence Ton 165,202.89 Standard coal Ton 30,783.01 Chemical oxygen demand Ton 3,899.91 Sulfur dioxide Ton 987.43 Ammonia nitrogen Ton 314.51 Oxynitride Ton 141.11 Total phosphorus Ton 50.32 electricity, grain and materials, waste classification, and differentiated rate service management, to reduce the negative impact of our operations on resources and the environment. In 2022, the bank did not experience any significant environmental violations. Green office management The bank has initiated water and electricity conservation and environmental protection actions in the whole bank, and encouraged our staff to reduce air Water and electricity conservation management Grain conservation management Material conservation management green credit projects in various industries using the above calculation formula. labels such as "Cherish Food" and "Thrifty and Economical" in cafeteria areas, encouraging all our staff to take food in appropriate amounts to save every grain. processes, setting up paper recycling areas, and placing "Save Paper" labels, advocating for energy and material conservation in routine office work. The bank has actively promoted waste classification through awareness industries and the energy efficiency benefits they produced. By combining the total investment of each balance for projects, we calculated annual energy conservation and emission reduction of different practice the concept of green office through practical actions. The bank has encouraged "paperless office" by implementing online approval Credit Projects , we have used different calculation methods for green credit projects based on different project group, post-completion energy conservation and emission reduction data, and the bank's loan conditioning operation time, turn off faucets when not in use, and actively The bank has initiated a "Clean Plate Action" throughout the bank, placing 7.1.3 Explanation of the quantitative environmental impact calculation method Based on the Guidelines for Calculating Energy Conservation and Emission Reduction of Green Initiatives by Bank of Nanjing campaigns and guidance, implemented separate recycling mechanisms Garbage classification management for leftovers and tissues, and set up waste classification bins to promote resource recycling through practical actions. The bank has integrated travel booking functions into our financial shared Annual energy conservation and emission reduction amount of projects funded by loans Loan balance of the bank for projects Total project investment system, providing all our staff with online booking and reservation services Annual energy conservation and emission reduction amount after the projects are completed for flights, hotels, train tickets, and ground transportation. The online Business travel service management management system for business travel services reduced our operational carbon emissions through online unified settlement and staff pre-financing, promoting the bank's transition to green operation and development. 61 62 Report on Green Finance in 2022 7.2.2 Standard procurement for low-carbon implementation 7.2.4 Spreading and popularizing green philosophy The bank has conducted centralized procurement activities in accordance with the Centralized We have proactively responded to the United Nations Sustainable Development Goals and the Procurement Management Regulations of Bank of Nanjing . Depending on the type of centralized "Carbon Peaking and Carbon Neutrality" initiative. Specifically, we have focused on green and low-carbon procurement projects, the procurement methods primarily include open tendering, invitation to tender, development, advocating "energy conservation, emission reduction, and low-carbon living." Through single-source procurement, and contract renewal with original suppliers. The bank has adhered to the initiatives centered on themes such as "Earth Day" and "Biodiversity", we have conducted campaigns to guidelines of centralized procurement bidding management and the terms of contracts signed with promote green finance, fostering public awareness towards environmental conservation. suppliers, requiring suppliers to comply with relevant clauses related to safety management, labor regulations, green environmental protection, and other aspects, and strictly followed these requirements. 7.2.3 Green public benefit campaigns We have championed the ideals of green and environmental consciousness. Specifically, we have steered our executives and staff towards cultivating eco-friendly, healthy, and low-carbon work and lifestyle practices through actions like tree planting. This initiative aligns with the modern development ethos of conserving resources and safeguarding the environment. Bank of Nanjing Arbor Day activities In the spring of 2022, the Bank of Nanjing's Youth League Committee launched a voluntary tree-planting campaign. Various youth associations at the primary level within the bank enthusiastically embraced this endeavor, mobilizing volunteers to engage in tree-planting endeavors. These actions served to enhance ecological well-being and contributed to the magnificence of our civilization. Promotion of Green Principles by Bank of Nanjing Bank of Nanjing initiates Arbor Day activities Innovative "Xin e Ban" to practice the green and environmentally-friendly philosophy Lianyungang Branch We have forged a holistic ecosystem and innovatively "Nurturing Hope Seedlings, Uplifting Youth Spirit" Themed Youth Activity In May 2022, the Lianyungang Branch organized the "Nurturing Hope Seedlings, Uplifting Youth Spirit" themed event at HuaGuo launched the e-banking app "Xin e Ban" service tailored to our corporate clients. "Xin e Ban" offers personalized services such as transportation, procurement, dining, and business travel. It encompasses features like digital management of official vehicle travel, online procurement and dining, and integrated business travel approval. These Mountain National Forest Park. Volunteers collected waste and provided guidance on civilized behaviors to visitors. services have enhanced financial processing efficiency for enterprises, reduced paper resource consumption, and effectively promoted corporate green transition. Lianyungang Branch's Environmental Themed Youth Activity 63 Bank of Nanjing Bank of Nanjing "Xin e Ban" service tailored 64 8 Data Governance, Enhanced Systems 8.1 Establishing Internal and External Data Management Systems 8.2 Conducting Data Security Classification and Grading 8.3 Establishing Information System Data Emergency Plans 65 66 Report on Green Finance in 2022 The bank has placed a strong emphasis on data security, and progressively enhanced our information security management capabilities to improve operational efficiency. For high-quality data standard management, we have established the Data Standard Management Measures of Bank of Nanjing and detailed the Implementation Rules of the Data Standard Management Measures of Bank of Nanjing . These measures have further refined our data management system, elevated our data control, and strengthened our data standard management. 8.2 Conducting Data Security Classification and Grading 8.2.1 Data security We have established a data management organizational structure, formed a data management committee at the executive level and designated dedicated individuals directly responsible for data security management. Policies such as the Data Security Management Measures of Bank of Nanjing and the Data Classification Management Measures of Bank of Nanjin g have been formulated to 8.1 Establishing Internal and External Data Management Systems Data collection phase Data storage phase We have fully prioritized the legality of collecting personal financial information, and strictly implemented regulatory guidelines and internal management systems, ensuring complete transparency and authorization before collecting and using information. Data collected from consumers for financial services have been deleted after the service cycle ended. We have refrained from collecting personal data from third parties without client authorization unless legally required. In cases of data collection from external entities, all processes involve explicit delineation of responsibilities and commitments for both parties, alongside specifying the scope and intent of data acquisition via formal agreements. This guarantees the legality and authenticity of the data we obtained. We have checked every data storage location, security, and sensitivity, thus improving access permissions for data at different levels. Based on the level of equipment protection, different physical security zones have been established. Key devices like network equipment and core systems are placed in dedicated areas with independent access controls for isolation and protection, ensuring the security of these areas. outline standardized requirements for classifying data based on importance, sensitivity, and impact. These policies also outline processes for applying for and approving data usage, thus reinforcing data security awareness across all business lines and branches at each level. 8.2.2 Network security We have made coordinated efforts to advance cybersecurity and IT-based work, and continuous efforts to build a secure and controllable information technology system. We have formulated the Implementation Rules for the Responsibility System of Bank of Nanjing Party Committee for Cybersecurity Work to clarify individuals directly responsible and the primary responsible person for cybersecurity work, further enhancing accountability in cybersecurity efforts. A cybersecurity leadership group has been established, tasked with deliberating on cybersecurity-related matters, making decisions, organizing deployments, and providing guidance and supervision across the bank. 8.3 Establishing Information System Data Emergency Plans We have developed the Emergency Plan of Bank of Nanjing against Network Security Incidents to address cybersecurity incidents , including harmful program incidents, network attacks, information destruction incidents, etc. The plan encompasses incident classification, emergency plan management and Data usage phase We have strictly distinguished among production, development testing, and office environments. Data upload and download are only permitted after approval processes. Data transitioning from production to development and testing environments must undergo desensitization before use. Leveraging enterprise cloud storage ensured our safer data usage. drills, emergency response, emergency resource provision, and continuous improvement. The plan aims to enhance the bank's capabilities in responding to and managing cybersecurity incidents, minimizing the negative impact and actual losses resulting from such incidents on critical business operations. In this way, we have well protected investors, clients, and the bank's interests, providing institutional support for maintaining financial security and stability. We have conducted regular security assessments of production applications, systems, networks, physical environments, etc., to comprehensively control data security. We have had both our internal and Data transmission phase We have practiced end-to-end protection of sensitive data, ensuring encryption throughout the data usage process to prevent tampering or interception during communication and transmission. external business systems undergo routine vulnerability scans and system upgrades, with ongoing efforts to identify and address vulnerabilities. Effective measures, including antivirus and desktop security, have been deployed throughout the bank's intranet, with regular log analysis reports generated to preempt risks and prevent malicious code from infiltrating and stealing data. Multiple offensive and defensive drills have been conducted to enhance the bank's practical network security skills and emergency response capabilities. 67 68 9 Well-established Plans for A Promising Future 69 70 Report on Green Finance in 2022 Well-established Plans for A Promising Future In the context of global climate change, sustainable development has become a crucial concern for financial institutions. In the future, the bank will diligently focus on new opportunities in green and lowcarbon transition and anchor its low-carbon developmental direction with ESG as a core principle. We will enhance environmental benefits in operations, establish a unique path for green finance transition, and contribute to the industry leadership. By implementing a low-carbon transition strategy and continually optimizing the asset allocation. The bank will align with the "Carbon Peaking and Carbon Neutrality" goals and the new economic development pattern. We will explore innovative approaches to support green and low-carbon transition, thereby optimizing the asset allocation of Bank of Nanjing, leveraging the sustainable, lowrisk, and stable returns of green and low-carbon assets. This will continually enhance the quality and effectiveness of green finance businesses, driving the transition, upgrading, and high-quality business development of the bank. Integrating ESG throughout the credit process and refining risk management mechanisms. The bank will consistently address the requirements of the Guidelines on Green Finance for the Banking and Insurance Industries. By utilizing ESG concepts and methods in line with industry characteristics, we will establish an ESG risk management framework and a forward-looking risk assessment mechanism, safeguarding the sustainable development across the bank. With a focus on operational carbon neutrality and social responsibility. The bank will focus on climate risk management and mitigation measures. We regard "Energy Saving and Emission Reduction and net zero development" as operational targets, demonstrating our social responsibility and active role in the sustainable development. We aim to establish a positive image as a green bank, thereby significantly enhancing the brand recognition and influence. 71 72 Index of References to International Information Disclosure Guidelines Index of Guidelines for Environmental Information Disclosure of Financial Institutions Index content 1. Overview in the Year Index of Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) Index content Index of disclosed content Chapter II of this report 2. Environmental Governance Structure of Financial Institutions 2.1 At the Level of the Board of Directors Chapter III (I) of this report 2.2 Under the Level of the Board of Directors Chapter III (II), (III), (IV) of this report 1. Governance 1.1 Describe the board’s oversight of climate-related risks and opportunities. Chapter III (I) of this report 1.2 Describe management’s role in assessing and managing climaterelated risks and opportunities. Chapter III (II) of this report 2. Strategy 3. Environmental Policy Framework of Financial Institutions 3.1 International Conventions, National and Regional Environmental Policies Chapter II of this report 3.2 Current Environmental Policies of Financial Institutions 4. Environmental Product and Service Innovations of Financial Institutions 2.1 Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. Chapter VII (I) of this report Chapter IV of this report 2.2 Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning. Chapters IV and VII of this report Chapter V of this report 3. Risk Management 5. Environmental Risk Management Process of Financial Institutions 3.1 Describe the organization’s processes for identifying and assessing climate-related risks. 5.1 Environmental Impact of Financial Institutions' Environmental Risks Chapter VII (I) of this report 3.2 Describe the organization’s processes for managing climaterelated risks. 5.2 Environmental Risk Management and Process of Financial Institutions Chapter VII of this report 6. Impact of Environmental Factors on Financial Institutions 3.3 Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management. Chapter V of this report 7. Environmental Impact of Financial Institutions' Investment and Financing Activities Chapter VIII (I) of this report 8. Environmental Impact of Financial Institutions' Business Activities Chapter VIII (II) of this report 9. Data Compilation, Verification, and Protection Chapter IX of this report 10. Green Finance Innovation and Research Achievements Chapter VI (II) of this report 73 Index of disclosed content Chapter VII of this report 4. Metrics and Targets 4.1 Disclose the metrics used by the organization to assess climaterelated risks and opportunities in line with its strategy and risk management process. Chapter VII of this report 4.2 Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. Plan for future disclosure 74 Bank of Nanjing Principles for Responsible Banking Report 2022 Retail banking business The bank provides services including retail loans, savings and deposits, credit card businesses, remittance services and others, to individual clients. In 2022, the retail banking sector further deepened its transformation and enhanced the management capabilities through the implementation of the "Large Retail Strategy 2.0" reform. There was a continuous focus on strengthening the team composition and capacity building. The bank has proactively Principle 1: Alignment responded to challenges, and the financial asset scale of retail clients was over CNY 620 billion. We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed The bank has innovatively created the comprehensive financial service model of "Business Home", maintaining a steady growth in consumer loans and mortgages. This has led to the in the Sustainable Development Goals, the Paris Climate Agreement and relevant national and regional frameworks. initial formation of a new situation where the "Three Engines" (consumer loans, mortgages, Business model Describe (high-level) your bank’s business model, including the main customer segments served, types of products and services provided, the main sectors and types of activities across the main geographies in which your bank operates or provides products and services. Please also quantify the information by disclosing e.g. the distribution of your bank’s portfolio (%) in terms of geographies, segments (i.e. by balance sheet and/or off-balance sheet) or by disclosing the number of customers and clients served. and micro and small loans) in retail loans develop synergistically. The bank has become the first commercial bank to obtain the qualification to start the personal pension business, and the retail payment scenarios and product functions have been further enriched. The bank has accelerated the digital transformation of credit card businesses, improving the product matrix and introducing the N+ membership system. As a result, the client base for N Card credit cards has surpassed one million. In addition, the bank has also improved private banking product portfolios. We have successfully launched retail credit-related private trust products and the first charitable trust product. The assets under management for private trust products have grown by Response Links and references Bank of Nanjing was established on 8 February 1996 and is headquartered in Jiangsu (Link to current report unless 14% compared to the beginning of the year. The bank has strengthened the operation of Internet clients and the construction of scenario finance. We successfully acquired Suning Consumer Province, China. Our services mainly cover the Yangtze River Delta and Beijing. After 27 years of operation and development, Bank of Nanjing has grown into a commercial bank with sound corporate governance, distinctive business characteristics, excellent quality and otherwise stated) Bank of Nanjing Annual Report 2022 / Section IV Management Finance Co., Ltd. and officially renamed it as BON BNPP Consumer Finance Company. With an increased capital of CNY 5 billion, it has achieved independent licensing and embarked on a new chapter of operating as a consumer finance company. By the end of 2022, the operating efficiency and outstanding competitive advantages. The bank operates within the business scope approved by China’s financial regulatory authorities and engages in various business activities. Our core businesses include corporate banking, retail banking, capital market Discussion and Analysis, p.19 (https://www.njcb.com.cn/njcb/ gywx/_300914/_301079/675363/ income of retail banking business was CNY 11.042 billion, accounting for 24.75% of the bank’s total operating income. business and other related services. The businesses include accepting public deposits; granting short-, medium- and long-term loans; handling settlements at home and abroad; handling bill acceptance and discount; issuing financial bonds; issuing, cashing and selling government bonds as an agent; buying and selling government bonds and financial bonds; engaging in inter-bank borrowing; buying and selling foreign exchange products by ourselves or as an agent; engaging in bank card business; providing letter of credit services and guarantees; handling receipts and payments and insurance businesses as an agent; providing safe deposit box services; and other businesses approved by the China Banking and Insurance Regulatory Commission (CBIRC). index.html) Capital market business (Financial market) Corporate banking business Bank of Nanjing Annual Report 2022 / Section IV Management Discussion and Analysis, p.4552, and Financial Statement N o t e s , p . 2 0 7 ( h t t p s : // w w w. n j c b.c o m .c n / n j c b / gywx/_300914/_301079/675363/ index.html) The bank provides services including corporate loans, bill issuance, trade financing, corporate deposits, remittance services and others, to corporate clients. In 2022, the bank’s corporate banking sector remains a client-centric strategy and continues to focus on the real economy, deepen the strategic implementation and enhance the transformation momentum. By cultivating business characteristics and professional advantages, the bank solidifies its position and further improves the quality and effectiveness of services to the local and real economy. By the end of 2022, the operating income of corporate banking business reached CNY 22.144 billion, accounting for 49.64% of the bank’s total operating income. In addition, the bank has been continuously guiding credit resources towards strategically important areas such as green finance, inclusive small and micro enterprises, technological development, and rural revitalization. The loan balance in these areas has increased significantly compared to that in the beginning of the year, with growth rates of 34.61%, 38.10%, 29.11% and 39.89%, respectively. These growth rates exceed the average growth rate of the total corporate loans. 75 The capital market business line engages in fund investment, asset management and trust plan investment, bond investment, repurchase and resale, and interbank lending. In 2022, the central levels of financial market interest rates remained relatively low for a considerable period. However, towards the end of the year, there was a noticeable adjustment as market expectations shifted. Both proprietary trading and wealth management businesses in the financial market sector faced periodic challenges. However, despite the complex and challenging external environment and unexpected difficulties, the bank remained focusing on overall business operations. We strengthened our efforts to enhance revenue generation, support business operations, and manage asset-liability adjustments. The bank continued to leverage the synergistic effects within sectors, facilitating the successful issuance of perpetual bonds, green bonds, and other financial bonds. We also enhanced the coordination among investment trusteeship, distribution and sales. In addition, the financial market department transformation of branches was promoted with good results. In the financial market sector, we strived to maintain its stable and upward trends with the high-spirited attitude of "precision, prowess and planning for excellence". By the end of 2022, the operating income of capital market business was CNY 11.353 billion, accounting for 25.45% of the bank’s total operating income. By the end of 2022, the total number of branches of the bank reached 242, fully covering all counties in Jiangsu Province. The assets, total deposits, annual operating income, and net profit attributable to shareholders exceeded CNY 2 trillion, CNY 1.2 trillion, CNY 44.6 billion, and CNY 18.4 billion respectively, and its total loans were nearly CNY 1 trillion. The bank currently ranks the 91st among the 1,000 largest banks in the world published by The Banker, a British magazine, and 21st in the 2022 "Top 100 Chinese Banks List" selected by China Banking Association. 1 XinDong Green and Going with Stability and Sustainability / 1.1 Overall of Green Finance / 1.1.1 About Bank of Nanjing, p05. 76 By the end of 2022, the bank’s loan balance in Jiangsu Province was CNY 814.217 billion, accounting for 86.08% of the total loan balance, an increase of 3.81 percentage points from the Bank of Nanjing Annual Report 2022 / Section IV Management end of last year; the loan balance in regions outside Nanjing was CNY 673.22 billion, an increase Discussion and Analysis, p.30 of CNY 109.942 billion from the end of last year. Among them, the loan balances in Jiangsu Province (except Nanjing), Shanghai, Beijing, and Zhejiang accounted for 57.25%, 3.83%, 4.41%, (https://www.njcb.com.cn/njcb/ gywx/_300914/_301079/675363/ and 5.68% of the total loan balance respectively. index.html) Regional distribution As of 31 December 2022 Strategy alignment Does your corporate strategy identify and reflect sustainability as strategic priority/ies for your bank? Yes No Please describe how your bank has aligned and/or is planning to align its strategy to be consistent with the Sustainable Development Goals (SDGs), the Paris Climate Agreement, and relevant national and regional frameworks. Does your bank also reference any of the following frameworks or sustainability regulatory reporting requirements in its strategic priorities or policies to implement these? Balance (CNY 1,000) Proportion (%) Jiangsu Province 814,217,234 86.08 International Labour Organization fundamental conventions Wherein: Nanjing 272,693,162 28.83 UN Global Compact Shanghai 36,276,841 3.83 UN Declaration on the Rights of Indigenous Peoples Beijing 41,675,295 4.41 Zhejiang Province 53,743,310 5.68 Total 945,912,680 100.00 UN Guiding Principles on Business and Human Rights Any applicable regulatory reporting requirements on environmental risk assessments, e.g. on climate risk - please specify which ones: "Green Finance Guidelines for the Banking and Insurance Industry" issued by the China Banking and Insurance Regulatory Commission, and "Guidelines for Environmental Information Disclosure by Financial Institutions" issued by the People’s Bank of China Any applicable regulatory reporting requirements on social risk assessments, e.g. on modern slavery - please specify which By the end of 2022, the bank’s loan offerings are mainly concentrated in the leasing and business services, manufacturing, and wholesale & retail trade industries, etc. The top 10 industries and their corresponding proportions are as follows: Industry As of 31 December 2022 Loan amount (CNY 1,000) Proportion (%) Leasing and business services 247,425,283 26.16 Manufacturing 103,625,920 10.95 Wholesale & retail trade 96,745,675 10.23 Water conservancy, environment and utility management 72,152,232 7.63 Real estate 49,299,673 5.21 16,885,365 1.79 15,947,337 1.68 12,583,392 1.33 12,287,877 1.30 Scientific research and technological service 11,850,460 1.25 Total 638,803,214 67.53 Farming, forestry, animal husbandry and fishery Construction Information transfer, software and information technology service Production and supply of electricity, heat, gas and water ones: -----------------------------------None of the above Response Links and references Aligned with the United Nations Sustainable Development Goals (SDGs) ( L i n k t o c u r re n t re p o r t u n l e s s otherwise stated) Bank of Nanjing Environmental, In 2022, the bank integrated its experience and development in society, economy and environment with the United Nations SDGs and actively promoted the realization of these goals to seek a win-win situation between commercial and social values. The following goals are identified as highly relevant to the development of the bank: No Poverty (SDG1), Good Health and Well-being (SDG3), Quality Education (SDG4), Gender Equality (SDG5), Affordable and Clean Energy (SDG7), Decent Work and Economic Growth (SDG8), Industry, Innovation and Infrastructure (SDG9), Reduced Inequalities (SDG10), Sustainable Cities and Communities (SDG11), Responsible Consumption and Production (SDG12), Climate Action (SDG13), and Partnerships for the Goals (SDG17). Aligned with the Paris Agreement and China’s "Carbon Peaking and Carbon Neutrality" goals Based on long-run sustainable development, the bank implemented the Paris Agreement and China’s strategy on carbon targets and took a series of actions to contribute to the environmental protection, deeply explore the green finance market, and support green development. In 2022, the bank proposed the Guiding Opinions of Bank of Nanjing on Developing Green Finance to Help Dual Carbon Strategy in 2022 based on six aspects: guiding ideology, development targets, four key areas, five strengthening measures, characteristic development models and organizational leadership. We not only made substantive policies in response to the Paris Agreement, "keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels", but also contributed to implementing the national and local carbon target-related policies such as Working Guidance for Carbon Peaking and Social and Governance Repor t 2 0 2 2 / 1. 2 S u p p o r t i n g t h e United Nations Sustainable D e v e l o p m e n t G o a l s , p .1 6 (https://www.njcb.com.cn/njcb/ gywx/_300914/_301071/675236/ index.html) Bank of Nanjing Annual Report 2022 / Section VI Environmental and Social Responsibility, p.96 (https://www.njcb.com.cn/njcb/ gywx/_300914/_301079/675363/ index.html) Carbon Neutrality in Full and Faithful Implementation of the New Development Philosophy of the CPC Central Committee and the State Council (Z Fa [2021] No. 36) and Notice of the General Office of the Provincial Government on Forwarding the Guiding Opinions of Nanjing Branch of the People’s Bank of China and Other Departments on Vigorously Developing Green Finance (SZB Fa [2021] No. 80) of Jiangsu Province. 77 78 Aligned with major national and regional development strategies Bank of Nanjing Environmental, Focusing on major national and regional development strategies, the bank optimized Social and Governance Repor t 2022 / Addresses of Chairman the allocation of financial resources, improved the quality and efficiency of financial and comprehensive services, strongly supported advanced manufacturing industries, better served small and micro businesses, and contributed to the rural revitalization. We successively launched special programs such as "1+3" action plan and "Xin Manufacturing" around the transformation of the entity, continuously expanded and consolidated the entity clienteles, a n d G o v e r n o r, p . 4 ( h t t p s : // w w w. n j c b.c o m .c n / n j c b / gywx/_300914/_301071/675236/ index.html) and improved the capability to serve the real economy. We improved the internal performance appraisal mechanism and resource allocation, and gave priority to guarantee the quota of manufacturing loans. The growth rate of manufacturing loans exceeded 22.36%. We are also continuously driving forward key initiatives such as empowering specialized and sophisticated small- and medium-sized entertprises (SMEs), doubling the count of high-tech enterprises, and facilitating financing docking of technology-oriented SMEs, achieving technological, b) Portfolio composition: Has your bank considered the composition of its portfolio (in %) in the analysis? Please provide proportional composition of your portfolio globally and per geographical scope i) by sectors & industries3 for business, corporate and investment banking portfolios (i.e. sector exposure or industry breakdown in %), and/or ii) by products & services and by types of customers for consumer and retail banking portfolios. If your bank has taken another approach to determine the bank’s scale of exposure, please elaborate, to show how you have considered where the bank’s core business/major activities lie in terms of industries or sectors. Response Links and references In accordance with UNEP FI Sector-Impact Map, the bank selected and analyzed 50 key (Link to current report unless industries in corporate banking business that have positive and negative impacts on the sustainable development. The outstanding loan balance of the assets under analysis as otherwise stated) of the end of 2022 was CNY 648.532 billion, accounting for 95.60% of the total on-balance sheet loan balance of corporate banking business. cultural, and financial loan balances of CNY 66.097 billion, and covering nearly 40% of cooperative clients of specialized and sophisticated SMEs in Jiangsu Province. We introduced financial activities to rural areas and contributed to building a beautiful countryside and c) Context: What are the main challenges and priorities related to sustainable development in the main countries/regions in which your bank and/or your clients operate4 Please describe how these have been considered, including what stakeholders you have boosting rural revitalization. engaged to help inform this element of the impact analysis. This step aims to put your bank’s portfolio impacts into the context of society’s needs. Principle 2: Impact and Target Setting We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services. To this end, we will set and publish targets where we can have the most significant impacts. Show that your bank has performed an impact analysis of its portfolio/s to identify its most significant impact areas and determine priority areas for target-setting. The impact analysis shall be updated regularly1and fulfil the following requirements/elements (a-d)2： a）Scope: What is the scope of your bank’s impact analysis? Please describe which parts of the bank’s core business areas, products/services across the main geographies that the bank operates in (as described under 1.1) have been considered in the impact analysis. Please also describe which areas have not yet been included, and why. Response Links and references This year, the bank for the first time adopted the third edition (February 2023 edition) of Portfolio Impact Analysis Tool for Banks provided by UNEP FI to carry out a detailed and systematic impact analysis on the on-balance sheet loans of corporate banking business. This tool enables the bank to identify both positive and negative impacts of the investment portfolio on environment, society, and economy and combine these impacts with the international, national, and local priorities and key policies, which helps identify the most significant impact areas of the portfolio and formulate targets and action plans accordingly. ( L i n k t o c u r re n t re p o r t u n l e s s otherwise stated) Bank of Nanjing Annual Report 2022 / Financial Statement N o t e s , p . 2 0 7 ( h t t p s : // w w w. n j c b.c o m .c n / n j c b / gywx/_300914/_301079/675363/ index.html) 1. That means that where the initial impact analysis has been carried out in a previous period, the information should be updated accordingly, the scope expanded as well as the quality of the impact analysis improved over time. 2. Further guidance can be found in the Interactive Guidance on impact analysis and target setting. 79 Links and references Using the "Context Module" in the third edition of UNEP FI Portfolio Impact Analysis Tool (Link to current report unless for Banks, and combining the 14th Five-Year Plans of China and Jiangsu Province and their 2022 government work report, the bank carried out a comprehensive background analysis of the country and province where the bank operates and identified the main challenges otherwise stated) and key policy directions related to the sustainable development, mainly including: • Biodiversity and healthy ecosystems • Climate stability 2.1 Impact Analysis (Key Step 1) The corporate banking business accounted for 49.64% of the total operating income of the whole bank. Therefore, impact analysis on this sector enables the bank to identify and consider the most significant impact of the asset portfolio, which is then taken as the core to formulate the bank’s sustainable development goals. Response • Circularity • Availability, accessibility, affordability and quality of resources and services Impact area Biodiversity and healthy ecosystems Impact topic Waterbodies SDGs SDG 6&14 Need score* - 4 - 4 3 Yes Yes Yes No Yes Yes Yes Yes Yes Yes Priority of national policies Priority of local policies Air Soil Species SDG 11&12 SDG 15&12 SDG 14&15 Habitat SDG 14&15 * Values range from 1 to 4, representing low to high need. Impact area Climate stability Impact topic Climate stability SDGs SDG 13 Need score 3 Priority of national policies Yes Priority of local policies Yes 3. ‘Key sectors’ relative to different impact areas, i.e. those sectors whose positive and negative impacts are particularly strong, are particularly relevant here. 4. Global priorities might alternatively be considered for banks with highly diversified and international portfolios. 80 Impact area Circularity Response Links and references (Link to current report unless otherwise stated) Impact topic Resource intensity Waste The bank applied the "Institutional Banking (assessment) Module" in the third edition of UNEP FI Portfolio Impact Analysis Tool for Banks to evaluate the performance of industries SDGs SDG 12 SDGs 11, 12 that have positive and negative impacts on the climate stability and financial inclusion, Need score 4 3 Yes Yes and identified industries that have significant impacts on them, accounting for 50.78% and 94.92% of the on-balance sheet loan balance. Yes Yes Priority of national policies Priority of local policies Impact area Impact topic Climate mitigation In the bank’s asset portfolio, the top 10 industries that have significant impacts on climate stability are: Wholesale and retail trade & repair of motor vehicles and motorcycles; Real SDGs SDG 6 SDG 11 SDGs 3, 6 SDG 4 SDG 16 Need score 2 3 3 3 4 Yes Yes Yes Yes No Yes Yes Yes Yes Yes Priority of national policies Priority of local policies estate activities; Administrative and support service activities; Professional, scientific and technical activities; Manufacture of electronic components and boards; Construction; Crop Availability, accessibility, affordability and quality of resources and services Healthcare & Water Housing Education Information sanitation The identification of the above-mentioned impact areas also takes into account the analysis results of major issues of stakeholders carried out by our bank, which were highly consistent with the identified core issues. and animal production, hunting and related service activities; Water collection, treatment and supply; Manufacture of other non-metallic mineral products; and Manufacture of basic metals. In the field of climate mitigation, the Paris Agreement , the UN SDG13 "Climate Action" and relevant policies in China all focus on greenhouse gas emissions. For example, the Paris Agreement requires "global greenhouse gas emissions to peak before 2025 at the latest, and be reduced by 43% by 2030"; and China proposes to achieve carbon peaking before 2030 and carbon neutrality before 2060. The green finance is one of the essential tools to Bank of Nanjing Environmental, Social and Governance Repor t 2022 / 1.6 Annual significance a n a l y s i s , p .1 9 ( h t t p s : // w w w. n j c b.c o m .c n / n j c b / gywx/_300914/_301071/675236/ index.html) Based on these first 3 elements of an impact analysis, what positive and negative impact areas has your bank identified? Which (at least two) significant impact areas did you prioritize to pursue your target setting strategy (see 2.2)5 ? Please disclose.。 Response In accordance with the analysis results of "Institutional Banking (identification) Module" in the third edition of UNEP FI Portfolio Impact Analysis Tool for Banks, after comprehensively considering the environmental, social and economic issues that need to be solved urgently in China and Jiangsu Province, as well as the key policy directions and areas of impact involved in bank assets and the concern of stakeholders, the bank identified climate mitigation and financial inclusion as the two most critical impact areas of Bank of Nanjing, and prioritized the two areas in setting targets, which is also aligned with the green finance and livelihood finance strategies that the bank has been vigorously promoting. Links and references (Link to current report unless otherwise stated) d) For these (min. two prioritized impact areas): Performance measurement: Has your bank identified which sectors & industries as well as types of customers financed or invested in are causing the strongest actual positive or negative impacts? Please describe how you assessed the performance of these, using appropriate indicators related to significant impact areas that apply to your bank’s context. promote carbon emission reduction and cope with climate change. Therefore, the bank selected green credit supply as the main performance measurement indicator in climate mitigation, and laid emphasis on the green credit invested in the above ten industries to expand the positive impact of the bank in this area. Financial inclusion In the bank’s asset portfolio, the top 10 industries that have a significant impact on financial inclusion are: Other financial service activities, except insurance and pension funding activities; Wholesale and retail trade & repair of motor vehicles and motorcycles; Real estate activities; Administrative and support service activities; Professional, scientific and technical activities; Manufacture of electronic components and boards; Computer programming, consultancy and related activities; Manufacture of special-purpose machinery; Construction; and Crop and animal production, hunting and related service activities. The main target of inclusive finance is to provide appropriate and effective financial services for all levels and groups of society with financial service needs at an affordable cost. Therefore, the financial service availability of inclusive subjects is a key indicator to evaluate financial inclusion. The bank selected the service and coverage of inclusive finance as the main performance measurement indicators, and concentrated on the client coverage in the above ten industries to expand positive impacts on financial inclusion. 5. To prioritize the areas of most significant impact, a qualitative overlay to the quantitative analysis as described in a), b) and c) will be important, e.g. through stakeholder engagement and further geographic contextualisation. In determining priority areas for target-setting among its areas of most significant impact, you should consider the bank’s current performance levels, i.e. qualitative and/or quantitative indicators and/or proxies of the social, economic and environmental impacts resulting from the bank’s activities and provision of products and services. If you have identified climate and/or financial health&inclusion as your most significant impact areas, please also refer to the applicable indicators in the Annex. If your bank has taken another approach to assess the intensity of impact resulting from the bank’s activities and provision of products and services, please describe this. The outcome of this step will then also provide the baseline (incl. indicators) you can use for setting targets in two areas of most significant impact. 81 82 Self-assessment summary: Financial inclusion Which of the following components of impact analysis has your bank completed, in order to identify the areas in which your bank has its most significant (potential) positive and negative impacts ？ 6 The bank put forward the Guiding Opinions of Bank of Nanjing on Deepening Financial Services to Boost Rural Revitalization 2022 from guiding ideology, development targets, Scope: Yes In progress No three implementation paths and job security. It is not only consistent with the United Nations SDGs such as "No Poverty", "Good Health and Well-being", "Decent Work and Economic Portfolio composition: Yes In progress No Growth", "Reduced Inequalities", and "Sustainable Cities and Communities", but also an Context: Yes In progress No Performance measurement: Yes In progress No effective measure to promote rural revitalization and development by implementing the Opinions of the CPC Central Committee and the State Council on Comprehensively Which most significant impact areas have you identified for your bank, as a result of the impact analysis? Climate change mitigation and financial inclusion How recent is the data used for and disclosed in the impact analysis? Up to 6 months prior to publication Promoting Rural Revitalization and Accelerating Modernization of Agriculture and Rural Areas (Z Fa [2021] No. 1), Opinions on Financial Support for Consolidating Achievements in the Critical Battle against Poverty and Comprehensively Promoting Rural Revitalization Jointly Released by People’s Bank of China, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, the Ministry of Finance, the Ministry of Agriculture and Rural Affairs and the National Rural Revitalization Administration (Y Fa [2021] No. 171), and Law on the Promotion of Rural Revitalization. Up to 12 months prior to publication b) Baseline: Have you determined a baseline for selected indicators and assessed the current level of alignment? Please disclose Up to 18 months prior to publication the indicators used as well as the year of the baseline. Longer than 18 months prior to publication You can build upon the performance measurement undertaken in 2.1 to determine the baseline for your target. Open text field to describe potential challenges, aspects not covered by the above etc.: (optional) A package of indicators has been developed for climate change mitigation and financial health & inclusion to guide and support banks in their target setting and implementation journey. The overview of indicators can be found in the Annex of this template. If your bank has prioritized climate mitigation and/or financial health & inclusion as (one of) your most significant impact areas, it is strongly recommended to report on the indicators in the Annex, using an overview table like below including the impact area, all 2.2 Target Setting (Key Step 2) Show that your bank has set and published a minimum of two targets which address at least two different areas of most significant impact that you identified in your impact analysis. The targets7 have to be Specific, Measurable (qualitative or quantitative), Achievable, Relevant and Time-bound (SMART). Please relevant indicators and the corresponding indicator codes: Impact area A.1.1 Climate strategy: Does your bank have a climate strategy in place? disclose the following elements of target setting (a-d), for each target separately: a) Alignment: which international, regional or national policy frameworks to align your bank’s portfolio with8 have you identified as relevant? Show that the selected indicators and targets are linked to and drive alignment with and greater contribution to appropriate Sustainable Development Goals, the goals of the Paris Agreement, and other relevant international, national or regional frameworks. Climate You can build upon the context items under 2.1. change Response Links and references Climate mitigation (Link to current report unless otherwise stated) Responding to international, national and regional climate policies, the bank supported the green finance development from system construction, business promotion, standard recognition, and theoretical research around regional emission and carbon reduction and strategic planning of industrial transformation. Goals and actions in climate mitigation are consistent with sustainable development goals, the Paris Agreement, the 14th Five-Year Indicator code mitigation A.1.3 Policy and process for client relationships: has your bank put in place rules and processes for client relationships (both new clients and existing clients), to work together towards the goal of transitioning the clients’ activities and business model? A.1.4 Portfolio analysis: Has your bank analyzed (par ts of) its lending and/or investment portfolio in terms of financed emissions (Scope 3, category 15); technology mix or carbonintensive sectors in the portfolio? Response Yes, we have formulated a climate strategy. We provide customers with convenient service channels for their green finance business to help them transform their activities and business models. For instance, the "Xindong Green - Park Support Program" Special Project of Bank of Nanjing provides a green channel for the approval and promotion of green finance businesses of green parks and enterprises in parks. We have analyzed the carbon emissions (scope 3) of the loan portfolio and the carbon-intensive industries separately. Plans (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035 of the People’s Republic of China and Jiangsu Province, and the framework of green finance development system in China. 6. You can respond "Yes" to a question if you have completed one of the described steps, e.g. the initial impact analysis has been carried out, a pilot has been conducted. 7. Operational targets (relating to for example water consumption in office buildings, gender equality on the bank’s management board or business-trip related greenhouse gas emissions) are not in scope of the PRB. 83 8. Your bank should consider the main challenges and priorities in terms of sustainable development in your main country/ies of operation for the purpose of setting targets. These can be found in National Development Plans and strategies, international goals such as the SDGs or the Paris Climate Agreement, and regional frameworks. Aligning means there should be a clear link between the bank’s targets and these frameworks and priorities, therefore showing how the target supports and drives contributions to the national and global goals. 84 A.1.5 Business opportunities and financial products: Has your bank developed financial products tailored to support clients’ and customers’ reduction in GHG emissions (such as energy efficient mortgages, green loans, green bonds, green securitisations etc.)? We have developed featured products for dual-carbon initiative loans and enriched the green finance product system around "Carbon Peaking and Carbon Neutrality". At the end of 2022, the bank issued new green finance bonds of CNY 5 billion, and the raised funds were mainly invested in project construction of energy conservation and environmental protection. By the end of 2022, CNY 6.586 billion of such funds mainly supported clean energy, public transportation and other areas with remarkable benefits of energy saving and carbon reduction. A.3.1 Financial volume of green assets/lowcarbon technologies: How much does your bank lend to/invest in green assets / loans and lowcarbon activities and technologies? By the end of 2022, the bank’s on-balance sheet green finance loan balance reached CNY 132.956 billion, accounting for 19.60% of the total on-balance sheet loan balances of corporate banking businesses, increasing by CNY 34.183 billion or 34.61% over the beginning of the year; and the number of clients was 2,400, increasing by 812 or 51.13% over the beginning of the year. The balance of green bonds purchased and held was about CNY 8.872 billion, spanning sectors including, but not limited to, green transportation equipment, efficient energy system operations, wind power generation infrastructure construction and operations, and green building initiatives. Climate change mitigation Impact area Financial inclusion Indicator code C.2.1 # of individuals supported with dedicated and effective financial and/or digital education initiatives C.2.3 # of new customers per month Response In 2022, the bank carried out the "π Plan" Science and Technology Innovation Competition, and 11 of the top 20 entries selected among 278 entries collected were implemented and launched. The bank explored the application of "metaverse" scenario and led in developing new areas for bank-toclient interaction. In August 2022, the first digital collection "Hello" was officially released, with over 7 million impressions and over 300,000 views. In October 2022, "Hello World", a metaverse digital finance scenario presented with 3D effect and featured by immersive interactive experience, was officially launched with over 20,000 cumulative registered users by the end of December 2022. In 2022, the number of inclusive loan customers of the bank increased by 11,660 throughout the year, with an average of 972 new customers per month. In case you have identified other and/or additional indicators as relevant to determine the baseline and assess the level of alignment towards impact driven targets, please disclose these. Response Links and references Referring to the United Nations Theory of Change for Climate Mitigation and Theory of Change for Financial Health & Inclusion, the bank used the latest edition of "Institutional Banking (identification) Module" with 2022 as the baseline year to analyze the loan portfolio, client participation and internal systems and procedures and respectively determine the baselines of climate mitigation and financial inclusion. (Link to current report unless otherwise stated) c）SMART targets (incl. key performance indicators (KPIs)9）：Please disclose the targets for your first and your second area of most significant impact, if already in place (as well as further impact areas, if in place). Which KPIs are you using to monitor progress towards reaching the target? Please disclose. Response Links and references Climate mitigation (Link to current report unless otherwise stated) Short-term targets (2023-2024): To establish a guarantee mechanism for the implementation of green strategic goals and the green finance development; to increase the amount of green loans and ensure that the proportion of green loans in the total onbalance sheet corporate loan balances at the end of each year is not lower than that at the beginning of the year. Mid-term targets (2024-2025): The bank is dedicated to expanding green and lowcarbon business initiatives. Our vision is to achieve a comprehensive and systematic approach to green and low-carbon development across the bank. Long-term targets (2026-): We aspire to weave green principles intrinsically into our enduring strategies. We stand poised to be a beacon, offering invaluable insights to small and medium-sized banks globally. Financial inclusion Sustaining targets: Unwavering in our dedication, we consistently fortify commitment to inclusive finance loans, ensuring that the increase of micro and small loans will surpass the bank’s loan growth metrics. Furthermore, we ardently strive for the sustained growth in accounts with loan balances, benchmarked against the commencement of the year. d) Action plan： which actions including milestones have you defined to meet the set targets? Please describe. Please also show that your bank has analysed and acknowledged significant (potential) indirect impacts of the set targets within the impact area or on other impact areas and that it has set out relevant actions to avoid, mitigate, or compensate potential negative impacts. Response Links and references Climate mitigation (Link to current report unless As the Bank of Nanjing embarks on the next phase, we are poised to seize significant opportunities in green development. This involves refining the top-level design, enhancing our development targets, and recalibrating our approaches. By aligning otherwise stated) ourselves with industry benchmarks, we’re taking proactive measures to swiftly allocate green assets and create the advantages of green finance development. （1）Centering on three main tenets of green finance businesses of pollution reduction, carbon offset, and green expansion, the bank’s primary focus areas will be clean energy, green manufacturing, and ecological restoration. Through a strategy combining channels, products and investigations, the bank aspires to steadily boost its green finance businesses. （2）In terms of resource allocation, the bank’s agenda is to devise policies for differentiated allocation of green finance resources, refine the assessment and evaluation system for green finance, and earmark special funds, all of which aim to cultivate a robust incentive mechanism for business growth. （3）In terms of the product innovation, the bank prioritizes the product exploration in popular areas of the green finance, diving deep into niche areas within the sector. By innovating and introducing new products, the bank intends to expand the clientele and enhance the business support. （4）For the talent development and team formation, the bank emphasizes the significance of green development principles. By instituting a robust educational framework for green finance and consistently investing in professional training, the bank strives to elevate the personnel expertise. （5）In terms of international cooperation, our global focus includes fostering partnerships in green finance with leading institutions, such as BNPP. These collaborations are designed to ensure the mutual growth and shared success in the green finance sector. 9. Key Performance Indicators are chosen indicators by the bank for the purpose of monitoring progress towards targets. 85 86 Financial inclusion 2.3 Target implementation and monitoring (Key Step 2) The bank remains unwavering in the commitment to further deepen the framework of For each target separately: inclusive finance policies, setting forth distinct preferential credit initiatives. In alignment with the People’s Bank of China’s mandates, the bank actively puts into action measures Show that your bank has implemented the actions it had previously defined to meet the set target. Report on your bank’s progress since the last report towards achieving each of the set targets and the impact your progress such as reloaning, supportive tools for inclusive micro and small loans, and phased resulted in, using the indicators and KPIs to monitor progress you have defined under 2.2. interest reductions. Such initiatives ensure that policy benefits are efficiently channeled Or, in case of changes to implementation plans (relevant for 2 nd and subsequent reports only): describe the potential to small and micro businesses, significantly reducing their financing costs. By harnessing a multifaceted approach, the bank draws upon key performance indicators, EVA risk- changes (changes to priority impact areas, changes to indicators, acceleration/review of targets, introduction of new milestones adjusted return subsidies, and FTP pricing concessions. This targeted deployment of or revisions of action plans) and explain why those changes have become necessary. policy resources steers the bank towards an enhanced quality and effectiveness in delivering financial services to the small and micro business sectors. Our commitment Response Links and references to fortify foundational support remains robust. Through the adoption of differentiated Climate mitigation ( L i n k t o c u r re n t re p o r t u n l e s s asset quality assessments, refined due diligence protocols, and streamlined business processes, we aim to swiftly establish a sustainable mechanism for inclusive finance. By the end of 2022, the bank had extended an impressive CNY 93.999 billion in financial support to 2,242 energy-saving and environment-friendly enterprises. The on-balance sheet otherwise stated) Bank of Nanjing Annual Report This system embodies our ethos of the courage to lend, the willingness to lend, and the loan balance of green finance at year’s end was CNY 132.956 billion, making up 19.60% of 2022 / Section VI Environmental capability to lend. the bank’s on-balance sheet loan balance of corporate banking business. increasing by CNY 34.183 billion or 34.61% over the beginning of the year; The client base also expanded, with and Social Responsibility, p.96 (https://www.njcb.com.cn/njcb/ a total of 2,400 clients, marking an increase of 812 clients or a growth rate of 51.13% over the gywx/_300914/_301079/675363/ beginning of the year. These figures affirm the bank’s sustained and stable growth trajectory. index.html) • Self-assessment summary Which of the following components of target setting in line with the PRB requirements has your bank completed or is currently in a process of assessing for your… Alignment Baseline SMART targets Action plan 87 … first area of most significant impact: … (please … second area of most significant impact: … (please name it) name it) (If you are setting targets in more impact areas) …your third (and subsequent) area(s) of impact: … (please name it) "Xindong Green - Park Support Program" With a keen focus on the ecological development of industrial parks, the bank launched the innovative "Xindong Green - Park Support Program". This initiative is built upon a tripartite collaboration among banks, governments, and corporates. The heart of this plan lies in fostering direct communications between banks and corporates, facilitating a deeper understanding of the financing needs of parks and corporates. Emphasizing green enterprises and projects, the bank leverages the strengths of "Xindong Green" product suite to deliver comprehensive, efficient, and competitively-priced green finance services. By the end of 2022, the bank had forged green finance cooperation agreements with 12 industrial parks, with over 120 clients already onboarded under this plan, and a total financial commitment nearing CNY 6 billion. Yes Yes Yes In progress In progress In progress No No No Yes Yes Yes In progress In progress In progress No No No million carbon-performance linked loan. This particular loan targets at emission-controlled enterprises holding carbon allowances in the national carbon market. It aims to incentivize enterprises to proactively reduce emissions, thereby facilitating the collaborative efforts of Yes Yes Yes banks and enterprises to achieve the carbon reduction target. In progress In progress In progress No No No Yes Yes Yes In progress In progress In progress No No No • 1 XinDong Green and Going with Stability and Sustainability / 1.2 Highlights of the Reporting Year / 1.2.1 Enhance asset allocation and focus on key green finance areas, p.11 4 Product Innovation and Service Upgrade, p.30-42 "Carbon-performance linked loan" To advance the dual carbon goals, the bank, under the guidance of multiple departments and through extensive market research and validation, has introduced the "carbonperformance linked loan". In February 2022, our Taizhou Branch successfully issued a CNY 40 • Green finance on-lending initiative from policy banks In 2022, in collaboration with the Jiangsu Branch of the China Development Bank, the bank successfully executed the first green finance on-lending initiative from policy banks in China, amounting to CNY 100 million. This on-lending is exclusively designed to bolster the development of small and micro businesses in clean energy, energy conservation, green transportation, and clean production sectors, propelling their green transformation. Moreover, the bank continuously innovates in carbon finance products and investment banking products. We have enriched our green finance product portfolios by launching innovative products such as sustainable development linked bonds, carbon neutrality bonds, and carbon-performance linked loans. These initiatives promote green advancement in areas like clean energy, green manufacturing, and ecological restoration. Concurrently, the bank directs its focus on ecological topics like biodiversity, "Zero-Waste City" initiatives, and the grand protection of the Yangtze River. We have rolled out the "Green+" specialized financial service solutions, consistently exploring new green finance sectors. 88 Financial inclusion By the end of 2022, the full-scale small and micro loan balance supervised by the bank was Principle 3: Clients and Customers CNY 263.33 billion, serving 32,838 loan recipients. The inclusive small and micro business loan balances (excluding discounts) was CNY 90.609 billion, an increase of CNY 24.996 billion or 38.10% over the beginning of the year, which was higher than the average increase of loans of We will work responsibly with our clients and our customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future generations. the whole bank by 19.41 percentage points. There are 29,830 loan recipients, an increase of 11,660 over the beginning of the year. • 3.1 Client engagement Special action initiative for inclusive finance Does your bank have a policy or engagement process with clients and customers 10in place to encourage sustainable practices? In 2022, the bank comprehensively launched the special action initiative for inclusive finance. Yes This strategic endeavor is built on six pillars of excellence, i.e., broadening our service In progress No Does your bank have a policy for sectors in which you have identified the highest (potential) negative impacts? footprint, deepening engagement in strategic sectors, optimizing financing solutions for clients, streamlining service integration processes, amplifying the expertise of our professional Yes In progress No Describe how your bank has worked with and/or is planning to work with its clients and customers to encourage sustainable teams, and improving our governance and internal control structures. With unwavering practices and enable sustainable economic activities11). It should include information on relevant policies, actions planned/ commitment, we’ve accelerated our innovative approaches in inclusive finance and embraced the transformative power of fintech. Central to our efforts is the initiative to expand the scope implemented to support clients’ transition, selected indicators on client engagement and, where possible, the impacts achieved. This should be based on and in line with the impact analysis, target-setting and action plans put in place by the bank (see P2). of the first loan offerings, aiming to provide relief and promote economic stability, all while advancing the rapid rollout of our ‘micro and small loan’ offerings. By the end of 2022, the business balance was CNY 7.853 billion, with 1,834 households. Through diligent coordination Response Links and references on Jiangsu Province’s comprehensive financial service platform, we registered 8,759 credit transactions in 2022, with a total credit amounting to CNY 39.346 billion. Climate mitigation (Link to current report unless The bank continues to foster strong ties with government departments, specialized institutions, otherwise stated) • ‘Xin Partner’ Growth Plan Bank of Nanjing Environmental, At the close of 2016, the bank launched the ‘Xin Partner’ Growth Plan, aiming to provide bespoke comprehensive financial service solutions to small and micro businesses. By the end of 2022, the ‘Xin Partner’ clientele reached 3,904, with a net growth of 918 over Social and Governance Repor t 2022 / 3.4 Supporting livelihood f i n a n c e , p . 4 1 - 4 3 ( h t t p s : // the beginning of the year. The headquarters regularly orchestrates exclusive events like the ‘Xinzuan Privilege Partner Enjoyment’ under the ‘Xin Partner’ theme. Leveraging the ‘Xin Micro Hall’ mini-program, we’ve effectively reached out to our clients, striving w w w. n j c b.c o m .c n / n j c b / gywx/_300914/_301071/675236/ index.html) to enhance the benefits and service levels for the ‘Xin Partner’ clientele. By focusing on diverse industries and various business growth stages, we’ve hosted multiple sessions of ‘Xin Partner’ entrepreneur club events, constructing a platform for the bank-corporate interaction and resource exchange. Furthermore, the bank proactively engages with regions spearheading new urbanization initiatives. Our commitment leans towards partnering with established enterprises that boast robust capabilities, a rich heritage of operational expertise, and consistent revenue performance. Our backing is judiciously extended to urban revitalization endeavors characterized by precise positioning, optimistic growth trajectories, and dependable revenue projections. On the premise of meeting regulatory and compliance requirements, the bank has devised comprehensive credit schemes that suit the characteristics of the project construction funds and timelines. In addition, the bank has forged a strategic alliance with the Nanjing City Digital Governance Center, co-establishing a public payment platform. This platform underpins the financial settlement processes of both governments and enterprise and public institutions. By integrating services such as payment gateway, digital accounts, ‘Xin e-commerce’, and blockchain carbon credits, the bank has curated a suite of offerings, encapsulating unified payment, centralized cash management, city wallet, and reward point wallet. Catering to the clientele, we offer a plethora of payment methods, while internally maintaining a diverse array of financial configurations. The platform has successfully handled nearly 300,000 transactions, representing an impressive turnover of approximately CNY 11 billion. 89 and other key market stakeholders, intensifying the collaboration in low-carbon and environment protection. At the governmental level, the bank has entered into agreements with provincial and city environmental departments, focusing on critical projects such as the development of ecological infrastructure and the innovative "Zero-Waste City" initiatives. At the level of industrial park cooperation, the bank continues to carry out the financial and environmental protection initiative of "Xindong Green - Park Support Program". Through in-depth cooperation with target parks, we provided a green channel for the approval and promotion of green finance businesses of green parks and enterprises in parks, and enhance clients’ participation in green sustainable development. At the level of carbon finance cooperation, focusing on the carbon market in China, the bank participated in the research on the zero-carbon transformation and development of banking green finance, carbon financial products and business innovation under the dual carbon goals initiated by China Banking Association, took part in the formulation of management measures such as Operational Guidelines for Carbon Asset Pledge Financing in Jiangsu Province (Provisional) and Operational Guidelines for Pledge Loan Business of Expected Income Right of Ecosystem Carbon Sink in Jiangsu Province , strengthened the connection with Shanghai Environment and Energy Exchange, and enhanced the cooperation in the field of carbon finance. Financial inclusion Promoting the inclusive finance in depth. Using targeted initiatives like "Empowering Small Businesses through Loans and Enriching Livelihoods" and "Expanding the Scope of the First Loan Offerings" as focal points, the bank engages with self-employed individuals without loans at the bank to comprehensively grasp their operational dynamics and financing requirements, thereby further expanding the reach of inclusive finance services and infusing financial vitality into the public welfare. 10. A client engagement process is a process of supporting clients towards transitioning their business models in line with sustainability goals by strategically accompanying them through a variety of customer relationship channels. 11. Sustainable economic activities promote the transition to a low-carbon, more resource-efficient and sustainable economy. 90 Persisting in excelling in technology-driven financial characteristics. In further alignment with Increasing the green finance investment in the capital market. The bank is actively steering strategic initiatives in China, such as the integrated regional development of the Yangtze River Delta and the high-quality development of specialized and sophisticated SMEs, the bank branches to enhance their engagement in green finance activities within the capital market, thereby ensuring a steady and robust growth of green credit operations. By the end of 2022, continuously prioritizes technology-driven financial services and support for specialized and the bank had achieved a green loan balance of CNY 132.956 billion, representing an increase sophisticated SMEs. Building on our advantages in government resources and channels and driving innovation through initiatives like "Government-Bank-Park-Investment Institution", of 34.61% over the beginning of the year, with a total of 3,268 green loan transactions in 2022. Throughout 2022, the bank issued a green bond with a substantial scale of CNY 5 billion. By we continuously make efforts to enhance financial support for scientific and technological the end of 2022, the bank purchased and held a balance of approximately CNY 8.872 billion of innovation and industrial transformation. green bonds, spanning sectors including, but not limited to, green transportation equipment, Improving the overall planning to promote rural revitalization. The bank is actively driving the implementation of agricultural assistance policies like "Jinling Agricultural Benefit Loan" and efficient energy system operations, wind power generation infrastructure construction and operations, and green building initiatives. "Jiangsu Agricultural Benefit Loan," while enhancing the marketing channel development. Financial inclusion We also deepen collaborative relationships with various agricultural channels, including the Nanjing Non-Staple Food Project Association for Promotion, Jiangsu Agricultural Mechanization Alleviating financing bottlenecks of SMEs. In response to the financing challenges and high borrowing costs encountered by SMEs along the manufacturing industry’s supply chain, the bank is dedicated to facilitating the sector’s high-quality growth by providing superior supply chain General Station, Jiangsu Rural Property Rights Trading Center, and Jiangsu Agricultural Financing Guarantee Co., Ltd., while concentrating on Nanjing’s dominant agricultural industry chains, leading agricultural enterprises, and the convergence sector of agricultural production, financial services. From early 2021 to the end of 2022, the bank has successfully implemented 117 projects in quantity-based supply chains, with a cumulative investment of CNY 2.579 billion. These efforts have benefited 820 upstream and downstream clients, spanning sectors agricultural product processing industry, and agricultural product market services, thereby enhancing our support for entities engaged in agricultural operations in Nanjing. such as construction machinery, pharmaceuticals and healthcare, consumer goods, and high- 3.2 Business opportunities Describe what strategic business opportunities in relation to the increase of positive and the reduction of negative impacts your bank has identified and/or how you have worked on these in the reporting period. Provide information on existing products and services , information on sustainable products developed in terms of value (USD or local currency) and/or as a % of your portfolio, and which SDGs or impact areas you are striving to make a positive impact on (e.g. green mortgages – climate, social bonds – financial inclusion, etc.). tech industries. We will continue to maintain a leading advantage in the investment-loan linkage model. By utilizing "minority equity stakes" as a bridge, we strategically allocate credit funds for "major debt claims", transitioning from a "distant" service model to an "integrated" win-win approach, thus providing technology and innovation enterprises within parks with a Links and references Refining relief and support policies. The bank implements measures to extend principal and interest payments for various types of micro, small, and medium-sized enterprises, self-employed Climate mitigation Establishing a green finance product system. Aligned with the strategy of "Carbon Peaking and Carbon Neutrality" in China, the bank continuously explores innovative product paths and enriches (Link to current report unless otherwise stated) 4 P ro d u c t I n n o va t i o n a n d individuals and other key industries, alongside flexible adjustments to individual loan repayment schedules. Furthermore, our commitment to cutting fees and facilitating concessions remains steadfast, contributing to the reduction of financing costs. We resolutely implement the policy of the "Xindong Green" product system across seven key categories, including foundational products, distinctive products, investment banking products, carbon finance products, bank-government products, and monetary policy tools. Launching sustainable products like contract energy management loans, photovoltaic power project loans, emission right pledge loans, solid waste loans, environmental protection loans, environmental protection guarantees, water conservation loans, carbon quota pledge loans, carbon-performance linked loans, and dual carbon project loans, the bank offers comprehensive support for green, low-carbon, and circular economy initiatives, driving environmental and social sustainability, and establishing itself as a pioneer green bank. Service Upgrade / 4.1 Enriching the Green Finance Product System and Demonstrating Financial Creativity, p.31-32 avoiding indiscriminate loan reduction, cessation, or suppression. We will further improve onlending models and iterate on principal-free refinancing products like the "Xin On-lending". Innovating models of green finance services. Remaining committed to the principles of green 4 P ro d u c t I n n o va t i o n a n d Ser vice Upgrade / 4.2 I n n ova t i n g G re e n F i n a n c e Service Models, Ensuring Sustainable Financial Services, p.35-42 the bank is progressively formulating specialized "Green+" financial solutions, focusing on various environmental conservation topics such as biodiversity, Zero-Waste City development, and the preservation of the Yangtze River. Simultaneously, in support of the green transition in the financial sector, the bank creates an innovative inter-industry collaboration service model, uniting peer strengths and resource advantages to jointly propel the development of green finance. Moreover, the bank is actively advancing the regional high-quality development through green finance, offering comprehensive service solutions like the financial and environmental protection initiative and the Park Support Program. These initiatives deliver diverse green financial services, supporting Benefits / 7.1 Green Loans of the Bank and Their Environmental Impact / 7.1.1 Overview of green credit, p.59 comprehensive support encompassing "equity investment, credit resources, and policy support". Response and sustainable development and continuously pioneering innovative green finance services, 7 Green Operations, Demonstrated Catering to the needs of specific clienteles. The bank is continuously driving forward key initiatives such as empowering specialized and sophisticated SMEs, doubling the count of high-tech enterprises, and facilitating financing connections between technology-oriented SMEs and banks. Furthermore, pilot enterprises can receive comprehensive services in both foreign and domestic currencies, along with various fee rate discounts, to support the cross-border financing requirements of high-tech and specialized and sophisticated SMEs. By the end of 2022, the bank’s loan balance of technology and culture finance loans reached CNY 66.097 billion, serving over ten thousand loan recipients, including more than 3,400 collaborative clients from specialized and sophisticated SMEs. Additionally, the loan balance for high-tech enterprises amounts to nearly CNY 44 billion, with over 6,800 loan recipients. The loan balance for technology-oriented SMEs exceeds CNY 31 billion, with nearly 6,800 loan recipients, and our comprehensive services have reached 15,100 clients. Pioneering new directions in infrastructure development. New-type infrastructure is a vital component of a modernized infrastructure system and a crucial support for enhancing the accessibility of various resources and services for citizens. The bank guides branches to increase their credit support for infrastructure investment projects encouraged by national policies, including urban renewal, water conservancy projects and transportation. Vigorously supporting Bank of Nanjing Environmental, Social and Governance R e p o r t 2 0 2 2 / 3 .1 S e i z i n g f ro n t i e r o p p o r t u n i t i e s , 3 . 2 Featured service models, 3.3 Supporting rural revitalization, 3.4 Supporting livelihood fi n a n c e, p. 3 2 - 4 3 ( h t t p s : // w w w. n j c b.c o m .c n / n j c b / gywx/_300914/_301071/ 675236/index.html) the sustainable growth of parks and corporates. 91 92 fundamental assets, the bank facilitates the implementation of infrastructure projects in transportation, municipal services, energy, industrial parks, as well as real estate investment trusts (REITs) projects of public infrastructure securities, such as government-subsidized rental Principle 4: Stakeholders housing. In alignment with national policy-promoted significant projects and regions with We will proactively and responsibly consult, engage and partner with relevant stakeholders to achieve society’s goals. concentrated credit needs in infrastructure development, the bank makes efforts to innovate its approval mechanism, arrange specialized approval sessions, and allocate concentrated resources for streamlined processing. Supporting the rural revitalization. The issues relating to agriculture, rural areas, and farmers are fundamental to China as they directly concern the national economy and people’s livelihoods in China. Comprehensively promoting rural revitalization is a significant task in the new era for building a strong agriculture. Focusing on the crucial tasks of revitalization in five aspects of industry, talent, culture, ecology, and organization, the bank is committed to promoting industrial and eco-environmental revitalization by enhancing top-level design, comprehensive coordination, scientific advancement, human capital investment, resource allocation, and 4.1 Stakeholder identification and consultation Does your bank have a process to identify and regularly consult, engage, collaborate and partner with stakeholders (or stakeholder groups 12） you have identified as relevant in relation to the impact analysis and target setting process? Yes In progress No Please describe which stakeholders (or groups/types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process. financial support. The bank has established a leading group to advance rural revitalization efforts and set up rural revitalization financial departments across its "headquarters - branch - sub-branch" framework, with these departments now operating in 17 branches and all Response Links and references comprehensive sub-branches (including county-level sub-branches). The bank formulated The bank promptly launched targeted communication and countermeasures based on (Link to current repor t unless the expectations and demands of stakeholders. For example, in response to the promotion otherwise stated) of regional development, comprehensive management and prevention of financial risks expected by the government and regulatory authorities, the bank put forward countermeasures such as research and implementation of financial policies, daily approval Bank of Nanjing Environmental, Social and Governance Report 2022 / I. Enhancing the integration of and supervision. Besides, the bank communicated with stakeholders on compliance information disclosure, protection of their legitimate rights and interests and other problems through regular reports and information announcements, performance briefings, investor ESG and supporting the sustainable development / 1.5 Communication among shareholders, p.17-18 surveys, communication meetings, etc. Furthermore, the corresponding communication methods are put forward for clients, employees, suppliers, partners, communities, environment and other stakeholders. (https://www.njcb.com.cn/njcb/ gywx/_300914/_301071/675236/ index.html) the Guiding Opinions of Bank of Nanjing on Deepening Financial Services to Boost Rural Revitalization in 2022 , outlining the implementation paths for rural revitalization activities, which include driving by county-level branches, industry-led planning, and the creation of distinctive models. Following the guidelines, each branch makes efforts to enhance agricultural loan business and continuously improve comprehensive financial service capabilities for rural revitalization, involving actions like distributing rural revitalization-themed cards, underwriting rural revitalization-themed bonds, and organizing financial literacy outreach activities in rural communities. Ensuring the food security. The bank introduces the tailored service "Xin Wei Dao" exclusively for farmer households of premium rice in the "Rice Flavor Town" across the whole Jiangsu Province, offering unsecured, online, and standardized assistance. We have also hosted multiple town-level financing matchmaking events in cities such as Yangzhou, Xuzhou, Taizhou, and Changzhou, benefiting over 2,700 clients. In alignment with grain storage and local distinctive farming and breeding industries, we have introduced the innovative business model of "Grain Procurement Loan", which effectively addresses the short-term, frequent, and cyclical funding requirements of local grain reserve suppliers during the wheat and rice procurement seasons, aiming to minimize financing costs for enterprises. Guaranteeing the demand for housing of residents. Housing security is essential to enhancing people’s livelihoods and fostering financial inclusion. The bank prioritizes urban development efforts and actively caters to the financing requirements of local urban renewal projects. We are actively involved in underwriting specialized bonds for urban construction in Jiangsu Province, with a focus on supporting projects related to the renovation of old urban neighborhoods. Furthermore, we proactively guide our branches in tracking the implementation of local government funds. In response to government-subsidized rental housing projects that related to people’s livelihoods, we employ a comprehensive approach, utilizing medium-to-long-term project loans and employing various models such as underwriting corporate bonds, company bonds, non-financial corporate debt financing tools, asset-backed securities, and REITs, thus providing enterprises with a package of comprehensive financial service solutions. Stakeholders Expectations and demands Response to national strategies Government and regulatory authorities Communication means Serving real economy Researching and implementing relevant financial policies Promoting regional development Implementing regulatory policies Dealing with climate change Daily approval and supervision Comprehensive management of risks Submitting statistical statements Compliance management according to laws Preventing financial risks Ensuring the safety of financial assets Carrying out relevant investigations Holding discussion meetings Taking part in industry and association activities 12. Such as regulators, investors, governments, suppliers, customers and clients, academia, civil society institutions, communities, representatives of indigenous population and non-profit organizations 93 94 5.1 Governance Structure for Implementation of the Principles Shareholders and investors Improving corporate governance Compliance information disclosure Protecting the legitimate rights and interests of shareholders and investors Good investment returns Regular report and information announcement General meetings of shareholders Performance briefing Theme open day Investors hotline reply Investors’ investigations and communication meetings Providing high-quality services Protecting consumer rights and interests Application of financial technology Popularizing financial knowledge Maintaining data security Solving public emergencies Tel.: 95302 Interact on official website and WeChat Questionnaire on client demands Investigation of client satisfaction Client care activities Popularizing financial knowledge Employees Protect employees’ rights and interests Competitive salaries and benefits Sound career development Balance between work and life Guarantee of health and security Diversity and inclusiveness Workers’ congress Staff training activities Cultural and sports activities Seminar and face-to-face communication Internal magazine and intranet interactive platform Suppliers Good cooperative relationship Responsible procurement Intellectual property protection Daily communication Bidding meetings Supplier investigation and visit Regular supplier meetings Partners Industrial cooperation and exchange Honesty and reciprocity Mutual benefit and win-win progress Zijin Mountain - Xinhejin Financier Club Seminars Communication and cooperation in the industry Project cooperation Community Serving people’s livelihoods Supporting rural revitalization Building a beautiful community Contributing to public welfare Public education assistance Disability and poverty assistance action Targeted poverty alleviation Employee voluntary service Community project construction Community service Environment Dealing with climate change Protecting biodiversity Improving the efficiency of resource utilization Reducing environmental pollution Green finance Green office Green public welfare Green procurement Clients Principle 5: Governance & Culture We will implement our commitment to these Principles through effective governance and a culture of responsible banking 95 Does your bank have a governance system in place that incorporates the PRB? Yes In progress No Please describe the relevant governance structures, policies and procedures your bank has in place/is planning to put in place to manage significant positive and negative (potential) impacts and support the effective implementation of the Principles. This includes information about • which committee has responsibility over the sustainability strategy as well as targets approval and monitoring (including information about the highest level of governance the PRB is subjected to), • details about the chair of the committee and the process and frequency for the board having oversight of PRB implementation (including remedial action in the event of targets or milestones not being achieved or unexpected negative impacts being detected), as well as • remuneration practices linked to sustainability targets. Response Links and references The bank strictly abides by laws and regulations, attaches great importance to the construction of corporate governance led by party building, and continuously improves corporate governance structure and operational mechanism with the aim of scientific, normative and effective governance, maintaining a highly efficient governance structure of "Shareholders’ Meeting, Board of Directors, Board of Supervisors and Senior Management" with clear responsibilities, scientific management, effective counterbalance of them. (Link to current repor t unless The Board of Directors of the bank plays a central role in the strategic decision-making, and has six special committees, each of which plays a professional deliberation function according to its respective responsibilities, including the Development Strategy Committee, the Risk Management Committee, the Nomination and Remuneration Committee, the Audit Committee, the Related Party Transaction Control Committee and the Consumer Right Protection Committee. The Development Strategy Committee is responsible for the formulation of sustainable development strategies and the target approval and monitoring. gywx/_300914/_301079/675363/ Hu Shengrong, chairman of the bank, holds the post of the president of the Development Strategy Committee. See the Bank of Nanjing Annual Report 2022 for details. In 2022, the Development Strategy Committee held 6 meetings and reviewed 37 proposals. In terms of sustainable development performance appraisal, the bank issued the 2022 Assessment Measures for Key Performance Indicators of Branches of Bank of Nanjing , formulated the promotion plan and target of green finance in 2022, and urged the operating institutions to promote and implement promptly. otherwise stated) Bank of Nanjing Annual Report 2 0 2 2 / S e c t i o n V C o r p o ra t e Governance, p.69-70, 78 (https://www.njcb.com.cn/njcb/ index.html) 3 Strengthened Institutional Systems and Optimized Allocation / 3.4 Resource Allocation: Wellestablished Implementation and Assessment Standards for Green Finance Businesses, p.28 5.2 Promoting a culture of responsible banking: Describe the initiatives and measures of your bank to foster a culture of responsible banking among its employees (e.g., capacity building, e-learning, sustainability trainings for client-facing roles, inclusion in remuneration structures and performance management and leadership communication, amongst others). Response Links and references In its dynamic two-decade journey, the bank’s cultural advancement and developmental reforms were mutually reinforcing. This progression has not only yielded remarkable growth in scale, profitability and brand equity, but also instilled the "unyielding, resilient, pioneering" spirit and established the cultural brand as a "responsible finance for harmonious win-win". As a result, a unique corporate culture philosophy system has been formulated, guiding unwavering pursuit and dedicated efforts among employees in Bank of Nanjing. (Link to current repor t unless otherwise stated) Bank of Nanjing Environmental, Social and Governance Report 2022 / II. Ensuring stable and sustainable development a n d s t re n g t h e n i n g c o r p o ra t e g o v e r n a n c e / 2 . 9 C o r p o ra t e c u l t u re d e v e l o p m e n t , p. 3 0 (https://www.njcb.com.cn/njcb/ gywx/_300914/_301071/675236/ index.html) The bank has reinforced the alignment with cultural values through initiatives like the series of events of "I Speak for Corporate Culture", corporate culture knowledge contests, microvideo competitions, and selecting cultural ambassadors, to extend the influence of corporate culture to the foundation level. Efforts have been made to update promotional pictures, revamp the Corporate Culture Handbook , and make progress in the development of the Visual Identity Standardization Manual for Corporate Culture and relevant curriculums, advancing the establishment of a communication model for standardized and normalized corporate culture. 96 Principle 6: Transparency & Accountability The cultural visibility is enhanced through online platforms and events. Through online platforms like "Cultural Vision of Bank of Nanjing" and "Release from Bank of Nanjing", the cultural dissemination is expanded, with over 200 cultural articles published, which amass We will periodically review our individual and collective implementation of these Principles and be transparent about and accountable for our positive and negative impacts and our contribution to society’s goals. over 100,000 views and engage more than 12,000 employees. Meanwhile, offline efforts encompassed 64 published articles and 37 showcased photographic works and paintings. The bank has also renovated the historical exhibition hall and prepared a new one at headquarters to create an educational hub for staff and showcase the corporate image. 6.1 Assurance Has this publicly disclosed information on your PRB commitments been assured by an independent assurer? 5.3 Policies and due diligence processes Does your bank have policies in place that address environmental and social risks within your portfolio?13 Please describe. Please describe what due diligence processes your bank has installed to identify and manage environmental and social risks associated with your portfolio. This can include aspects such as identification of significant/salient risks, environmental and social risks mitigation and definition of action plans, monitoring and reporting on risks and any existing grievance mechanism, as well as the governance structures you have in place to oversee these risks. Response Links and references In response to the requirements of Guidelines on Green Finance for the Banking and Insurance (Link to current repor t unless Industries issued by the China Banking and Insurance Regulatory Commission, the bank has formulated policies and systems for environmental, social and governance risk management otherwise stated) Bank of Nanjing Environmental, to achieve differentiated client management. We have established assessment criteria for Social and Governance Report environmental, social and governance risks associated with clients and dynamically categorize and assess their risks. Significant environmental, social and governance risks are managed 2022 / 2. Ensuring stable and sustainable development through a list-based approach. The bank has initiated the construction of the management system for environmental, social and governance risks as part of its green finance plan, which a n d s t re n g t h e n i n g c o r p o ra t e governance / 2.6.3 Environmental has entailed integrating risk management throughout the investment and financing process and using it as a pivotal reference in each phase. and social risk management, p.26 (https://www.njcb.com.cn/njcb/ gywx/_300914/_301071/675236/ The due diligence phase involves authenticating the environmental, safety and legal compliance status of clients and projects within the context of their respective industries and regions. index.html) Yes Partially No If applicable, please include the link or description of the assurance statement. Response This report is the second self-assessment report on the progress of the PRB disclosed by the bank. The verification of relevant sections has not yet been conducted. The bank will adhere to the requirements of UNEP FI and provide a verification report concurrently with the disclosure of Links and references (Link to current report unless otherwise stated) the third report. 6.2 Reporting on other frameworks Does your bank disclose sustainability information in any of the listed below standards and frameworks? GRI SASB CDP IFRS Sustainability Disclosure Standards (to be published) TCFD Other: "Guidelines on Financial Institutions Environmental Information Disclosure " issued by the Financial Standardization Technical Committee of the People’s Bank of China, "Guidelines on Environmental, Social and Governance Reporting " issued by the Hong Kong Stock Exchange (HKEX). The compliance investigation phase entails meticulous scrutiny of the authenticity, Response Links and references effectiveness and comprehensiveness of environmental impact assessment documents. The Report on Green Finance of Bank of Nanjing in 2022 has been compiled in accordance with the disclosure requirements outlined in the "Guidelines on Financial Institutions Environmental Information Disclosure" issued by the Financial Standardization Technical (Link to current repor t unless otherwise stated) Appendix: Index of References to International Information Disclosure Guidelines, p.73-74 During the credit approval phase, dynamic management and differentiated credit processes are applied based on the environmental, social and governance risk assessments of clients. On this basis, green and low-carbon project credit applications receive preferential treatment. During the post-loan management phase, for clients and projects with significant environmental, social and governance risks, relevant constraint clauses are added to contracts. During the contract management and fund disbursement phase, post-loan dynamic assessments are strengthened. A risk warning mechanism is established based on environmental credit information and environmental penalty data to enable timely risk mitigation measures for clients engaged in green finance businesses. Committee of the People’s Bank of China. The report also takes into consideration the environmental disclosure requirements and recommendations from the Recommendations of the Task Force on Climate-related Financial Disclosures. The bank’s disclosed environmental, social and governance reports have been aligned with the Sustainability Reporting Guidelines by the Global Reporting Initiative (GRI) and the Guidelines on Environmental, Social and Governance Reporting by HKEX. For further details, please refer to the Bank of Nanjing Environmental, Social and Governance Report 2022. /_300914/_301071/675236/index.html) Does the CEO or other C-suite officers have regular oversight over the implementation of the Principles through the bank’s governance system? No Does the governance system entail structures to oversee PRB implementation (e.g. incl. impact analysis and target setting, actions to achieve these targets and processes of remedial action in the event targets/milestones are not achieved or unexpected neg. impacts are detected)? Yes No Does your bank have measures in place to promote a culture of sustainability among employees (as described in 5.2)? Yes 97 In progress Guidance on Environmental, Social and Governance Report by HKEX, Appendix 3 Index to the Sustainability Reporting Guidelines by Global Reporting Initiative (GRI), p.82-90 (https://www.njcb.com.cn/njcb/gywx Self-assessment summary Yes Bank of Nanjing Environmental, Social and Governance Repor t 2022 / Appendix 2 Index to the No 6.3 Outlook What are the next steps your bank will undertake in next 12 month-reporting period (particularly on impact analysis14, target setting15 and governance structure for implementing the PRB)? Please describe briefly. 13. Applicable examples of types of policies are: exclusion policies for certain sectors/activities; zero-deforestation policies; zerotolerance policies; gender-related policies; social due diligence policies; stakeholder engagement policies; whistle-blower policies etc., or any applicable national guidelines related to social risks. 14. For example outlining plans for increasing the scope by including areas that have not yet been covered, or planned steps in terms of portfolio composition, context and performance measurement 15. For example outlining plans for baseline measurement, developing targets for (more) impact areas, setting interim targets, developing action plans etc. 98 Response Links and references In response to the requirements of Guidelines on Green Finance for the Banking and Insurance In the context of global climate change, sustainable development has become a crucial concern (Link to current repor t unless otherwise stated) for financial institutions. In the future, the bank will diligently focus on new opportunities in IX. Well-established Plans for A green and low-carbon transformation and anchor its low-carbon developmental direction with ESG as a core principle. We will enhance environmental benefits in operations, establish a Promising Future , p.72 unique path for green finance transformation, and contribute to the industry leadership. By implementing a low-carbon transformation strategy and continually optimizing the asset allocation, we will align with the dual carbon goals and the new economic development pattern. We will explore innovative approaches to support green and low-carbon transformation, thereby optimizing the asset allocation of Bank of Nanjing, leveraging the sustainable, low-risk, and stable returns of green and low-carbon assets. This will continually enhance the quality and effectiveness of green finance businesses, driving the transformation, upgrading, and high-quality business development of the bank. Integrating ESG throughout the credit process and refining risk management mechanisms, the bank will consistently address the requirements of the Guidelines on Green Finance for the Banking and Insurance Industries. By utilizing ESG concepts and methods in line with industry characteristics, we will establish an ESG risk management framework and a forward-looking risk assessment mechanism, safeguarding sustainable development across the bank. With a focus on operational carbon neutrality and social responsibility, the bank will focus on climate risk management and mitigation measures. We regard "low-carbon emission reduction and net-zero development" as operational targets, demonstrating our social responsibility and active role in sustainable development. We aim to establish a positive image as a green bank, thereby significantly enhancing brand recognition and influence. 6.4 Challenges Here is a short section to find out about challenges your bank is possibly facing regarding the implementation of the Principles for Responsible Banking. Your feedback will be helpful to contextualise the collective progress of PRB signatory banks. What challenges have you prioritized to address when implementing the Principles for Responsible Banking? Please choose what you consider the top three challenges your bank has prioritized to address in the last 12 months (optional question). If desired, you can elaborate on challenges and how you are tackling these: Embedding PRB oversight into governance Gaining or maintaining momentum in the bank Getting started: where to start and what to focus on in the beginning Conducting an impact analysis Assessing negative environmental and social impacts Choosing the right performance measurement methodology/ies Setting targets Other: … Customer engagement Stakeholder engagement Data availability Data quality Access to resources Reporting Assurance Prioritizing actions internally If desired, you can elaborate on challenges and how you are tackling these: 99 100