^{Sustainability} Climate

Aligning our portfolios and reducing financed emissions is a strategic priority. The delivery of key milestones related to these goals is linked to the remuneration of the Group CEO and Group CFO, reflecting their importance to our overall sustainability strategy.

ADCB's reported total Scope 3 'financed' greenhouse gas (GHG) emissions for 2023 were 13.25 million tCO2e, mainly from Oil & Gas, Commercial Real Estate, and Power Generation. This represents a reduction of around 25% on the previous year.

A central element of our climate approach is our participation in the Net Zero Banking Alliance (NZBA). This requires the Bank to align its lending and investment portfolios with the objectives of the 2015 Paris Agreement on limiting global warming. We plan to set intermediary alignment targets for the most carbon-intensive sectors and aim to publish our first wave of sector decarbonisation targets during 2025.

Quantifying our emissions

To quantify our financed emissions, ADCB has adopted the Partnership for Carbon Accounting Financials (PCAF) methodology. We report these emissions with a one-year lag to allow for the inclusion of accurate client emissions data. The reporting boundary for 2023 covers eight sectors across the UAE. These represent approximately 97% of the Bank’s NZBA perimeter by exposure and around 21% of our total loans and investments.

In 2024, we implemented several enhancements to our financed emissions measurement. These included integrating more client-reported data, using country-specific and physical intensity proxies, and fully aligning the commercial real estate methodology with PCAF.

During 2025 we continued to enhance our data collection and aim to update and disclose our financed emissions baseline annually, explaining the drivers of change. Recognising the importance of supporting our clients in achieving their own net journey commitments, we have also developed a framework to assess client transition plans.

View our sustainability disclosures for more information on our approach to Climate change and sustainability.

As a signatory to the UN-convened Net Zero Banking Alliance, we are committed to aligning our lending and investment portfolios into line with the goals of the 2015 Paris Agreement.

One of the key pillars of this commitment is our pledge to lend, invest, and facilitate AED 125 billion (USD 34 billion) by 2030 towards sustainable activities. This ambition supports the broader UAE Banks Federation goal of mobilising over AED 1 trillion in sustainable financing. We set an interim target of AED 50 billion (USD 14 billion) by the end of 2025. We have met and exceeded this target, with AED 63.1 billion in sustainable finance achieved by the end of Q1 of 2025.

Our approach to sustainable finance is guided by our Sustainable Finance Framework. This defines the methodology for categorising, tracking and reporting on sustainable finance, in line with international guidelines. This framework covers lending, investing, and facilitating activities. Islamic financing and sukuk are explicitly included within the scope of this framework. We have also implemented a Green Bond Framework to guide our green bond issuance.

Sustainable finance products and services

We offer numerous specific sustainable finance products and services. These aim to support our customers in their own sustainability journeys, as well as driving our own sustainability goals. These include affordable housing financing, Sustainable Call Accounts for corporates, and green car loans and green home loans for retail customers.

Sustainable finance governance is overseen by a Sustainable Finance Working Group (SFWG) that reports the portfolio quarterly to the UAE Banks Federation and investors. The SFWG consists of senior stakeholders from across the Bank, responsible for monitoring and reporting on our sustainable finance portfolio.

Responsible investing is also a focus, with ADCB Asset Management Limited (AAML) becoming a signatory of the UN Principles for Responsible Investment (UNPRI) in 2024.

View our sustainability disclosures for more information on our approach to Climate change and sustainability.

Environmental and social risks may arise from environmental degradation or from social factors, like human rights violations or unsafe working conditions. We recognise the potentially negative impacts these risks could have on the Bank's operations, reputation, and credit exposures. Embedding these considerations into our risk management framework and lending practices is therefore crucial for enhancing due diligence, effectively managing potential risks and identifying new opportunities.

A cornerstone of our approach is the Group Environmental and Social Risk Management (ESRM) policy. This is informed by international guidelines like the IFC Performance Standards and Equator Principles, as well as CBUAE regulations.

Our ESRM policy establishes principles for identifying, measuring, monitoring, and reporting environmental and social risks across ADCB's business units. Key objectives include incorporating material environmental and social risks into the Group's overall risk appetite framework, establishing an effective risk governance structure with clear responsibilities, and promoting environmental and social risk awareness and understanding at all levels.

A dedicated ESRM Working Group with members from key business areas leads the implementation policies and procedures, including climate stress testing.

Assessing risks

We assess risks through screening against exclusion/restricted lists and an environmental and social scorecard for counterparty evaluation. This scorecard includes quantitative and qualitative assessments and a combined risk rating, with categories ranging from low to severe.

Semi-annual materiality assessments are used to identify critical environmental and social risks. The Bank specifically addresses climate-related financial risks, distinguishing between physical and transition risks, and employs climate stress testing to gauge potential impacts on our lending portfolio.

We have expanded the ESRM assessment scope to Retail mortgages and Treasury investments and developed a new policy and process to manage reputational environmental and social risks, such as ‘greenwashing’. This comprehensive and evolving ESRM framework underpins our commitment to responsible risk management and financing.

View our sustainability disclosures for more information on our approach to Climate change and sustainability.

We are working to reduce our direct environmental footprint across our operations and our supply chain, supporting the UAE's drive towards a net zero economy. We also incorporate environmental and social considerations into our supply chain management, enabling us to enhance operational efficiency, facilitate sustainable procurement and manage associated risks.

Our approach is based on implementing environmental management systems and embedding specific sustainability criteria within our procurement framework. A core policy is the Vendor Code of Conduct, which sets clear expectations for suppliers on adherence to local laws, data privacy protection, environmental impact minimisation, fair labour practices (including minimum salary) and robust business continuity capabilities.

We work with a number of partners to advance our green procurement strategy in line with our strategic priorities. The launch of our sustainable procurement plan and a new ESG questionnaire in 2024 marked the further integration of sustainability criteria into our vendor selection and management process. Around 95% of our procurement budget is spent on local suppliers in the UAE, reflecting our commitment to supporting local economy.

Enhancing efficiency

We have introduced several specific initiatives and projects that highlight our efforts to strengthen operational efficiency and maintain a sustainable supply chain.

Energy efficiency is pursued through partnerships like RESET in our Abu Dhabi offices, which aims to reduce energy use. The IT strategy's heavy reliance on cloud adoption aims to cut carbon emissions by 99% compared to legacy systems, while also enhancing scalability and agility.

Paper use is significantly reduced via digital channels, e-statements, and removing inefficient printers. Waste management includes defined procedures, recycling efforts with approved providers, and environmentally-friendly e-waste recycling via certified partners.

Water use is managed through efficient fixtures in renovated branches and technology in data centres. ADCB Egypt's pursuit of EDGE green building certification underscores the Group-wide commitment to sustainable premises by meeting high environmental performance standards.

View our sustainability disclosures for more information on our approach to Climate change and sustainability.