Environmental | PT Bank Tabungan Negara (Persero) Tbk

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Credit policy related to agriculture, mining, biodiversity, utilities, oil and gas
Company Practices 2023-2024	The Bank has established policies to enhance its Credit Risk Management, including: Measuring to control Credit Concentration Risk This involves diversifying corporate/commercial lending by extending loans to sectors beyond the property industry. Environmental, Social, and Governance (ESG) considerations in wholesale loans BTN already put ESG aspects as consideration in credit committee for corporate/commercial loans as well as prudent principles and sound credit management practices. Portfolio guidelines play a crucial role in managing Credit Risk The portfolio guidelines can be used by relevant business units to extend corporate/commercial loans to prioritized industries outside the property sector, up to certain positions that align with the Bank’s capacity to manage Credit Risk within those industries. The portfolio guidelines are expected to help diversify income from sectors beyond the property industry. Credit policy related to agriculture, mining, biodiversity, utilities, oil and gas: Coal & CPO Loan Policy Bank committed to “No Coal & CPO Loan” Agriculture Loan Policy Bank focuses on financing sustainable agricultural practices that contribute to food security, support rural economies, and adhere to Environmental, Social, and Governance (ESG) principles. Loans are extended to operations that prevent deforestation, reduce environmental degradation, and practice soil and water conservation. Proper ratings are used to evaluate the sustainability and risk levels of agricultural projects (min.Green PROPER Rating) Mining Loan Policy Bank emphasizes lending to companies that maintain high environmental and safety standards. Projects are rigorously assessed for their impact on ecosystems, including potential contributions to deforestation. Financing is directed toward companies with strong ESG ratings that actively rehabilitate land and ensure responsible waste management. Black PROPER rating is not accepted Pulp & Paper Loan Policy PROPER Rating (Gold or Green Predicate is accepted) No Deforestation practices Biodiversity Policy In biodiversity-related sectors, the Bank funds initiatives that prioritize conservation and sustainable practices. Loans support projects that aim to protect biodiversity, reduce deforestation, and restore natural habitats. PROPER ratings are applied to evaluate each project’s impact on ecosystems and alignment with biodiversity goals. Utilities Loan Policy Financing in utilities is directed at companies that enhance energy efficiency, invest in renewable energy, and focus on reducing their carbon footprint. The Bank favors projects with strong ESG ratings and those that contribute to a sustainable energy transition without causing deforestation or ecosystem degradation. Oil and Gas Loan Policy The policy for oil and gas is designed to promote responsible lending to companies that are transitioning to cleaner energy sources, reducing emissions, and adhering to strict environmental regulations. The Bank uses proper ESG ratings to assess these projects, with a preference for those that integrate renewable energy or carbon reduction initiatives. Lending to oil and gas projects is also evaluated for indirect impacts, such as deforestation and habitat disruption. Through these sector-specific policies, the Bank ensures that its lending portfolio aligns with prudent credit risk management and environmental protection, using ratings to assess sustainability and reduce the impact of activities like deforestation across various industries. Portofolio Guidelines \| PT Bank Tabungan Negara (Persero) Tbk
Direct involvement of group credit, including examples of deep dive assessments for ESG intensive industries
Company Practices 2023-2024	The Bank conducts early identification of risks and impacts related to the business activities it finances, focusing on environmental, social, and governance (ESG) aspects, and provides appropriate risk mitigation measures. In this regard, the Bank has carried out ESG analysis for every credit disbursement, which is documented in analysis reports and presented to the Credit Committee. Specifically for corporate debtors, the Bank requires an ESG Rating from external parties.
ESG risk escalation process clearly defined, details provided on thresholds for triggering escalation, examples provided of extra due diligence where necessary
Company Practices 2023-2024	The Bank has established internal regulations governing the credit approval authority limits at each level of the Credit Committee, based on the credit exposure of the applicant. Credit approvals are conducted by applying the four-eyes principle, involving both the Business Unit and the Risk Unit.
Comprehensive materiality assessment of group wide business risks associated with climate change, including scenario modelling or sensitivity analysis
Company Practices 2023-2024	The Bank has conducted a Climate Risk Stress Test (CRST) assessment based on Climate Risk Management & Scenario Analysis for Bank released by Indonesia Financial Services Authority (Otoritas Jasa Keuangan). The CRST aims to analyze climate change using scenario modeling and sensitivity analysis with short term and long-term period. The scenario for short term period are current policies and Net Zero 2050, for long-term period are current policies, Net Zero 2050 and Delayed Transition. The CRST evaluates stress conditions related to credit risk, liquidity risk, market risk, and operational risk with also assess the physical risk and transition risk. The CRST calculated for more than 90% BTN loan portfolio (as of Dec 23) who have impact in climate risk. As the result, based on these CRST, BTN still have a good capital resilience. As for the worst scenario, Net Zero 2050, in year 2050, BTN CAR is still above our recovery plan limit. This CRST will perform annually to measures the climate risk impacting to BTN financial conditions and as our mitigation to set the strategy related to climate.
Evidence of strong management systems in place for assessing ESG risks in financing activities
Company Practices 2023-2024	The Bank has established an ESG Committee directly supervised by the Board of Directors. The purpose of this committee is to assess and measure ESG risks associated with financing activities, as well as to oversee the Bank’s ESG planning, organization, and performance.

Transparency	Company Practices 2023-2024
Credit policy related to agriculture, mining, biodiversity, utilities, oil and gas	The Bank has established policies to enhance its Credit Risk Management, including: Measuring to control Credit Concentration Risk This involves diversifying corporate/commercial lending by extending loans to sectors beyond the property industry. Environmental, Social, and Governance (ESG) considerations in wholesale loans BTN already put ESG aspects as consideration in credit committee for corporate/commercial loans as well as prudent principles and sound credit management practices. Portfolio guidelines play a crucial role in managing Credit Risk The portfolio guidelines can be used by relevant business units to extend corporate/commercial loans to prioritized industries outside the property sector, up to certain positions that align with the Bank’s capacity to manage Credit Risk within those industries. The portfolio guidelines are expected to help diversify income from sectors beyond the property industry. Credit policy related to agriculture, mining, biodiversity, utilities, oil and gas: Coal & CPO Loan Policy Bank committed to “No Coal & CPO Loan” Agriculture Loan Policy Bank focuses on financing sustainable agricultural practices that contribute to food security, support rural economies, and adhere to Environmental, Social, and Governance (ESG) principles. Loans are extended to operations that prevent deforestation, reduce environmental degradation, and practice soil and water conservation. Proper ratings are used to evaluate the sustainability and risk levels of agricultural projects (min.Green PROPER Rating) Mining Loan Policy Bank emphasizes lending to companies that maintain high environmental and safety standards. Projects are rigorously assessed for their impact on ecosystems, including potential contributions to deforestation. Financing is directed toward companies with strong ESG ratings that actively rehabilitate land and ensure responsible waste management. Black PROPER rating is not accepted Pulp & Paper Loan Policy PROPER Rating (Gold or Green Predicate is accepted) No Deforestation practices Biodiversity Policy In biodiversity-related sectors, the Bank funds initiatives that prioritize conservation and sustainable practices. Loans support projects that aim to protect biodiversity, reduce deforestation, and restore natural habitats. PROPER ratings are applied to evaluate each project’s impact on ecosystems and alignment with biodiversity goals. Utilities Loan Policy Financing in utilities is directed at companies that enhance energy efficiency, invest in renewable energy, and focus on reducing their carbon footprint. The Bank favors projects with strong ESG ratings and those that contribute to a sustainable energy transition without causing deforestation or ecosystem degradation. Oil and Gas Loan Policy The policy for oil and gas is designed to promote responsible lending to companies that are transitioning to cleaner energy sources, reducing emissions, and adhering to strict environmental regulations. The Bank uses proper ESG ratings to assess these projects, with a preference for those that integrate renewable energy or carbon reduction initiatives. Lending to oil and gas projects is also evaluated for indirect impacts, such as deforestation and habitat disruption. Through these sector-specific policies, the Bank ensures that its lending portfolio aligns with prudent credit risk management and environmental protection, using ratings to assess sustainability and reduce the impact of activities like deforestation across various industries. Portofolio Guidelines \| PT Bank Tabungan Negara (Persero) Tbk
Direct involvement of group credit, including examples of deep dive assessments for ESG intensive industries	The Bank conducts early identification of risks and impacts related to the business activities it finances, focusing on environmental, social, and governance (ESG) aspects, and provides appropriate risk mitigation measures. In this regard, the Bank has carried out ESG analysis for every credit disbursement, which is documented in analysis reports and presented to the Credit Committee. Specifically for corporate debtors, the Bank requires an ESG Rating from external parties.
ESG risk escalation process clearly defined, details provided on thresholds for triggering escalation, examples provided of extra due diligence where necessary	The Bank has established internal regulations governing the credit approval authority limits at each level of the Credit Committee, based on the credit exposure of the applicant. Credit approvals are conducted by applying the four-eyes principle, involving both the Business Unit and the Risk Unit.
Comprehensive materiality assessment of group wide business risks associated with climate change, including scenario modelling or sensitivity analysis	The Bank has conducted a Climate Risk Stress Test (CRST) assessment based on Climate Risk Management & Scenario Analysis for Bank released by Indonesia Financial Services Authority (Otoritas Jasa Keuangan). The CRST aims to analyze climate change using scenario modeling and sensitivity analysis with short term and long-term period. The scenario for short term period are current policies and Net Zero 2050, for long-term period are current policies, Net Zero 2050 and Delayed Transition. The CRST evaluates stress conditions related to credit risk, liquidity risk, market risk, and operational risk with also assess the physical risk and transition risk. The CRST calculated for more than 90% BTN loan portfolio (as of Dec 23) who have impact in climate risk. As the result, based on these CRST, BTN still have a good capital resilience. As for the worst scenario, Net Zero 2050, in year 2050, BTN CAR is still above our recovery plan limit. This CRST will perform annually to measures the climate risk impacting to BTN financial conditions and as our mitigation to set the strategy related to climate.
Evidence of strong management systems in place for assessing ESG risks in financing activities	The Bank has established an ESG Committee directly supervised by the Board of Directors. The purpose of this committee is to assess and measure ESG risks associated with financing activities, as well as to oversee the Bank’s ESG planning, organization, and performance.