First Abu Dhabi Bank P J S C : Sustainable Finance Report 2022

SUSTAINABLE FINANCE

REPORT 2022

TABLE OF CONTENTS
1. INTRODUCTION..........................................................................................................................................................................	02
1.1 FAB'S GREEN BONDS..........................................................................................................................................................	04
1.2 WHY IS FAB ISSUING GREEN BONDS...........................................................................................................................	05
2. FAB'S SUSTAINABLE FINANCE APPROACH..................................................................................................................	06
3. PROJECT OVERVIEW................................................................................................................................................................	12

1. INTRODUCTION

We are proud to be leading the sustainable finance movement in the areas in which we operate, and are pleased to publish our 6th Sustainable Finance Report which includes a summary on the use of proceeds and the associated environmental impacts of our outstanding Green Bonds and Green Private Placements (referred to as Green Bonds in this report) as of March 31, 2022.

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2021 SUSTAINABLE FINANCE HIGHLIGHTS

1	In 2021, FAB launched its ESG Strategy and committed to lend, invest, and facilitate business of USD 75 billion by 2030
	to activities focused on environmental and socially responsible solutions.
2	In March 2022, FAB priced the first-ever public Green Bond denominated in EURs from a MENA issuer. The EUR 500
	million 5 year Bond was issued at Euro MS + 70bps and a coupon of 1.625%.
3	FAB's second public green issuance in 2022 was the CHF 200 million 4-year bond issued at SARON + 54 bps and a coupon
	of 1.0625 per cent.
4	Additionally, in 2021 FAB issued 6 new bonds covering public and private green bonds, having now issued a total of 13
	bonds since the issuance of the first Green Bond in the region of USD 587 million in 2017.
5	The first public Green Bond in the region of USD 587 million issued by FAB in 2017, matured in March 2022. Through its
tenure, it helped finance 13 green projects across UAE, USA, Africa and France in areas of Energy Efficiency, Renewable
Energy and Sustainable Water Management.
6	FAB was recognised for "Outstanding Leadership in Sustainable Finance" and "Outstanding Leadership in Green Loans"
in the Middle East in Global Finance's inaugural Sustainable Finance Awards 2021.
7	FAB played a lead role in analysing the eligibility criteria and advising Ministry of Finance, Egypt on the financing of
eligible Green projects under Egypt's Green Financing Framework, for the USD 3 billion 'Debut Green Term Loan' and
Murabaha Facility for MoF Egypt.

8	FAB led the issue of the first sustainability-linked loan (SLL) in global aviation tied to ESG targets (USD 1.2 billion loan to
Etihad Airways). FAB played a lead role advising the company and acted as a ESG Structuring Bank, Joint ESG Coordinator and
Bookrunner and Mandated Lead Arranger. The facility is the first SLL both regionally and globally in the aviation industry -
with all three ESG KPIs linked to reducing CO2 emissions, increasing corporate governance & promoting female participation.
9	In 2022, FAB will further expand the sustainable finance framework to implement new lines of ESG business to include
green trade finance, equity capital markets, commercial mortgage-backed securities, and treasury issuances.

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1.1 FAB'S GREEN BONDS

FAB's Green Bonds continues to support projects both in the UAE and internationally, with the aim of addressing critical environmental issues such as climate change, renewable energy, and energy efficiency.

Our public Green Bonds and Green Private Placements, referred to as Green Bonds throughout this report, are based on the FAB Sustainable Finance Framework and adhere to the 2018 ICMA Green Bond Principles (GBP).

Following the issuance of the region's first public Green Bond in March 2017, FAB has issued 13 new bonds to date:

Green Asset	ISIN	Type	Currency	Bond	Issuance	Maturity	Status
Label				Amount	Date	Date
Public Green	XS1587035996	Public Green	USD	587,000,000	Mar-17	Mar-22	Matured
Bond		Bond
ISIN: XS1587035996
Green Private	XS2056572402	Green Private	USD	20,000,000	Sep-19	Sep-24	Live
Placement		Placement
ISIN: XS2056572402
Green Private	XS2188912179	Green Private	HKD	750,000,000	Jun-20	Jun-25	Live
Placement		Placement
ISIN: XS2188912179
Green Private	XS2047618769	Green Private	USD	50,000,000	Sep-19	Dec-29	Live

1.2 WHY IS FAB ISSUING GREEN BONDS

The provision of Green Bonds and Green Private Placements products is a vital aspect of our sustainability strategy and plays a critical role in supporting the transition to a more sustainable future.

We recognize that climate change poses a significant threat to the global economy, and we support the transition to a low-carbon economy in accordance with global and regional agendas such as the United Nations Sustainable Development Goals (UN SDGs), the UAE Green Agenda 2015-2030 and the Abu Dhabi Economic Vision 2030. Green bonds assist us in achieving positive environmental and social outcomes in the areas in which we do our business.

In 2021 we started to define our new ESG Strategy with the goal of ensuring that the bank stays ahead of the curve as stakeholder expectations evolve. Our approach to sustainability is guided by three pillars: strong governance model, transitioning to a low carbon future and positive social impact. All three pillars ultimately support FAB's goal of sustainable financial performance by reducing risk and creating new business opportunities.

Placement		Placement
ISIN: XS2047618769
Public Green	CH0593893925	Public Green	CHF	260,000,000	Feb-21	Mar-27	Live
Bond		Bond
ISIN: CH0593893925
Private Green	XS2353097269	Private Green	CNH	150,000,000	Jun-21	Jun-25	Live
Bond		Bond
ISIN: XS2353097269
Private Green	XS2385355651	Private Green	CNH	128,000,000	Sep-21	Sep-26	Live
Bond		Bond
ISIN: XS2385355651
Private Green	XS2386530880	Private Green	CNH	128,000,000	Sep-21	Sep-26	Live
Bond		Bond
ISIN: XS2386530880
Public Green	CH1145096181	Public Green	CHF	200,000,000	Nov-21	Nov-26	Live
Bond		Bond
ISIN: CH1145096181
Private Green	XS2407093504	Private Green	USD	30,000,000	Nov-21	Nov-26	Live

Transforming our Governance Model

• We will commit to the highest standards for ESG accountability, transparency and risk management.

Transitioning to a Low Carbon Future

• To become the model sustainable financial institution in the Middle East and North Africa.
• To act in partnership with our stakeholders to accelerate the transition to a Net Zero society and economy.

Capitalising on our Social Responsibility

• To expand access to financial services for all - in particular underbanked groups.
• To foster a diverse, inclusive and equitable organisation.

Bond		Bond
ISIN: XS2407093504
Green Private	XS2460006542	Green Private	USD	20,000,000	Mar-22	Mar-27	Live
Placement		Placement
ISIN: XS2460006542
Public Green Bond	CH1181713616	Public Green	CHF	200,000,000	Apr-22	Apr-26	Live
ISIN: CH1181713616		Bond
Public Green	XS2466186074	Public Green	EUR	500,000,000	Apr-22	Apr-27	Live
Bond		Bond
ISIN: XS2466186074

Note: ISIN: XS2466186074 and CH1181713616 has been issued post the reporting period (April 22), however, the proceeds are yet to be allocated as of 31 March 2022.

In 2019 FAB become a signatory to the Abu Dhabi Sustainable Finance Declaration and aligns to the Guiding Principles developed with authorities in the UAE to promote sustainable development for the UAE. FAB is listed on the Abu Dhabi Securities Exchange (ADX) and aligns with ADX's ESG Disclosure Guidance for listed companies, which includes 31 ESG indicators mapped across Global reporting Initiative (GRI) standards and the UN SDGs. This ensures that FAB's approach to sustainable finance is in adherence to local Abu Dhabi principles.

Full details of our ESG pillars, strategy, commitments and disclosures can be found in our 2021 ESG Report.

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2. FAB'S SUSTAINABLE

FINANCE APPROACH (A)

FAB's Sustainable Finance Framework includes any type of Sustainable Financing Transaction used to fund projects that provide environmental and/or social benefits. These financial transactions include Green, Social or Sustainable Bonds, Sukuk, loans, repurchase transactions and deposits (such as Islamic Financing).

FAB's Sustainable Finance Framework was developed in accordance with market best practices requirements reflected in the International Capital Market Association (ICMA) Green Bond Principles (GBP), Social Bond Principles (SBP), and Sustainability Bond Guidelines (SBG) - together known as "the Principles." Additionally, this Framework was developed in accordance with the Loan Market Association (LMA)'s Green Loan Principles (GLP) and Sustainability-Linked Loan Principles (SLLP).

External reviews are conducted by independent third parties to offer a second opinion on the Sustainable Finance Framework and the designated reports in accordance with the ICMA Principles.

The Framework will be reviewed and updated as required to ensure that it remains in line with evolving market practice, among the core components are the following:

1. Use of		2. Process for		3. Management
	Project Evaluation			4. Reporting
Proceeds			of Proceeds
	and Selection

In 2022, FAB will further expand the sustainable finance framework to implement new lines of ESG funding and financing.

USE OF PROCEEDS

The Framework outlines the eligible green categories for the use of proceeds which presently include:

Renewable	Energy	Sustainable water
energy	efficiency	management

PROCESS FOR PROJECT EVALUATION AND SELECTION

We have formulated a Sustainable Finance Committee, who are responsible for ensuring compliance with all aspects of FAB's Sustainable Finance Framework. The Committee has oversight of the Framework, including the approval of eligible projects. The projects passing the category screen are assessed for eligibility using FAB's ESG Due Diligence Assessment Methodology. ESG performance of both clients and the selected projects are stringently analysed and ESG Assessment Reports generated. The Sustainable Finance Committee reviews the ESG Assessment Reports and allocates eligible projects in whole or in part to the Bonds, up to the full value.

Eligible projects that are allocated in whole or in part to the Green Bonds have undergone a multi-step assessment process as follows:

• Potential projects identified by FAB's client relationship managers and/or ESG team, are screened against FAB's eligible project categories outlined in the Framework (listed in the preceding table).
• Once screened and identified to be in alignment with the eligible categories, an extensive ESG due diligence is undertaken to ensure only projects and clients that score the highest are proposed to the FAB Sustainable Finance Committee.
• Projects or clients that have been exposed to major allegations during the last three years are excluded.
• The results of screening and the due diligence process are presented to the Sustainable Finance Committee, confirming which projects are deemed eligible for the Green Bonds.
• Eligible projects are allocated in whole or in part to the Green Bonds, up to the full value of the bond.

Process for Project Evaluation and Selection Procedure(A)

Meets eligible project	Reviewed and verified by
categories definition	the Green Bond committee

ESG due diligence

Approved

Pollution prevention	Sustainable	Clean
and control	management of living	transportation
	natural resources
Terrestrial and	Climate change	Eco-efficient

Yes

No

Proposed project

ESG due diligence

Allocation

aquatic biodiversity	adaptation	products
conservation

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Rejected

Project rejected

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FAB'S DUE DILIGENCE METHODOLOGY

Projects identified as potentially eligible are put forward for evaluation. FAB has developed an ESG Due Diligence Toolkit designed to assess the ESG performance of both the projects and the clients and generates environmental and social due diligence reports that are reviewed by the Sustainable Finance Committee.

FAB's ESG Due Diligence Toolkit has been developed in collaboration with an external third-party provider. The methodology leverages stringent international standards and recommendations including those of the European Bank for Reconstruction and Development (EBRD), IFC, World Bank, Equator Principles, OECD, International Labour Organisation (ILO), the UN's Universal Declaration of Human Rights, and country-specific environmental and labour laws.

MANAGEMENT OF PROCEEDS

To track the management of proceeds, FAB has created internal monitoring and reporting mechanisms. Our Sustainable Financing Register records the allocated amount per project, the share of total portfolio financing, maturity dates, due diligence scores, and the remaining balance of unallocated proceeds.

REPORTING

We have committed to issuing an annual report on Sustainable Finance, which will include independent verification of all outstanding sustainable financing products.

This reporting package will contain details including, but not limited to:

1. Total proceeds from each Sustainable Product.
2. Allocated amount against the Green Bonds and Green Private Placements eligible project portfolio/s.
3. Green bond proceeds allocated against each of the green bond eligible categories identified within the Framework.

1. List of projects included within the Green Bonds and Green Private Placements portfolio and a brief description of the project benefits.
2. Environmental impact reporting measures for the eligible projects within the green bond portfolio (where available).
3. A geographical breakdown of use of proceeds and indicate to total project size and total financing.
4. Value of any unallocated green bond proceeds.

The Sustainable Finance Committee assess and approve each Green Bonds and Green Private Placements which contains allocation reporting and impact reporting. Note that any disclosure of data will be subject to FAB's confidentiality requirements and the availability of information.

We undertake ESG due diligence and screening for clients in the establishment of financing frameworks, project finance, and other related services to this part of our banking franchise.

INDEPENDENTTHIRD-PARTY

ASSURANCE

FAB engaged KPMG to provide independent third- party assurance, ensuring selected information in this report was prepared in accordance with FAB's Sustainable Finance Framework and 2018 ICMA Green Bond Principles. The assurance statement is included on page 20, and the areas subject to independent third-party assurance are denoted throughout the report with the symbol (A).

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