Banco Mercantil del Norte S.A. (2025)

IMPLEMENTATION OF THE EQUATOR PRINCIPLES AT BANORTE

The Social and Environmental Management System (SEMS) was created to identify, categorize, assess and track the socioenviromental risks and impacts of the financing we provide in our Corporate, Commercial and Infrastructure Banking areas. The SEMS is an integral part of the bank’s lending process, and operates in accordance with Mexican laws, institutional regulations and the Equator Principles, the highest standard for socio-enviromental risk management in the financial industry

Organizational structure

The Specialized Social and Environmental Risk Area (SERA), made up of a team of professionals expert in this field, is part of the Sustainability and Responsible Investment Department, which in turn reports to the Executive Department of Sustainability and Investor Relations and is responsible for the operation and continuous improvement of the SEMS.

The SEMS is supported by what are called Sustainability Champions, a group of employees from the Credit area who serve as a liaison between the SERA and territorial bank offices, to ensure that proper socioenvironmental risk management permeates our operations nationwide.

Social and Environmental Risk Analysis Process

The due diligence process involves the identification, categorization, assessment and management of socio-enviromental risks, including potential impacts on human rights, which are communicated to the Credit Committees before any financing is authorized.

IDENTIFICATION

We identify the potential socioenviromental risks and impacts of loans, ascertaining that none of the activities to be financed are present in the Exclusion List and ruling out any prohibited activities.

CATEGORIZATION

We assign a socioenvironmental risk level to loans based on the magnitude of their impacts and the possibility of mitigating them. The risk is classified according to the Equator Principles into categories A (high risk), B (medium risk), and C (low risk).

ASSESSMENT

Once the loans are categorized, we select those that should be screened through a due diligence process, based on the loan amount, the financial product, and its destination. All industries are subject to screening, especially sensitive ones.

The screening involves verifying that the projects to be financed comply with the national legal framework and the guidelines of the Equator Principles, the IFC Performance Standards, and the SEMS Assessment.3 We therefore request information from our clients regarding permits, resolutions, licenses, plans, programs, specialized studies, and good practices in order to prepare the Due Diligence.

MANAGEMENT

We monitor the socio-enviromental performance of the loans screened throughout the finance lifecycle. We consider primarily the financing analyzed under the Equator Principles and include annual reviews, ongoing advice to clients, credit and business executives, reputational risk monitoring, and site visits to verify the operating conditions and the correct application of environmental, social, and human rights conditions or recommendations, among others, of the assessed projects.

Reputational risk monitoring

The SERA analyzes the reputational risk of the clients and projects it evaluates under the Equator Principles through a monthly monitoring of controversial environmental and social topics using artificial intelligence tools. If there are any material findings, the area gets in touch with the parties involved to clarify it or impose the conditions necessary to mitigate the risks and impacts identified.

HUMAN RIGHTS

Banorte recognizes the value and importance of human rights. Through its senior management and Sustainability Department, it promotes policies and procedures aimed at respecting and protecting these rights for its employees, suppliers, clients, and stakeholders in general.

We have a Human Rights Policy consistent with national and international human rights agreements and initiatives to which Mexico and Banorte are party. We are currently working to update the policy in order to align ourselves with best practices in the area of human rights.

In addition, to ensure that these rights are respected and that communities are actively engaged in the planning and execution of projects, through the SEMS, we offer continuous advice on the correct application of and compliance with applicable regulations and best practice throughout the financing period, through an assessment that incorporates the following aspects:

Policies on hiring and employment terms

Clients are urged to promote a culture of equal employment and non-discrimination in the workplace through hiring policies and employment terms that respect and provide equal opportunities to employees, regardless of race, color, religion, gender, sexual orientation, marital or family status, nationality, disability, or any other status protected by federal, state, or local laws, and by guaranteeing that the workplace is free of discrimination and other forms of intolerance and violence.

Social impact assessment (SIA)

For energy sector projects that fulfill the criteria, a social impact assessment is required, so that the necessary actions can be taken to ensure the sustainability of the project and respect for human rights throughout its useful life.

Local populations have a legitimate right to a healthy environment, to participation in decisionmaking that affects them, and to be consulted in advance, in an informed and culturally appropriate manner, about projects to be developed in their territories. The social impact assessment involves identifying the communities and peoples located in the projects’ area of influence, as well as identifying, characterizing, predicting and assessing of the consequences the project might have for local communities, developing mitigation measures and social management plans, and providing regular evidence of their correct application.

Land acquisition and involuntary resettlement

Projects that have resulted in physical or economic displacement of populations are identified, and where appropriate, the client is asked to consider alternatives to minimize displacement and/or offer compensation to the affected group.

Grievance mechanism

In cases where the presence of affected communities is detected based on their location, the client is urged to establish a grievance mechanism to field community concerns and complaints from the communities about the client or project and facilitate their resolution. This should be appropriate to the risks and adverse impacts of the project. Efforts should be made to resolve concerns promptly through a consultation process that is understandable, transparent, culturally appropriate, and easily accessible, without cost or reprisal to those who raise the issue or concern. In addition, clients must inform the affected communities about the mechanism and provide regular evidence of its correct implementation.

Public consultation

A project must conduct a public consultation to ensure a transparent process in which the communities involved are informed about it and have an opportunity to convey their comments, doubts, and concerns, ensuring that these do not become an impediment as the process moves on to more advanced stages.

Free, prior, and informed consent

Based on International Finance Corporation Performance Standard 7, indigenous communities or peoples are particularly vulnerable if their lands and resources are significantly altered, occupied, or impaired; their languages, cultures, religions, spiritual beliefs, and institutions may be threatened; or the project development exposes them disproportionately to other adverse impacts.

When a project is proposed or natural resources are to be commercially developed on lands traditionally owned or customarily used by indigenous peoples, and adverse impacts or possible resettlement can be anticipated, the SERA requires that the client obtain free, prior, and informed consent (FPIC) to ensure that the rights of indigenous peoples are respected in any decision that may affect their lands, territories, or livelihoods. It guarantees that these peoples have the right to give or withhold their consent to these activities, without fear of reprisal or coercion, within a time frame appropriate to their culture and with the resources to make informed decisions.

TRAINING

Ongoing training in the Credit, Business, and Risk areas is a priority for instilling a culture of social, environmental, and climate risk management at Banorte. We are confident that awareness and skills development are useful in properly managing related risks and impacts.

With this aim in mind, 785 employees received training in these areas during in 2025. At the same time, we distributed information on topics relevant to the business through our internal communication channels, such as regular bulletins on the global application of the Equator Principles version 4, updates on Mexican legislation, emerging risks, socio-enviromental risk management in priority industries, and business cases.

Similarly, to ensure skills improvement and the functioning of the system, in 2025 the SERA received training on topics such as ESG and Sustainable Finance for the Company, Implementation of asset management systems based on ISO 55001:2024 and professional training in Financing Decentralized Renewable Energy Generation.

Review of the implementation of the Equator Principles

The Sustainability and Responsible Investment Department, together with the Specialized Social and Environmental Risk Area, annually reviews the application of the Equator Principles and the optimal operation of the system, which is part of the SEMS continuous improvement process. The review encompasses the achievement of goals, the identification of areas of opportunity, and feedback from areas such as Credit, Risk, Regulatory, HRTraining, Communication, and Specialized Areas.