Davivienda Bank (First Year Implementation)

Within the framework of our Comprehensive Risk Management and contributing to the Bank’s Sustainable Strategy within the policy “The World is Our Home: Let’s Make It More Prosperous, Inclusive, and Green”, since 2011 we have had the Environmental and Social Risk Management System (SARAS), which is managed by the Environmental and Social Risk Department of the Credit Risk Vice-presidency, and reports to the Corporate Risk, Corporate Governance and Sustainability, Credit Risk, and Investment Committees.

Our SARAS methodology is aligned with the standards and performance norms of the International Finance Corporation (IFC), and includes elements of the Equator Principles standard, which we formally adhered to in 2024. It integrates an Environmental and Social Exclusion List based on multilateral banking references; since its inception, we have been improving and extending our procedures to different management areas. This is how our system currently covers:

• Environmental and social risk assessment for applicable credit applications from our Business and Construction banking clients, as well as in the evaluation of the Bank’s strategic suppliers.
• Management of climate risks: physical and transitional.
• Management of human rights risks.
• Evaluation of ESG aspects within the framework of responsible investment.
• Definition and evaluation of categories and criteria for sustainable financing.

The SARAS process applied to credit evaluation includes specific scope policies considering amounts, terms, sensitive activities, local regulations, and when credit approval instances require it, prioritizing projects or activities with potential adverse impacts on the environment or surrounding communities.

For project finance, the environmental and social risk assessment considers the methodological reference of the Equator Principles, taking into account the existence of environmental and social due diligence by an independent advisor; and accompanying the process from the credit structuring stage until the client’s obligation with the Bank is finalized.

The Environmental and Social Risk Department has a team of professionals with backgrounds in areas such as Environmental Engineering, Administration, and Law, and with postgraduate degrees related to environmental management, environmental law, and hydraulic resource management.

For more details on SARAS, its components and procedures, please refer to section 3.1, page 66 of our “The World Is Our Home: Let’s Make It More Prosperous, Inclusive, and Green” Policy, published at https://sostenibilidad.davivienda.com/assets/pdf/en/POLICY_THE-WORLD-IS-OUR-HOME_Lets-Make-It-More-Prosperous-Inclusive-and-Green.pdff and in the Environmental and Climate Change Policy https://sostenibilidad.davivienda.com/assets/pdf/es/politica-ambiental-cambio-climatico.pdf

For the strengthening and continuous improvement of SARAS, in June 2024, we became new signatories of the Equator Principles in order to strengthen the integration of environmental and social factors in project financing, support the environmental and social risk management that is part of our credit processes, and promote the development of projects that reflect solid environmental management practices and respect for communities.

As part of the requirements to advance in aligning existing policies with the Equator Principles (EP) reference, we have been carrying out the following activities:

• In the second half of 2024, 2 of the officials who are part of the environmental and social risk team completed the virtual EP course, and during the first half of 2025, the training process was completed with the SARAS professional team of the Bank in Colombia and Central America.
• In 2025, we have held awareness sessions and practical knowledge of the reference and established an alignment work plan with involved areas such as credit, credit risk, commercial, and internal audit.
• Learning and active participation in working sessions with colleagues from national and international banks, for the monitoring of Equator Principles in jointly financed projects. This experience allows for the exchange of knowledge and practices, creating technical and operational capabilities.
• As of the end of 2024, SARAS monitoring continues for 8 projects under the Equator Principles framework with a portfolio balance of COP 1.3 trillion and 3 new projects without disbursement initiation, with an amount of COP 589 billion.

Below, we present the proposed general procedures and responsibilities (based on the current process) that the environmental and social risk evaluation and monitoring process, including Equator Principles, applied to credit applications intended to finance projects, should follow: