Al Rajhi Banking and Investment : Report Review 2025

REPORT REVIEW

Al Rajhi Bank

Allocation and Impact Report

20 February 2025

VERIFICATION PARAMETERS

Type(s) of reporting

▪ Allocation and Impact Report

Relevant standard(s)

Scope of verification

Lifecycle

Validity

• Harmonised Framework for Impact Reporting (HFIR), updated June 2024, as administered by the International Capital Market Association (ICMA)
• Harmonised Framework for Impact Reporting for Social Bonds (HFIRSB), updated September 2024, administered by the International Capital Market Association (ICMA)
• Al Rajhi Bank's Allocation and Impact Report 2025 (as of Feb. 20, 2025)
• Al Rajhi Bank's Sustainable Finance Framework (as of
  Feb. 16, 2022)
• Instruments' identification: see Appendix
• Post-issuanceverification
• As long as no changes are undertaken by the Issuer to its Allocation and Impact Report (as of Feb. 20, 2025)

www.iss-corporate.com

© 2025 | ISS Corporate Solutions, Inc. All Rights Reserved

R E P O R T R E V I E W

Allocation and Impact Report Al Rajhi Bank

C O N T E N T S

SCOPE OF WORK	3
AL RAJHI BANK OVERVIEW	3
ASSESSMENT SUMMARY	4
REPORT REVIEW ASSESSMENT	5
PART I: ALIGNMENT WITH COMMITMENTS SET FORTH IN THE SUSTAINABLE FINANCE
FRAMEWORK	5
PART II: ASSESSMENT AGAINST THE HARMONISED FRAMEWORK FOR IMPACT
REPORTING	6
PART III: DISCLOSURE OF PROCEEDS ALLOCATION AND SOUNDNESS OF THE
OUTPUT/IMPACT REPORTING INDICATORS	15
ANNEX 1: Methodology	21
ANNEX 2: Quality management processes	22
APPENDIX: Instruments identification	23
About this Report Review	25

w ww .iss -c orporate.c om

2 o f 2 5

R E P O R T R E V I E W

Allocation and Impact Report Al Rajhi Bank

SCOPE OF WORK

Al Rajhi Bank ("the Issuer", "the Bank" or "Al Rajhi") commissioned ISS-Corporate to provide a Report Review1 on its Allocation and Impact Report by assessing:

1. The alignment of Al Rajhi Bank's Allocation and Impact Report 2025 (as of Feb. 20, 2025) with the commitments set forth in Al Rajhi Bank Sustainable Finance Framework (as of Feb. 16, 2022).2
2. Al Rajhi Bank's Allocation and Impact Report, benchmarked against the Harmonised Framework for Impact Reporting (HFIR), and Harmonised Framework for Impact Reporting for Social Bonds (HFIRSB), as administered by the International Capital Market Association (ICMA).
3. The disclosure of proceeds allocation and soundness of reporting indicators - whether the impact metrics align with best market practices and are relevant to the Sustainable Financing Instruments issued.

AL RAJHI BANK OVERVIEW

Al Rajhi Bank engages in the provision of banking, financing, and investment services. It operates through the following segments: Retail, Corporate, Treasury, and Investment Services Brokerage, and Others. The Retail segment includes individual customer deposits, credit facilities, customer debit current accounts, fees from banking services and remittance business. The Corporate segment incorporates deposits, corporate customer deposits, corporate credit facilities, and debit current accounts. The Treasury segment provides treasury services and portfolios. The Investment Services and Brokerage, and Other segments incorporate investments of individuals and corporate in mutual funds, local and international share trading services, and investment portfolios. The company was founded in 1957 and is headquartered in Riyadh, Saudi Arabia.

1. A limited or reasonable assurance is not provided on the information presented in Al Rajhi Bank's Allocation and Impact Report 2025. A review of the use of proceeds allocation and impact reporting is solely conducted against the core principles and recommendations of ICMA's standards (Green Bond Principles, Social Bond Principles, Sustainable Bond Guidelines) and LMA's standards (Green Loan Principles, and Social Loan Principles) where applicable, and the criteria outlined in the underlying Framework. The assessment is solely based on the information provided in the allocation and impact reporting. The Issuer is responsible for the preparation of the report, including the application of methods and internal control procedures designed to ensure that the subject matter is free from material misstatement.
2. The Framework was assessed as aligned with the Green Bond Principles, Social Bond Principles, and Sustainable Bond Guidelines, as of Feb. 16, 2022.

w ww .iss -c orporate.c om

3 o f 2 5

R E P O R T R E V I E W

Allocation and Impact Report Al Rajhi Bank

ASSESSMENT SUMMARY

REVIEW

SECTION

SUMMARY

EVALUATION

Part I

Alignment withthe Issuer's commitments set forth in theFramework

Al Rajhi's Allocation and Impact Report 2025 meets the commitments set forth in its Sustainable FinanceFramework.

Aligned

Part II	The Allocation and Impact Report is in line with the HFIR
Alignment with	and HFIRSB. The Issuer follows core principles and,
where applicable, recommendations.
the HFIR and
HFIRSB	The Issuer provides transparency on the level of
	expected reporting as well as on the frequency, scope	Aligned
	and duration, aligned with best practices. The Issuer has
	disclosed the amount of proceeds allocated, sector-
	specific core indicators and calculation methodologies,
	in line with the recommendations of the HFIR and
	HFIRSB.

Part III

Disclosure of proceeds allocation and soundness of reporting indicators

The allocation of the bond's proceeds has been disclosed, with a detailed breakdown across different eligible project categories as proposed in theFramework.3

Al Rajhi's Allocation and Impact Report 2025 has		Positive
adopted an appropriate methodology to report the
outcomes and impacts generated by providing
comprehensive disclosure on data sourcing, calculation
methodologies and granularity, reflecting best market
practices.

3 The assessment is based on the information provided in the Issuer's report. The Issuer is responsible for the preparation of the report, including the application of methods and procedures designed to ensure that the subject matter is free from material misstatement.

w ww .iss -c orporate.c om

4 o f 2 5

R E P O R T R E V I E W

Allocation and Impact Report Al Rajhi Bank

REPORT REVIEW ASSESSMENT

PART I: ALIGNMENT WITH COMMITMENTS SET FORTH IN THE SUSTAINABLE FINANCE FRAMEWORK

The following table evaluates Al Rajhi's Allocation and Impact Report 2025 against the commitments set forth in its Framework, which are based on the core requirements of the Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines, Green Loan Principles, Social Loan Principles and best market practices.

	GBP, SBP, SBG, GLP			OPINION			ALIGNMENT
	AND SLP						WITH
							COMMITMENT
	Process for project			Al Rajhi Bank confirms to follow the process for
	evaluation and			project evaluation and selection described in its
	selection			Sustainable Finance Framework. The Issuer applied
				the eligibility criteria set in the Framework to
				determine whether projects fit within the defined
				categories.
				ESG risks associated with the project categories are
				identified and managed appropriately, as defined
				in the Framework.
Management of		Al Rajhi Bank confirms to follow the management
proceeds		of proceeds described in its Sustainable Finance
				Framework.
				The proceeds collected equal the amount allocated
				to eligible projects, with no exceptions. The
				proceeds are tracked appropriately and attested in
				a formal internal process. Moreover, the Issuer
				discloses the temporary investment instruments for
				unallocated proceeds.
	Reporting			The report is in line with the initial commitments
				set in Al Rajhi's Sustainable Finance Framework.
				Further analysis of this section is available in Part III
				of this report.

w ww .iss -c orporate.c om

5 o f 2 5

R E P O R T R E V I E W

Allocation and Impact Report Al Rajhi Bank

PART II: ASSESSMENT AGAINST THE HARMONISED FRAMEWORK FOR IMPACT REPORTING AND HARMONISED FRAMEWORK FOR IMPACT REPORTING FOR SOCIAL BONDS

FOR GREEN BONDS

Reporting is a core component of the Green Bond Principles and transparency is of particular value in communicating the expected and/or achieved impact of projects in the form of annual reporting. Green bond issuers are required to report on both the use of green bond proceeds and the environmental impacts at least annually until full allocation or maturity of the bond. The HFIR has been chosen as benchmark for this analysis as it represents the most widely adopted standard.

The table below evaluates Al Rajhi's Allocation and Impact Report 2025 against the HFIR.

CORE PRINCIPLES

	ICMA HFIR			ALLOCATION AND IMPACT REPORT 2025			ASSESSMENT
				As reporting is a core component of the GBP, Al
				Rajhi reported within one year of issuance and
				thereafter within one year from the last report.
				The report will be available on Al Rajhi's website.
Report on an annual		The initial allocation and impact reporting of the
basis		Commodity	Murabaha	Facility	(FIGI:
				BBG019RJB997, FIGI: BBG019RJB9G9, USD 1.265
				billion) was conducted in late 2024, 18 months
				from the issuance date. Since then, Al Rajhi has
				maintained annual reporting, fulfilling its
				framework commitments.
				All proceeds that have been allocated to green
	Formal internal process			projects as of the date of the Allocation and
			Impact Report 2025 have only been allocated to
	to allocate proceeds
			green projects that meet the eligibility criteria
				stated in the Framework.
				Allocated proceeds have been reported in a
Transparency on the		single currency (USD).
currency

w ww .iss -c orporate.c om

6 o f 2 5

R E P O R T R E V I E W

Allocation and Impact Report Al Rajhi Bank

			The Issuer has a system in place to identify and
			manage ESG risks connected to the projects
	ESG risk management		financed. No negative effects of the projects
		have been identified by the Issuer.

	The impact report illustrates the expected
	environmental impacts made possible by
	projects to which green bond proceeds have
	been allocated. It is based on ex-ante estimates
	based on the respective clients' budgeted
	expectations (developed prior to project
Illustrate the expected	implementation) of expected annual results for a
representative year once a project is completed
environmental impacts	and operating at normal capacity. The method
or outcomes	of estimating the impacts is made transparent.
	More information can be found in Part III.
	The estimation method was assessed by an
	external verifier as aligned with best standards
	and practices for the commercial banks and
	capital markets sector.

RECOMMENDATIONS

ICMA HFIR	ALLOCATION AND IMPACT REPORT 2025		ASSESSMENT
			The reporting was done on a green instruments
Report at project or			portfolio basis, in which the proceeds of all of
portfolio level			Al Rajhi's outstanding green instruments fund
			a portfolio of projects.
Define and disclose			9.5% of the proceeds have been allocated to
period and process			green assets, 6.8% to Renewable Energy, 0.4%
for			to Energy Efficiency, 1.7% to Sustainable Water
including/removing			and Wastewater Management, and 0.7% to
projects in the			Clean Transportation. Only financing to
report			projects disbursed and confirmed as eligible by
			the Sustainable Finance Working Group up to
			Dec. 31, 2024, is included in the Allocation and
			Impact Report.
			As part of its due diligence, the Issuer monitors
			the projects included in its eligible	assets
w ww .iss -c orporate.c om			7 o f 2 5

R E P O R T R E V I E W

Allocation and Impact Report Al Rajhi Bank

		portfolio. No projects have been removed from
		the Issuer's eligible asset Portfolio, and one
		project has been added to Clean
		Transportation. The period to include or add
		projects is until December 2024.
Signed amount and		Al Rajhi Bank does not indicate the total signed
amount of green		amount of projects financed under sustainable	-
bond proceeds		financing instruments. The amount of proceeds
allocated to eligible		allocated to eligible disbursements is USD 674
disbursements		million.
		The Issuer reports on the overall impacts of the
Approach to		portfolio, and the impacts based on
impact reporting		technology. Additionally, the Issuer discloses
		the prorated share of the overall results.
		To facilitate comparison and benchmarking of
		project results, Al Rajhi Bank reports on sector-
		specific core indicators.
		The core indicators are:
		Renewable Energy
		▪	Attributable capacity (MW)
		▪ Attributable Annual Production (MWh)
		▪ Attributable Annual Avoided Emissions
			(tCO2e)
Report on at least a		▪	Attributable Electric Capacity (MWe)
limited number of		Energy Efficiency
sector-specific core
indicators		▪ Attributable Annual Energy Savings
			(kWh)
		▪ Attributable Annual Avoided Emissions
			(tCO2e)
		Sustainable Water Management
		▪ Attributable Annual Water Collected
			(m3)
		▪ Attributable Annual Water Treated (m3)
		▪ Attributable Annual Absolute Energy
			Reduction (MWh)

w ww .iss -c orporate.c om

8 o f 2 5

R E P O R T R E V I E W

Allocation and Impact Report Al Rajhi Bank

• Attributable Annual Avoided Emissions (tCO2e)

Where there is no single commonly used standard, the Issuer discloses its ownmethodologies.

	Disclose own
		The Issuer has elected reasonable and easy-to-
	methodologies,		quantify	measurement	units	and
	where there is no		methodologies. The methodology used to
	single commonly		calculate the impact indicators is available on
	used standard
		the Issuer's website.
			More information can be found in Part III.
	Disclosure of the		The Issuer converts units reported for individual
		projects based on standard conversion factor
	conversion
		and includes	appropriate	disclosure of	the
	approach
		conversion approach in the report.
	Projects with partial		All projects are 100% eligible for financing.			N/A
	eligibility
			The Issuer uses an attribution approach based
			on a formula dividing Al Rajhi Outstanding
			Investment Amount by the Total Project Value.
	Use (and		For Renewable Energy projects, the Issuer
	disclosure) of the		cannot separate the calculation of impacts from
	attribution		solar PV projects and battery energy storage
	approach		systems (BESS). In this case, the Issuer uses and
			discloses an attribution approach. The avoided
			emissions generated from the BESS project
			were subtracted from the solar PV project.
	Ex-post verification		The Issuer does not sample ex-post verification
		of specific projects and the results are reported		N/A
	of specific projects
		and compared to ex-ante assumptions.
	Report the
	estimated lifetime		There is no reporting on the estimated lifetime	-
	results and/or
		impacts and project economic life in years.
	project's economic
	life (in years)
	OPINION

w ww .iss -c orporate.c om

9 o f 2 5

R E P O R T R E V I E W

Allocation and Impact Report Al Rajhi Bank

Al Rajhi follows ICMA's Harmonized Framework for Impact Reporting (HFIR)'s core principles and some key recommendations. The Issuer provides transparency on the level of expected reporting as well as on the frequency, scope, and duration, aligned with best practices. The Issuer has disclosed the amount of proceeds allocated, sector-specific core indicators, and calculation methodologies in line with the recommendations of the HFIR.

w ww .iss -c orporate.c om

1 0 o f 2 5