In today's rapidly changing world, marked by advances in technology, shifts in social structures, changes in consumption patterns, and the effects of climate change, the operations of banks and the businesses of their customers are impacted both positively and negatively. These factors are also interconnected with the overall economic system. Therefore, it is crucial for organizations to incorporate sustainability factors into their decision-making processes.

Krungthai, as a financial institution serving the Thai people, recognizes its role and responsibility towards society. The bank's vision, "Growing Together for SUSTAINABILITY", drives its efforts to integrate governance, social and environmental issues into its business processes. Krungthai also adheres to national and international sustainable banking guidelines to promote a systematic transition to a low-carbon economy and build a quality society. By focusing on preventing negative impacts and promoting environmentally friendly business practices, the bank aims to support its customers, partners, employees, and shareholders in meeting these challenges while creating new business opportunities through the development of innovative financial products and services.

Krungthai is committed to managing the impacts and risks associated with the loans it supports. To achieve this, the bank has developed guidelines for responsible lending, which integrate considerations of environmental and social risks into credit and investment underwriting processes. In addition, Krungthai has adopted internationally recognized frameworks for sustainable project finance, such as the Equator Principles and the environmental and social performance standards of the International Finance Corporation (IFC). These frameworks provide a robust approach to considering various types of loans and investments, including project finance and corporate finance, and enable the bank to ensure that it operates in a socially and environmentally responsible manner.

At Krungthai, we have a clear list of loan types that we will not support (Exclusion List). To promote environmentally friendly business practices and create value for society, we have developed guidelines for credit approval for potential industries that we will support (Inclusion List). These guidelines are regularly monitored and reviewed to ensure continuous improvement. We also have sector-specific guidelines for credit approval for specific industries or high-risk customers (Sector Specific Guidelines). As part of our commitment to responsible lending, we aim to expand the scope of our operations to cover more industries and customers.

The Bank assesses credit applications based on the characteristics of the applicant and the type of business or project they are engaged in. As part of our responsible lending practices, we have identified a list of credit types that we do not support. These include

1. Illegal business or against morals or contrary to good governance or Corporate Governance.
2. Businesses or projects that have a negative impact on the environment, ecosystems, cultural conservation areas, or important ancient sites. These include
   2.1 Areas in the mangrove forest or natural conservation area, park area, animal sanctuaries area according to relevant government announcements.
   2.2 Areas of UNESCO World Heritage Sites as registered in Thailand and/or other areas which have the same characteristics elsewhere.
   2.3 Ramsar Convention on Wetlands conservation areas of international importance (Ramsar Convention on Wetlands) as registered in Thailand and/or similar elsewhere, including agricultural projects converted from Wetlands, Peatlands, or other areas with high carbon stocks.
   2.4 Protected areas of International Union for Conservation of Nature: IUCN (IUCN Protected Area Category) as registered in Thailand and/or similar elsewhere
3. Trade in wildlife and wildlife products which is protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
4. Business that are hoarding products for the purpose of speculation or behavior that implies to hoarding products for speculation (Corner Market) that affect the economic stability or that is contrary to the announcement of the requirements of government agencies or related regulatory agencies.
5. Business related to the production or trade of weapons of war, including but not limited to anti-personal land mines, cluster munitions, and lethal autonomous weapons systems (LAWS), as well as their key components. The Bank considers products critical to military targets as military products, even if they can also be used as civilian products (i.e., "dual use" products). The Bank will not accept transactions involving weapons and weapons delivery systems, military transport systems, and other military products with conflicting parties engaging in violence, except for parties pursuing UN Security Council Resolutions. The Bank also rejects transactions involving arms and weapons delivery systems with countries that spend more than their reasonable budget on arms purchases, companies involved in arms delivery and weapons delivery systems to embargoed countries, countries that are sensitive to corruption, countries with severe human rights violations, and countries where governments are failing or vulnerable. In addition, the Bank may refuse transactions if it determines that there is a high risk that those weapons will be used in serious violations of human rights and humanitarian law, except when dealing with Thai Government agencies or sending products to them.
6. Business related to human rights violations or projects with social risks such as child labor, illegal foreign workers, forced labor, etc.
7. Businesses or Projects that have significant impact to environment and social include
   7.1 Production of pesticides and weeds, production of retroactive materials, production of substances that destroy the atmosphere that are contrary to the laws or international conventions / agreements ( such as the prohibition of production, import, export or possession of hazardous substances type 4 under the Hazardous Substance Act B.E. 2535 (1992) and the prohibition of production of development Production and stockpiling of chemical weapons according to the Hazardous Substances Act, No. 2, B.E.2544 (2001) or hazardous chemicals which are strictly prohibited or limited in use according to the Rotterdam Convention or chemicals that are long-lasting pollutants according to the Stockholm Convention, etc.).
   7.2 Hazardous waste quality improvement (collection, treatment, and disposal) business or radioactive waste.
   7.3 Coal Mining Business or coal trading business except businesses that have Carbon Emission Control.
   7.4 Nuclear Power Business.
8. Business that are engaged in direct and indirect lobbying activities with the aim of influencing regulatory decisions in ways that weaken climate change policies.

In addition, the Bank has established specific approval guidelines for personal loans, which include restrictions on granting loans to certain individuals, such as

• A person who the Office of the National Anti-Corruption Commission (NACC) pointed out the guilt.
• A dark influencer.
• Persons ordered by the Court to be quasi-competent or incompetent.
• Persons who should be despised by society, such as chronic alcoholism, has a serious contagious disease and gamblers, etc.

To promote sustainable and ethical entrepreneurship, the Bank provides credit facilities to businesses and industries with potential, as determined by the Bank and aligned with the United Nations Sustainable Development Goals (UN SDGs). These efforts support the country's strategic plan for developing a bio-circular-green economy (BCG Model), which emphasizes environmentally friendly practices and the principles of circular economy.

1. The healthcare industry comprises businesses involved in medical equipment manufacturing, pharmaceutical and medical product manufacturing, as well as laboratory services.
2. Private Hospital Industry
3. Electric vehicle industry and parts for electric vehicles
4. Food industry for the future: Functional Food, Organic, Plant- based Food, Enriched drink
5. Solar power plant industry or friendly alternative energy with the environment

** The Bank may consider and adjust other industries in the future that align with national and international guidelines for creating value for society and are environmentally friendly, in order to ensure the continuity of its business operations.

To align with the global goal of transitioning towards a low-carbon economy, the Bank provides risk services at both the credit portfolio level and transaction level. The Bank has established additional guidelines for businesses or projects that may significantly impact environmental quality, natural resources, and community health. Such businesses or projects must have obtained a license, undergone evaluation, or passed an Environmental Impact Assessment (EIA) or Environmental and Health Impact Analysis (EHIA) according to criteria set by law.

Companies financed by the Bank are required to implement measures to safeguard the health of their employees, customers, and neighboring communities from harm caused by their products or manufacturing processes, in line with the precautionary principle.

Furthermore, credit applicants in specific industries must provide evidence or information on relevant measures and standards for managing social and environmental issues related to their business nature. These measures and standards can include those recognized at the international level (such as ISO), ESG prevention programs, or guidelines.

1. The upstream petro industry includes crude oil and natural gas extraction, etc. and the intermediate petro industry includes oil and petroleum refineries.
2. All types of thermal power plants (Fossil) except solar and wind power plant.
3. Improvement industry or adjust the quality of all types of waste (collection, treatment and disposal) of hazardous or retroactive waste (including the positive or negative effect to the society and economy of the country in which the measure or process manage safety or impacts on the environment, society and good governance that meet the standard and suitable according to the requirements of government agencies or relevant regulatory agencies.
4. Mining industry including coal mining business or coal trading business (including positive and negative impacts on the society and economy of the country in which the measure or safety management process or environmental, social and governance impacts that are standardized and appropriate according to the requirements of government agencies or related regulatory agencies).
5. All kinds of metal manufacturing industry
6. Chemical and dangerous objects manufacturing industry
7. Agricultural Industry (Farming)

** To manage credit portfolio and transaction level risks in response to significant changes in the context, the Bank may consider making further adjustments to include other industries.

The Bank incorporates ESG issues into its credit approval process for project loans, business loans, personal loans, and investments. ESG issues are assessed based on predetermined criteria to evaluate potential risks and their impacts. The Bank monitors credit limits and line utilization according to specific objectives and conditions. Credit reviews are conducted periodically to ensure that clients are taking effective steps to manage ESG issues and comply with requirements throughout the duration of their credit lines.

Our commitment to contributing to and driving systematic transformation is clearly reflected in our operating results from 2022 and our action plans.