Recommendations on Sustainability Information Disclosure

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Date of creation: 2025-10-03

Appendix to the resolution of the Supervisory Committee of the National Bank of the Kyrgyz Republic of "26" September 2025 No. 47/7

Recommendations on Sustainability Information Disclosure

Chapter 1. General Provisions

1. These Recommendations on Sustainability Information Disclosure (hereinafter – Recommendations) are developed to facilitate the implementation of sustainable development principles in the banking sector of the Kyrgyz Republic and to enhance the transparency of the activities of commercial banks, non-bank financial-credit organizations, and other legal entities supervised by the National Bank and applying sustainable finance principles (hereinafter – bank) for all interested parties (investors and creditors).

The Recommendations may be applied by banks conducting activities in accordance with sustainable finance principles (hereinafter – bank) in the framework of implementing paragraph 113 of the Regulation "On Minimum Requirements for the Code of Corporate Governance of Commercial Banks of the Kyrgyz Republic" dated 27.12.2024 No. 2024-P-12/71-4-(NPA), implementation of Chapter 5 of the Recommendations on Identification, Monitoring and Disclosure of Financial Risks Related to Sustainable Finance Factors (ESG Risks) dated 28.09.2023 No. 37/1, as well as taking into account the Resolution of the Cabinet of Ministers of the Kyrgyz Republic dated 30.04.2024 No. 246 "On Approval of the Pilot National Classifier – Green Taxonomy of the Kyrgyz Republic".

2. The Recommendations define minimum norms regarding the disclosure of information on financial risks and opportunities related to sustainable development. Banks must disclose information in accordance with the principles of materiality, completeness, balance, comparability, accuracy and reliability, timeliness, clarity and accessibility.

3. For the purposes of these Recommendations, the following terms are used:

Opportunities related to sustainable development include the possibility of obtaining additional income, competitive advantages and creating additional value of offered products and services related to the impact of ESG factors on the bank's activities, as well as the bank's impact on the environment (including climate change prevention), social sphere and economy.

Material information

– information is considered material if its omission or misstatement could change or influence the assessment or decision of an interested party relying on this information for the purpose of making economic decisions. Criteria for the materiality of information must be defined in the bank's internal documents. Banks must determine the materiality of information in the field of sustainable development taking into account the requirements of the Regulation "On Requirements for Disclosure of Information on the Activities of a Commercial Bank" dated October 30, 2019 No. 2019-P-12/54-4-(NPA), as well as approaches applied in international practice for determining material topics in the field of sustainable development.

Scope 1 (category 1 greenhouse gas emissions)

– these are direct greenhouse gas emissions that occur from sources owned or controlled by the organization/bank.

Scope 2 (category 2 greenhouse gas emissions)

– these are indirect greenhouse gas emissions from the production of purchased or acquired electricity, steam, heat or cooling consumed by the organization/bank.

Scope 3 (category 3 greenhouse gas emissions)

– these are indirect greenhouse gas emissions (not included in category 2) that occur in the activities of the organization/bank at upstream and downstream stages of the value chain.

Interested parties

– legal and natural persons whose activities may be influenced by the bank, or who may significantly influence its activities, including shareholders, clients, investors, creditors, government bodies and other interested parties.

Value chain

– the full spectrum of interactions, resources and relationships related to the business model of the reporting organization and the external environment in which it operates. The value chain covers interactions, resources and relationships that the organization uses and depends on for the creation of its products or services from concept to delivery, consumption and end of life, including interactions, resources and relationships in the organization's operations, such as human resources; present in supply channels, marketing and distribution, such as sources of materials and services, as well as the sale and delivery of products and services; and the financial, geographical, geopolitical and regulatory environment in which the organization operates.

Chapter 2. Recommendations on the structure and composition of disclosure of information in the field of sustainable development and climate

4. Reporting on sustainable development and climate must contain disclosure of information on the following main elements:

• governance

– governance processes, control mechanisms and procedures that the bank uses to monitor and manage risks and opportunities related to sustainable development and climate;

• strategy

– the approach that the bank uses to manage risks and opportunities related to sustainable development and climate;

• risk management system

– processes that the bank uses to identify, assess and monitor risks and opportunities related to sustainable development and climate;

• performance metrics and their target values – the bank's performance results regarding risks and opportunities related to sustainable development and climate, including progress in achieving goals set by the bank or in accordance with legislation.

5. Governance

The purpose of disclosure is to enable interested parties to obtain a comprehensive understanding of how the bank's corporate governance system is organized in terms of taking into account sustainable development issues, ESG factors, how effective and efficient it is in terms of identifying and managing corresponding risks and opportunities, how responsibility is distributed among governing bodies.

The bank is recommended to disclose information on:

1. the bank's governing body responsible for monitoring risks and opportunities related to sustainable development and climate, including information on,

a) how responsibilities for risks and opportunities related to sustainable development and climate are reflected in the bank's internal documents, job descriptions and relevant policies;

b) how often the governing body is informed about risks and opportunities related to sustainable development and climate;

c) how the bank's governing body takes into account risks and opportunities related to sustainable development and climate when exercising control over the bank's strategy, decisions on major transactions and risk management processes and related policies;

g) how the governing body exercises control over the establishment of goals related to risks and opportunities in the field of sustainable development and climate, as well as monitors progress in achieving these goals, including information on whether performance indicators are included in the remuneration policy;

2. the role of the bank's board of directors in governance, control and monitoring and management processes of risks and opportunities related to sustainable development and climate, including information on whether this role is transferred to a specific board member or a specialized committee, and how control over this position or committee is carried out.

6. Strategy

The purpose of disclosure is to enable interested parties to form an understanding of the bank's strategy for managing risks and opportunities related to sustainable development and climate, ESG factors, the decision-making process having long-term consequences for the bank's activities, as well as risks and opportunities related to sustainable development that may affect the business model, financial position, financial performance results, cash flows and financial stability, the bank's value, the nature and continuity of its activities, maintaining the necessary level of trust of interested parties in the short, medium and long term.

In particular, the bank is recommended to disclose information allowing users of the report to understand:

1. risks and opportunities related to sustainable development that may affect the prospects / continuity of the bank's activities;

2. current and expected consequences of these risks and opportunities for the bank's business model and value chain;

3. the impact of these risks and opportunities on strategy and decision-making in the bank;

4. the impact of these risks and opportunities on the financial position, financial performance results and cash flows of the bank for the reporting period, as well as the expected impact on these indicators in the short, medium and long term, taking into account how these risks and opportunities are included in the bank's financial planning;

5. the resilience of the bank's strategy and its business model to the specified sustainable development and climate risks.

Risks and opportunities related to sustainable development

The bank is recommended to disclose information allowing users of the report to understand risks and opportunities related to sustainable development and climate that may affect the prospects / continuity of the bank's activities, in particular:

1. describe such risks and opportunities;

2. indicate time horizons (short-term, medium-term or long-term) within which the consequences of these risks and opportunities are expected to manifest; as well as explain how these periods relate to the planning horizons applied for strategic management.

Business model and value chain

The bank is recommended to disclose information allowing users to understand the current and expected impact of risks and opportunities related to sustainable development and climate on the business model and value chain, in particular:

1. description of the current and assumed impact of such risks and opportunities on the business model and value chain;

2. indication of where in the business model and value chain such risks and opportunities are concentrated (for example, geographical regions, facilities, types of assets).

Strategy and decision-making

The bank is recommended to disclose information allowing users to understand the impact of sustainable development risks and opportunities on the bank's strategy and decision-making processes, namely:

1. how the organization responded and plans to respond to such risks and opportunities in its strategy and decision-making;

2. progress compared to previously disclosed plans, including both quantitative and qualitative information;

3. trade-offs between risks and opportunities that were taken into account (for example, taking into account environmental impact and job creation when choosing the location of new operations).

Financial position, financial performance results and cash flows

The bank is recommended to disclose information allowing users to understand:

1. the impact of sustainable development risks and opportunities on the financial position, financial performance results and cash flows for the reporting period (current financial consequences);

2. the expected impact of these risks and opportunities on the financial position, financial performance results and cash flows in the short, medium and long term, taking into account how these risks are included in financial planning.

The bank is recommended to disclose both quantitative and qualitative information:

1. on how risks and opportunities related to sustainable development and climate affected the financial position, financial performance results and cash flows in the reporting period;

2. on those risks and opportunities that may lead to significant changes in the assessment of assets and liabilities in the next reporting period;

3. on expected changes in financial position in the short, medium and long term, taking into account the strategy for managing these risks and opportunities: a) expectations arising from current and adopted investment plans, their expected impact on financial position (for example, on capital expenditures, major acquisitions and sales, joint ventures, business transformation, innovations, new business directions and asset disposals); b) expectations arising from planned funding sources for implementing the strategy;

4. on expected changes in financial performance results and cash flows in the short, medium and long term, taking into account the strategy for managing these risks and opportunities.

5. When disclosing quantitative information, the bank may disclose specific values of indicators or their ranges. The bank may not present quantitative information on the current and expected financial impact of risks and opportunities related to sustainable development and climate if the specified impact cannot be determined separately, the level of uncertainty of impact assessments is so high that the data would be unhelpful, as well as if the bank does not have / has insufficient resources to prepare such quantitative assessments. In these cases, it is necessary to explain why quantitative information is not disclosed; provide qualitative information indicating the reporting items that may be affected.

Resilience

The bank is recommended to disclose information allowing interested parties to understand the bank's ability to adapt in a situation of uncertainty arising from significant risks related to sustainable development. It is recommended to disclose qualitative and quantitative indicators (if applicable) characterizing the resilience of the bank's strategy and cash flows regarding the implementation of significant risks related to sustainable development, including information on the methodology and time horizon of the conducted analysis.

7. Risk Management System

The purpose of disclosure is to enable interested parties to form a comprehensive understanding of the procedures for identifying, assessing and managing risks and opportunities related to sustainable development. Disclosure of information on the risk management system is intended to enable interested parties to assess whether these processes are integrated into the bank's general risk management processes, as well as to provide an understanding of the bank's overall risk profile and risk management processes. It is recommended to disclose information characterizing the general methodology and methods used to manage risks and opportunities related to sustainable development, in particular:

1. description of processes used to identify risks and opportunities related to sustainable development:

a) risks related to sustainable development;

b) opportunities related to sustainable development.

2. description of processes used to identify risks related to sustainable development for risk management purposes, including, if applicable, information on the following:

a) how the probability of realization of such risks and their possible impact are assessed (qualitative factors, quantitative thresholds, other criteria used in the assessment);

b) how the priority of risks related to sustainable development is determined relative to other types of risks, including the use of specific risk assessment tools;

c) what input parameters are used within the identification process (for example, data sources, scope of operations and detail level, assumptions used);

g) whether the above processes have changed compared to the previous reporting period;

3. description of procedures used to identify, assess and rank the significance of opportunities related to sustainable development;

4. description of procedures used to monitor and manage risks and opportunities related to sustainable development:

a) risks, including relevant policies;

b) opportunities, including relevant policies;

5. Description of how detailed and in what way the processes of identification, assessment and management of risks related to sustainable development are integrated into the bank's general risk management process.

6. description of how and in what way the processes of identification, assessment and management of opportunities related to sustainable development are integrated into the bank's general management processes.

7. Performance Metrics and Their Target Values

The purpose of disclosure is to enable interested parties to form a comprehensive understanding of how the bank measures, monitors and manages its significant risks and opportunities related to sustainable development; to understand how the bank evaluates its performance results and progress in achieving goals. It is recommended to disclose information characterizing specific planned and actual performance metrics related to sustainable development and work with such metrics:

1. quantitative and qualitative indicators that the bank uses to monitor risks and opportunities related to sustainable development, as well as indicators used to determine performance in the field of sustainable development, and their current values reflecting progress in achieving previously set goals. It is recommended to disclose both general indicators characterizing the bank's activities as a whole, and specific indicators characteristic of certain types of activities. The bank is recommended to determine indicators that correspond to the types of activities carried out, the business model and take into account the specifics of the bank's significant risks and opportunities related to sustainable development. In the event that the bank combines several types of activities, it is recommended to use indicators applicable and characteristic of the corresponding types of activities. The list of general and specific indicators related to sustainable development recommended for use by a financial organization for disclosure of information in the field of sustainable development is presented in the Appendix to these Recommendations.

2. The bank is recommended to disclose the following information.

a) information on the calculation method for each indicator, as well as any sources used to develop the indicator;

b) information on whether the calculation of indicators undergoes independent external assessment (confirmation or assurance) by third parties, and information on the persons conducting the assessment;

c) description of methods used to calculate target values for indicators, as well as input data used for calculation, including assumptions, as well as limitations for calculation methods.

3. The bank is recommended to disclose target values set by it to assess progress in achieving its strategic goals in the field of sustainable development, indicating the following data.

a) the indicator used and its target value;

b) the period for which the target value applies;

c) the base period relative to which progress is measured;

g) stages or intermediate target values.

4. The bank is also recommended to disclose the following information.

a) actual values of indicators compared to planned target values and analysis of trends or significant changes in performance results;

b) information on the revision of target values for indicators with an explanation of the reasons for such changes;

5. definition and calculation of performance metrics in the field of sustainable development, including indicators used to record and monitor the target values of the bank's performance metrics in the field of sustainable development.

It is recommended that performance metrics be consistent and ensure continuity throughout the life cycle of the financial organization. If an indicator or target value is modified or replaced, the bank is recommended to disclose the following information:

a) provide explanations regarding changes;

b) indicate the reasons for these changes;

c) provide recalculated comparative data (if such data can be provided).

Chapter 3. Procedure and deadlines for reporting

9. Publication of sustainability disclosure reports together with external assurance is carried out no later than June 30 of the year following the reporting period. Financial information related to sustainable development must cover the same reporting period as financial reporting. Financial information related to sustainable development may be published as part of financial reporting or as a separate report. Financial information related to sustainable development may undergo external assurance.

Sustainability reporting and the report on external assurance must be published on the bank's official website.

Appendix to the Recommendations

on disclosure of information

in the field of sustainable development

List of general and specific indicators related to sustainable development recommended for disclosure by financial organizations

Financial and credit organizations, depending on the scale, nature of their activities and the level of development of their corporate governance systems, are recommended to independently decide which indicators from the list below they will disclose.

I. General indicators related to sustainable development

Impact on the environment (including climate)

1. Current volume of greenhouse gas emissions, including:

1.1. total volume of greenhouse gas emissions (by scope 1, scope 2, scope 3), in tons of CO2 equivalent;

1.2. volume of specific greenhouse gas emissions in tons of CO2 equivalent by types of activities (where possible by financial products or services, by geographical distribution of business units).

2. Change in greenhouse gas emissions or achievement of carbon neutrality (by scope 1, scope 2, scope 3) in tons of CO2 equivalent or as a percentage of the base period.

3. Current volume of energy consumption, including:

3.1. total volume and specific volume of energy consumption by types of activities (where possible by financial products or services, by geographical distribution of business units);

3.2. if there is technical possibility of differentiation, total volume and specific volume of energy consumption produced from green energy (recognized as such in accordance with the national taxonomy) by types of activities (where possible by financial products or services, by geographical distribution of business units).

4. Changes in energy consumption volume during the reporting period, including:

4.1. changes in total volume and specific volume of energy consumption by types of activities (where possible by financial products or services, by geographical distribution of business units) during the reporting period;

4.2. if there is technical possibility of differentiation, changes in total volume and specific volume of energy consumption from green energy (recognized as such in accordance with the national taxonomy) by types of activities (where possible by financial products or services, by geographical distribution of business units).

5. Share of energy use produced from green energy (recognized as such in accordance with the national taxonomy) in the energy balance.

6. Change in the share of energy use obtained from green energy (recognized as such in accordance with the national taxonomy) in the energy balance.

(For the purpose of calculating the volume of greenhouse gas emissions, it is recommended to use international Greenhouse Gas Protocol standards: www.ghgprotocol.org.)

Impact on the social sphere and employee relations

1. Participation in the implementation of social projects of regions of presence, in the development of public space (including the volume of investments during the reporting period).

2. Participation in charitable or volunteer activities (including the volume of investments during the reporting period).

3. Participation in the implementation of local community development programs based on their needs (incl

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