Jordan Kuwait Bank

Green Finance
Framework

.
April 2023
Contents
Background ............................................................................................................................................................................. 2
How We Approach Sustainability........................................................................................................................................ 2
Focusing on What Matters Most......................................................................................................................................... 3
Material Issues Matrix..................................................................................................................................................... 3
Stakeholder Engagement ................................................................................................................................................ 3
Our Wider Contribution ...................................................................................................................................................... 4
Direct Environmental Impact .............................................................................................................................................. 5
Climate and Energy ......................................................................................................................................................... 5
Water .............................................................................................................................................................................. 5
Responsible Investment and Financing............................................................................................................................... 6
ESG Risk Management .................................................................................................................................................... 6
Green Finance Framework (the “Framework”)................................................................................................................... 6
Use of Proceeds................................................................................................................................................................... 6
Eligible Green Asset Categories........................................................................................................................................... 7
Exclusionary Criteria............................................................................................................................................................ 9
Process for Project Evaluation and Selection...................................................................................................................... 9
Management of Proceeds ................................................................................................................................................. 10
Reporting........................................................................................................................................................................... 10
Allocation reporting .......................................................................................................................................................... 11
Impact reporting ............................................................................................................................................................... 11
External Revie.................................................................................................................................................................... 12
Background
Jordan Kuwait Bank is a Jordanian public shareholding company listed on the Amman Stock Exchange (Ticker: JOKB);
founded in 1976 as the country’s fifth national commercial bank. The Bank upholds the vision of “The Bright Future
ofBanking “with a refreshed corporate strategy running through to 2025, we are better placed than ever to
Transform, Excel, and Prosper, while operating responsibly to deliver a wider ESG value for all stakeholders. Our
approach is designed to contribute to Jordan Vision 2025 and, globally, support capital shifts needed to achieve the
17 United Nations’ (UN) Sustainable Development Goals (SDGs).

Jordan Kuwait Bank issued its second annual Sustainability Report for 2021, entitled “Sustainability is more than just a
vision”, which reviews the Bank’s strategy, partnerships, and initiatives in governance, social and environmental
responsibility (ESG), prepared in line with the latest (GRI) standards and guidelines and the United Nations Sustainable
Development Goals (SDGs). The report also represents the Bank’s commitment to recognizing the latest results and
impacts of its corporate sustainability strategy and promoting business sustainability within the Bank, as part of its efforts
to improve and enhance the disclosure of governance, social and environmental responsibility practices, as well as to
engage with various stakeholders on developments related to those practices.

The Sustainability Report includes fundamentals of environment, society and governance in the Bank’s activities,
management, and operations and highlights the Bank’s achievements in the areas of environmental and social reporting
and corporate governance and implementation, its contribution towards a more successful tomorrow and a sustainable
future, which includes many initiatives and partnerships with local and international organizations, with a focus on
supporting NGOs, charitable programs, women empowerment programs, environmental preservation.

How We Approach Sustainability

Our Sustainability Framework guides our ESG impact and reporting activities. It also provides a platform for stakeholders
to engage with, and a focus for our sustainability journey:
Focusing on What Matters Most
Diligent and regular stakeholder engagement is the underlying reason material issues have been identified. We prioritize
such issues through the GRI-based materiality assessment, last conducted formally for our 2021 Sustainability Report,
and incorporating formal and informal monitoring, dialog with stakeholders and relevant external studies and reports to:

• Identify issues by reviewing industry peers, internal stakeholder interviews and international standards such
as the GRI, Sustainability Accounting Standards Board (SASB), UN PRB, Jordan Vision 2025, and Amman
Stock Exchange Guidance on Sustainability Reporting.
• Priorities in terms of perceived importance to internal and external stakeholders.
• Validate results to ensure a complete list that reflects all stakeholder perspectives.

In 2022 we refreshed the materiality assessment, adding economic performance and re-evaluating other aspects to align
with national and international standards, and to anticipate future trends.

Material Issues Matrix

Stakeholder Engagement
In addition to the materiality process, we regularly engage with seven key stakeholder groups to better understand their
needs and aspirations. Their views, in turn, enable us to reflect on our overall strategy and metrics. We acknowledge
that progress can only be achieved by an integrated and inclusive approach, therefore it is important that all
stakeholders can express their opinion through diverse channels.
 Investors and
Shareholders

Environment Customers

Suppliers Employees

Government
and
Communities Regulators

Our Wider Contribution

Our sustainability approach aligns with the Jordan Vision 2025 to build a prosperous and resilient country. We are working
towards many of its goals, including those relating to poverty, unemployment, and financial scarcity. Alongside our
stakeholders, we are determined to empower the people of Jordan to prosper and realize their full potential.

One of our strategic objectives is to create a social impact. We do so through our CSR programs, including women
empowerment and renewable energy initiatives. We align with the SDGs – the world’s shared plan to end extreme poverty,
reduce inequality and protect the planet. The specific SDGs our efforts support is found below.

Going forward, we aim to wholly align our sustainability strategy with the Goals, and to review progress for continuous
convergence.
Direct Environmental Impact
JKB focused on reducing greenhouse gas (GHG) emissions, working towards ISO 14001 certification for environmental
management, and opening the first LEED Gold building in Jordan’s banking industry.

Climate and Energy

Our strategic priorities to reduce our GHG emissions include making our buildings more energy-efficient and increasing
our use of renewable energy. In addition to our HQ, we improved our air conditioning scheduling across our sites. We are
also installing motion sensors for lighting in public areas. With 8,712 solar panels (with a capacity of 2,300 kW) saved more
than 90% in electricity consumption of JKB. Electricity production in 2021 was approximately four million Kilowatt hours.
We released a new product for e-vehicles (EV), encouraging employees and customers to buy electric cars. We are
currently in the process of installing EV charging stations for employees and customers.

Ventilation and fresh air technologies

Solar thermal heater

Reducing the capacity of flushing tanks will save 320,000 liters per year, while grey water recycling will save 50,000 liters per year

Heat-blocking blinds.

Reduced water consumption

Lower energy consumption.

Rainwater harvesting will save 330,000 liters per year

Recycling bins integrated.

400 m2 green wall on the southern façade

Water
While we are a not a water-intensive business, we recognize that we operate in a region of water scarcity. In addition to
our water harvesting system at HQ, we installed sensors on all water fixtures and further reduced the flow of water from
these fixtures. We aim to reduce water consumption by 100,000 liters a year.
Responsible Investment and Financing
Our industry is playing an active role in addressing global issues, such as human rights, environmental protection, and
climate change, which are rapidly changing the regulatory and competitive environment.

ESG Risk Management

For certain projects, namely those in economic sectors where the risk of environmental impact is higher, we go beyond
government legislation to outsource independent traffic impact surveys and detailed environmental assessment reports.
To ensure sound governance practices, our Compliance Department provides feedback on the borrower’s shareholder
structure and reputation, alongside macroeconomic valuations that are considered in all lending decisions.

Environmental and social risks are mainly considered for green loan portfolios or those in densely populated areas. Here,
environment and traffic impact assessments, along with appropriate governmental permits are required according to the
type of project and geography. If significant risks are found, the borrower is required to rectify them, or lending may be
rejected. If they are significant (assessed on a case-by-case basis), we act according to the risks identified in the
environmental impact assessment. Later stage monitoring is based on the borrower maintaining initial environmental
requirements set during due diligence.

Green Finance Framework (the “Framework”)

JKB has established this Framework to lay out the mechanism which the Bank set forth to raise funds via the issuance
of green bonds, to finance and/or refinance1 project with environmental benefits.

This Framework is aligned with the ICMA Green Bond Principles (“GBP”) 20211& the Jordanian Green Bond Guidelines
issued by MoEnv in Dec 20212 .The GBP are voluntary process guidelines that recommend transparency and disclosure
and promote integrity in the development of the Green Bond market by clarifying the approach for issuance of a Green
Bond. In alignment with these, our Framework is based on the following key pillars:
1. Use of Proceeds
2. Process for Project Evaluation and Selection
3. Management of Proceeds
4. Reporting

*External Review.

This Framework will apply to any Green Bonds issued by Jordan Kuwait Bank. It applies to the covered bonds
(“Green Covered Bonds”); green buildings, energy efficiency, renewable energy, clean transportation, and
sustainable water and wastewater management projects for which the use of proceeds is intended for an Eligible
Green Assets Portfolio, compliant with selection criteria (“Eligibility Criteria”) defined in accordance with this
Framework.

1ICMA’s Green Bond Principles 2021 - https://www.icmagroup.org/green-social-and-sustainability-bonds/green-bond-principles-gbp/

Use of Proceeds
The proceeds from any green bonds issued under this Framework (the “Proceeds”) will be used to finance and/ or
refinance loans in assets or projects that fall under the following Eligible Green Assets categories:
 Eligible Green Asset Categories

UN
Sustainable
Eligible Green Asset Description Development
categories Goals
(“UNSDGs”)
Alignment
Green Buildings  Projects for industrial 2, commercial, and residential and building
energy efficiency and energy efficiency improvement, including
energy management centers and energy-efficient infrastructure
construction projects.

 New, existing, or refurbished commercial buildings which

received at least one of the following certifications:
 Leadership in Energy and Environmental Design (LEED) certificate as
defined by the U.S. Green Building Council, Gold or above, or
 “BRE” Environmental Assessment Method (BREEAM) certificate as defined
by the Building Research Establishment, Very Good or above, or
 IFC’s Excellence in Design for Greater Efficiencies (EDGE) certificate,
 Other equivalent internationally or locally recognized Green
Building certification.

Renewable Energy  Construction of solar panels, solar heat utilization.

 Financing Projects related to installation or construction and investment

in fixed assets for producing efficiently using such forms of energy as
power, heating, cooling (equal or less than 1MW).

Energy Efficiency  Includes projects related to ‘new investment, replacement, redesign

or renewal’ of equipment, systems and/or services to mitigate energy
consumption for a product or service unitof an entity.
These activities include the use of redundant energy and other
measures to improve energy efficiency (or to reduce energy
consumption norm).
 Energy Efficient Equipment (Appliances, Lighting etc.) in line with EU
labeling system or document proving the saving of at least 15% of
energy

2
Industrial projects exclude improvements in facilities designed for the purpose of extraction, storage, transportation or manufacture of
fossil fuels, and facilities in hard-to-abate industries.
 Clean  Finance or refinance Loans related to purchase, rental, leasing,
Transportation and operation of zero- direct emission vehicles as well as
related infrastructure (e.g., electric charging points), including
hybrid vehicles.
hybrid vehicles will meet the following criteria:
(1) Hybrid passenger vehicles below 75 gCO2e/km, (2)
buses below 50 gCO2e/p-km, (3) light commercial vehicles
below 75 gCO2e/p-km, and (4) heavy trucks below 25
gCO2e/t-km.
 Finance or refinance Loans related to electrified
transportation;public electric buses, and electric taxis.

Sustainable Water  Projects related to water treatment facilities, activities and

and Wastewater technologies that increase water quality, ,
Management  Technologies that increase water-use efficiency, water recycling
and reuse, water saving systems and technologies and water
metering which save up to 20%.

.
Exclusionary Criteria
JKB commits that any activities, assets, and technologies related to the below will be excluded from Eligible Green
Assets:
 Production or trade in any product or activity deemed illegal under host country laws or regulations or
international conventions and agreements, or subject to international bans, such as pharmaceuticals,
pesticides/herbicides, ozone depleting substances, PCB’s, wildlife, or products regulated under CITES.
 Production or trade in weapons and munitions.
 Production or trade in alcoholic beverages (excluding beer and wine).
 Production or trade in tobacco.
 Gambling, casinos, and equivalent enterprises.
 Production or trade in radioactive materials. This does not apply to the purchase of medical equipment,
quality control (measurement) equipment and any equipment where IFC considers the radioactive source to
be trivial and/or adequately shielded.
 Production or trade in unbonded asbestos fibers. This does not apply to purchase and use of bonded
asbestos cement sheeting where the asbestos content is less than 20%.
 Drift net fishing in the marine environment using nets more than 2.5 km. in length.
 Production or activities involving harmful or exploitative forms of forced labor /harmful child labor.
 Commercial logging operations for use in primary tropical moist forest.
 Production or trade in wood or other forestry products other than from sustainably managed forests.

Process for Project Evaluation and Selection

Sustainable Development Committee
A dedicated Sustainable Development Committee (“Committee”) has been established at the level of JKB’s issuing entity
to ensure Eligible Green Assets evaluation and selection according to the provisions of this Framework.

The Committee is responsible for the content and implementation of this Framework, including Eligibility Criteria
definition, selection of Eligible Green Assets Portfolio, management of proceeds, reporting and, where applicable, an
external review. The Committee reviews assets’ eligibility and confirms allocation of proceeds in accordance with this
Framework. The Committee ensures compliance of Green Bonds with best practices on a best effort basis and is
responsible for constant monitoring of potential future changes in this area.
The Committee may rely on and/or be supported in its process of eligible project identification and evaluation,
including assessment of non-financial impact, by external parties and their relevant data sources. The Committee is
also responsible for addressing any remarks obtained from the Second Party Opinion (SPO) provider.
The committee also consists of representatives from each of the following departments and competence areas: Treasury,
Corporate Business Development, Risk, Sustainability.

The Sustainable Development Committee for JKB is responsible for selection and management of Eligible Green Assets
Portfolio, JKB’s SDC is responsible for:
a. Formal acceptance of the Eligibility Criteria with regards to the assets managed by JKB.
b. Decision on adding/removing Eligible Assets booked in JKB to/from Eligible Green Assets Portfolio subject to
proceeds’ allocation, at least on an annual basis.
c. Monitoring and forecasting proceeds’ allocation.
e. Proposing changes of the Eligibility Criteria to the Committee.
 Matters outside the scope of JKB SDC shall be ruled and managed by the Chief Executive Officer "CEO”.

Selection Process

Selection of projects and assets is performed according to the Eligibility Criteria, titled “Use of Proceeds & Eligible Green
Asset Categories”.

The proceeds from Green Bonds will be allocated considering the exclusionary criteria obeyed at JKB, enlisted in
“Exclusionary Criteria “.

Internal departments shall provide comprehensive information to the Committee to take a decision on including assets
into the Eligible Green Assets Portfolio.

E&S officer Credit Sustainability

Relationship Credit Review
-E&S Committees Committee
Manger Green Loan and approval
screening -Review & -Final
criteria Approval Approval

Selection Process by Business Units.

Management of Proceeds
Green Bonds issued under this Framework will be managed by JKB in a portfolio approach (“Eligible Green Assets
Portfolio”). Green Bonds proceeds will be assigned to the Eligible Green Assets Portfolio based on the Eligibility Criteria
and in compliance with the selection and evaluation process described in” Process for Project Evaluation and Selection”.

JKB aims to ensure allocation of the Green Bonds’ proceeds into the Eligible Green Assets Portfolio to the extent matching
or exceeding these proceeds. Assets will be added to/removed from the Eligible Assets Portfolio by decision of the
Sustainable Development Committee, based on the Eligibility Criteria. In case a loan/project terminates prior to the
maturity of a Green Bond, it will automatically be removed from the Eligible Green Assets Portfolio.
Sustainable Development Committee will monitor the use of net proceeds from Green Bonds with use of its internal
information systems.

The proceeds from the issuance of Green Bonds will be allocated to the Eligible Green Assets Portfolio within 36 months
after the issuance.

Any net proceeds remaining unallocated to the Eligible Green Assets Portfolio will be invested on a temporary basis at
JKB’s discretion in line with its treasury guidelines, in cash and/or cash equivalent and/or short-term liquid instruments.

Reporting

On an annual basis until full allocation, and on a timely basis upon material changes in proceeds allocation, JKB
commits to publish reporting related to its green bonds (the “Report”), providing information on the allocation
and the environmental impacts of the Proceeds as follows:
 • Total volume of green bonds issued,
• Total amount and number of Eligible Loans,
• Total amount of proceeds allocated to Eligible Loans,
• Breakdown by Eligible Categories, and
• Balance of unallocated proceeds, if any.

Allocation reporting
JKB will report the allocation of proceeds, including the total amount of Proceeds allocated to Eligible Green
Assets Category and the amount of unallocated Proceeds. Subject to confidentiality disclosures, JKB may provide
some project examples.

Impact reporting
JKB commits to provide impact reporting on best-effort basis and available information to demonstrate the
expected environmental benefits of the Eligible Green Assets financed. The impact indicators, evaluation
methods and key assumption will be described in the Report. Some potential impact indicators by Eligible Green
Asset Category as below:

Eligible Green Asset Category Potential environmental impact indicators

Green Building - Number of financed projects with internationally
recognized Green Building certification.

- Annual energy savings

Renewable Energy - CO2 (or other GHG) avoided (tonnes) equivalent.
- Installed renewable energy capacity (MW)

Energy Efficiency - CO2 (or other GHG) avoided (tonnes) equivalent.

- Annual energy saving.

Clean Transportation - Number of clean transportation infrastructure financed.

/ Number of financed EV’s.
- Annual GHG emissions reduced/avoided in tonnes of
CO2 equivalent.
Sustainable Water and - Wastewater treatment capacity (m3/day)
Wastewater Management - Annual reduction in water use in %.
External Review

JKB has appointed Sustainalytics (“External Reviewer”) to review this Framework, confirm its alignment with the
ICMA GBP 2021 and provide a respective Second Party Opinion.

The relevant external review reports will be made publicly available on JKB’s official website.