Banco Sabadell

The governance system and the organisation of the different decision-making levels are both being continuously improved and adapted to the needs that are emerging from the new sustainability environment.

Board of Directors

With the exception of matters reserved to the Annual General Meeting, Banco Sabadell's Board of Directors is the most senior decision-making body of the company and its consolidated Group as it is responsible, by law and pursuant to the Articles of Association, for the management and representation of the Bank. The Board of Directors acts mainly as an instrument of supervision and control, delegating the management of the Institution's ordinary business matters to the Chief Executive Officer.

The Board of Directors is subject to well-defined and transparent rules of governance, in particular to the Articles of Association and the Regulation of the Board of Directors, and it conforms to best practice in the area of corporate governance. To ensure better and more diligent performance of its general supervisory duties, the Board is directly responsible for approving the Institution's general strategies. It also approves its policies and is therefore responsible for establishing principles, commitments and objectives in the area of sustainability, and for including them in the Institution's strategy.

As at 31 December 2024, the Board of Directors is made up of fifteen members. Of these, two are Executive Directors (13.33% of the total Board) and thirteen are Non-Executive Directors, while ten are Independent Directors (66.67% of the total Board), two are Other External Directors (13.33% of the total Board) and one is a Proprietary Director (6.67% of the total Board). There is no trade union representation on the Board.

As at 2024 year-end, there were six female directors, including five female Independent Directors out of a total of ten Independent Directors and one female Other External Director. Women represent 40% of the full Board of Directors, thus bringing forward the fulfilment of the Bank's commitment stated in Sabadell's Commitment to Sustainability and achieving early compliance with the provisions of Organic Law 2/2024 of 1 August on equal representation and balanced presence of women and men.

When defining the general strategy, the business objectives and the risk management framework of the Institution, the Board of Directors considers aspects related to sustainability, including climate-related, environmental, social and governance risks, and it also effectively oversees them.

In April 2024, the Board of Directors revised its Sustainability Policy, which incorporates ESG parameters into the activities and organisation of Banco Sabadell Group. This policy establishes the core principles that guide Banco Sabadell Group in its task of addressing the challenges of sustainability, defining the management parameters, as well as the organisation and governance structure needed for its correct implementation.

In relation to the management and control of environmental risk, the Board is ultimately responsible for embedding it into the general strategy and for establishing the necessary mechanisms for its review. Its duties range from monitoring environmental risk to approving and reviewing the organisational and functional framework for managing, controlling and reporting on this risk, approving the associated policies and reviewing them on an annual basis. Lastly, it is worth noting that the Board of Directors has received specific training on climate risk management, the impact deriving from those risks, policies and regulations in that regard, as well as measurement metrics such as the carbon footprint and decarbonisation pathways.

Board Committees

The Board Strategy and Sustainability Committee was set up in 2021 and is chaired by the Chairman of the Board of Directors, in the capacity of Other External Director. It is formed of five Directors: three Independent, one Other External and its Chair. This Board Committee met 15 times in 2024.

This Board Committee is responsible for analysing and reporting to the Board of Directors on environmental risk policies and for reporting to the Board of Directors on any amendments or periodic updates of the environmental risk strategy. It is also responsible for supervising the model for identifying, controlling and managing risks and opportunities in relation to sustainability including, where applicable, environmental risks.

The Board Strategy and Sustainability Committee carries out regular monitoring of the Institution's progress in ESG matters through the review of the Corporate Sustainability Report, which contains information about the overall ESG environment in the context of the macroeconomic and regulatory environment, and about the Institution's ESG outlook, the integration of ESG risks into management arrangements and the priority indicators of Sabadell's Commitment to Sustainability.

With regard to sustainability, the Board Committee has the following duties:

• Analyse and inform the Board of Directors about the Institution's sustainability and environmental policies.

• Inform the Board of Directors of any modifications or regular updates of the sustainability strategy.

• Analyse the definition and, where applicable, amendment of policies on diversity and integration, human rights, equal opportunities and work-life balance and evaluate the level of compliance therewith on a regular basis.

• Review the Bank's social action strategy and its sponsorship and patronage plans.

• Review and report on the Sustainability Report prior to its review and reporting by the Board Audit and Control Committee and its subsequent sign-off by the Board of Directors.

• Receive information in connection with reports, documents or communications from external supervisory bodies within the scope of responsibility of this Board Committee.

Other Board Committees are involved to various degrees in the sustainability governance arrangements:

Board Appointments and Corporate Governance Committee: took on duties in relation to the disclosure of internal corporate policies and regulations, the oversight of rules on corporate governance, and the relationship with shareholders and investors, proxy advisers and other stakeholders. This Board Committee is formed of three Independent Directors and one Other External Director.

Board Audit and Control Committee: oversees the process to prepare and submit regulated financial and non-financial information and escalates to the Board of Directors recommendations or proposals intended to safeguard its integrity. This Board Committee is formed of four Independent Directors, its Chair being an audit expert.

Board Risk Committee: oversees the implementation of the Institution's Global Risk Framework Policy and is responsible for advising and supporting the Board of Directors with regard to the monitoring of the Bank's risk appetite and general risk strategy. This Board Committee is formed of four Independent Directors.

Internal Committees

The Management Committee regularly monitors the Sustainable Finance Plan and any updates to the regulatory framework. It is also in charge of overseeing the aforesaid plan and resolving any incidents.

The Sustainability Committee, created in 2020 and chaired since 2021 by the General Manager and head of the Sustainability and Efficiency division, is the body responsible for establishing the Bank's Sustainable Finance Plan and for monitoring its execution, for defining and disclosing the general action principles in the area of sustainability and for promoting the development of projects and initiatives. It is made up of 11 members and it meets once a month. The Sustainability Committee met 11 times in 2024.

Organisation

The Sustainability and Efficiency division was created in 2021 and is the unit responsible for defining and managing Banco Sabadell Group's responsible banking strategy, including the cross-cutting implementation of ESG criteria across all of the Bank's business units, affiliates and subsidiaries. The Sustainability and Efficiency Director is a General Manager who forms part of the Institution's Management Committee and reports directly to the Chief Executive Officer.

At the end of 2024, certain internal organisational changes were approved, applicable as from 1 January 2025, as a result of which the Sustainability division is to be integrated within the People division. The Director of the People and Sustainability division is a General Manager who forms part of the Institution's Management Committee and reports directly to the Chief Executive Officer.

The Bank is organised according to the system of the three lines of defence, and each line has teams dedicated to Sustainability-related matters:

• First line of defence: business areas have been reinforced by setting up specific units that coordinate with commercial teams to create sustainable financing solutions for customers. Risk teams have also been expanded to perform ESG functions in portfolio risk management.

• Second line of defence: new members have been added to the Compliance, Credit Risk Control, Internal Control and Models Validation teams to reinforce the second line of defence.

• Third line of defence: teams were also enlarged to take on audit functions related to governance processes, risk management activities and internal control in the area of sustainability.

The material Impacts, Risks and Opportunities (hereinafter, IROs) have been identified using the double materiality analysis and are set out in detail in section 3.3 SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model. In this respect, the material IROs have been grouped into a total of six topics: Climate change mitigation and adaptation, Energy, Own workforce, Access to products and services and non-discrimination, Cybersecurity and data protection, and Business conduct. In this vein, the Management Committee is the highest level executive committee and is regularly informed of material impacts, risks and opportunities at top-level committee meetings.

The governance process for each of the above-mentioned topics is described below:

Climate change mitigation and adaptation

All matters related to climate change (mitigation and adaptation) are regularly reviewed by the Sustainability Committee. The Management Committee, for its part, engages in regular monitoring of the Sustainable Finance Plan and updates to the regulatory framework.

As for the Board Committees, in relation to that to which each topic refers:

• Board Strategy and Sustainability Committee: Carries out regular monitoring of the Institution's progress in ESG matters through the review of the Corporate Sustainability Report

• Board Risk Committee: One of the main responsibilities of the Board Risk Committee is that of putting forward the proposed Risk Appetite Statement (RAS) to the Board of Directors for its approval. The RAS has been strengthened through the inclusion of new environmental risk metrics linked to credit risk.

• Delegated Credit Committee: Approves or reports favourably to the Board of Directors on decisions concerning credit risk acceptance, ensuring that companies take sustainability indicators into account through ESG guidelines compliance and IRCA ranking.

• Board Audit and Control Committee: Has monitored and analysed the sufficiency, clarity and integrity of all financial and related non-financial disclosures published by the Bank.

• Board of Directors: Responsible for approving the Institution's policies, for establishing principles, commitments and objectives in the area of sustainability, and for including them in the Institution's strategy.

Energy

Compliance with the commitments under the ESG framework, which include those related to the Institution's energy efficiency, is reported to the Sustainability Committee on an annual basis. The Sustainability Committee also validates proposals for improvements to the energy efficiency of the Institution's facilities, while the corresponding budget is approved by the Management Committee.

Own workforce

The top-level committee of the People division is the body in charge of supervising the strategy and direction of decisions that have an impact on staff. The monitoring and control of gender representation and the gender pay gap is a priority for the People division and is regularly reviewed by the unit's top-level committee. The People division conveys outcomes to various forums:

• Board Committees (Board Remuneration Committee, Board Appointments and Corporate Governance Committee, Board Strategy and Sustainability Committee): report on remuneration models and action levers to reduce the gender pay gap.

• Management Committee: validates annual targets for female representation embedded in the sustainability indicator.

• Managerial Performance Evaluation Committee (MPEC) and Divisional Employee Appraisal Committee (DEAC): meet annually to decide on senior management staff changes and verify compliance with gender diversity targets.

Access to products and services and non-discrimination

Before marketing a new product or service, an internal workflow ("Product Workflow") is followed, with validation ultimately ratified by the Technical Product Committee.

Regarding Sogeviso, the Committee for Service Businesses monitors the social support programme and Jobs scheme once a fortnight, tracking management indicators such as labour market insertion rates and social housing rental contract renewals.

Cybersecurity and data protection

The Information Security function sends regular cybersecurity status reports to governing bodies, such as the Management Committee, the Board Strategy and Sustainability Committee and the Board of Directors. For Data Protection, annual plans and semi-annual monitoring reports are submitted to the Management Committee and Board Risk Committee.

Business conduct

The Corporate Ethics Committee (CEC), reporting to the Board of Directors, is ultimately responsible for adopting policies on corporate reputation and ethical behaviour. Its core mission is to promote the ethical behaviour of the entire organisation to ensure compliance with various codes and policies including the Code of Conduct, Internal Code of Conduct relating to securities markets, Corporate Crime Prevention Policy, General Policy on Conflicts of Interest, Anti-Corruption Policy and Policy on Internal Reporting System and Protection of Reporting Persons.

Banco Sabadell Group's Remuneration Policy is consistent with the goals of the risk and business strategy, the corporate culture, the protection of shareholders, investors and customers, the values and long-term interests of the Group, as well as with customer satisfaction and the measures taken to prevent conflicts of interest without providing incentives for excessive risk-taking.

Banco Sabadell Group's Remuneration Policy is based on the following principles:

1. Promote business and social sustainability in the medium-long term and ensure alignment with Banco Sabadell Group's values. This involves: • Aligning remuneration with shareholders' interests and with the creation of long-term value. • Implementing rigorous risk management, considering measures to prevent conflicts of interest. • Aligning with Banco Sabadell Group's long-term business strategy, objectives, values and interests.

2. Ensure a competitive and fair remuneration system (external competitiveness and internal fairness) that: • Is able to attract and retain the best talent. • Rewards professional experience and responsibility, irrespective of the employee's gender. • Is aligned with market standards and is flexible.

3. Reward performance, thereby aligning remuneration with individual results and the level of risk taken: • Finding an adequate balance between the various remuneration components. • Considering current and future risks and results, without providing incentives for excessive risk-taking. • Implementing a simple, transparent and clear-cut remuneration scheme.

In terms of sustainability, the following aspects are taken into consideration:

• The remuneration policy and practices integrate sustainability risks and information is published on the Group's website. The remuneration policy and practices encourage behaviour consistent with the Group's risk-based approaches related to climate and the environment, as well as with voluntarily undertaken commitments. They promote a long-term approach to the management of climate-related and environmental risks.

• Remuneration components must contribute to the promotion of environmental, social and governance actions in order to make the business strategy sustainable and socially responsible.

Variable remuneration will be linked to results, combining: • Results of the Group, entity, business unit or division and/or those of the employee. • Both financial and non-financial criteria, aligned with strategic planning, budget and risks taken or indicators in the fields of environment, society, diversity and gender equality. • Multi-year targets based on quantitative criteria linked to a period long enough to properly reflect the risk taken.

Synthetic Sustainability Indicator (SSI)

Within the Group's objectives, the Synthetic Sustainability Indicator (SSI) has a weight of 10% in employees' variable remuneration and includes ESG metrics and indicators. In the case of the Executive Directors, this indicator has a weight of 14% for the CEO and 13% for the CRO.

Furthermore, to reinforce the alignment of remuneration with the Group's sustainability commitment, in 2023 a synthetic sustainability indicator was included in the multi-year targets set by the Group, directly linked to long-term remuneration, weighted at 20%.

For the period 2024-2026 the multi-year target indicators are: • Shareholder value creation (relative Total Shareholder Return or TSR), weighted at 40% • Profitability (Return On Tangible Equity or ROTE), weighted at 40% • Sustainability (synthetic sustainability indicator), weighted at 20%

Additionally, some job functions have been assigned sustainability targets as part of their individual targets.

Banco Sabadell Group annual and multi-year targets, their weighting and their scale of achievement will be approved by the Board of Directors, based on a proposal by the Board Remuneration Committee.

The Group takes into account sustainability risks in its assessment, management and control processes through the activities carried out.

In this respect, Banco Sabadell Group has a Sustainability Policy, which aims to provide a framework for all of the Institution's activity and organisation within ESG parameters. The Policy incorporates environmental, social and governance factors in decision-making and, at the same time, based on those factors, it responds to the needs and concerns of all of its stakeholders. The Sustainability Policy sets out the core principles on which the Group bases its approach to tackling the challenges of sustainability, and defines the corresponding management parameters, as well as the organisation and governance structure required for their optimal implementation.

Effective integration of environmental, social and governance risks into management arrangements requires a strategy and set of regulations that establish the guidelines, targets and limits required at different points of the credit approval workflow. The Bank therefore attaches great importance to the assessment of the climate-related and/or environmental, social and/or governance risks of its counterparties.

In terms of social risks, various social factors are considered, such as those related to rights, well-being, and the interests of people and communities. The risk of loss arising from any negative financial impact on counterparties stemming from the current or prospective impacts of social factors is also included. To that end, a series of actions linked to the process for identifying, measuring and managing social risk for both retail and business customers have been implemented.

The Group therefore has an Environmental and Social Risk Framework that consolidates the set of applicable criteria (sectoral standards) that are intended to limit the financing of customers or projects that the Institution considers to be contrary to the transition to a sustainable economy or that lack alignment with international regulations or best practices in the industry.

The Framework also integrates compliance with the rules and standards at the level of social risk, some sector-specific and others of general application, such as the International Labour Organisation (ILO) Conventions and the UN Guiding Principles on Business and Human Rights. The general exclusions limiting the financing of companies with a high level of social risk are:

a. Companies for which Banco Sabadell has sufficient reason to believe that they employ child labour or forced labour, as defined in the ILO conventions, or that have participated in human rights violations and/or that do not follow the principles of the Institution's human rights policy.

b. Companies involved in the resettlement of indigenous or vulnerable groups without their free, prior and informed consent, or that otherwise infringe the rights of those groups.

c. Companies for which Banco Sabadell has sufficient reasons to believe that they are in material breach of applicable laws and regulations in relation to human rights and the environment, even if the circumstances in question do not constitute a breach of the local legislation of each country.

d. Companies that do not have health and safety policies in place to protect their workers, such as OHSAS 18001 or ISO 45001.

On the other hand, the Group has a Human Rights Policy and a related Due Diligence Procedure, both approved in 2021, which are reviewed annually and are applicable to all Group companies. They establish basic principles of action, as well as the mechanisms required to identify, prevent, mitigate and/or remedy any potential negative impacts on human rights that the Bank's activities and processes may entail, in particular with regard to granting finance to companies, or in relation to its human resources management model or supplier engagement processes. They also establish the need for employees to receive training in all of these areas.

The Group also has a new version of the Group Code of Conduct, first approved in 2021 by the Board of Directors, which underwent an in-depth review to adapt it to regulatory requirements, supervisory guidelines and specifications, and to market standards. Every member of the Group's workforce was required to read and expressly accept the new version of the Group's Code of Conduct.

The main function of the Internal Controls over Sustainability Reporting (hereinafter, ICSR) unit is the design and implementation of the general control framework corresponding to Banco Sabadell Group's Sustainability Report.

This includes the identification of significant quantitative data generation processes involved in generating the quantitative information contained in the Sustainability Report. A data generation process is considered to be one which generates quantitative indicators associated with the Impacts, Risks and Opportunities (IROs) stemming from the double materiality analysis and one which comprises common elements, such as a data origination source and the processing and analysis of those elements prior to final disclosure.

The ICSR unit analyses those data generation processes, through a thorough analysis with the expert areas involved, and identifies the risks associated with those processes, which are related to the content of the Comisión Nacional del Mercado de Valores (CNMV) guidance that serves as the frame of reference, and controls are designed and incorporated, jointly with those responsible for the data, to mitigate the previously identified risks.

The resulting matrix of risks and controls provides a holistic view of the processes and systems involved in producing the Sustainability Report. The matrix can be consulted to identify the executor and the reviewer of the control, the data that it covers and the process to which it belongs, among other fields.

Furthermore, with the entry into force of the new European Corporate Sustainability Reporting Directive (CSRD), the ICSR unit has identified risks and designed controls over the new double materiality exercise in order to ensure the correct execution of this exercise and its completeness.

Based on the above-mentioned Directive, content controls have been established over the qualitative information disclosed throughout the Sustainability Report in relation to policies, actions, metrics and targets, as these are considered to constitute sensitive information and there are risks involved in their disclosure to the markets.

With regard to the assessment of the established controls, which mitigate the associated risks through their prevention or detection, this is carried out using the Bank's Governance, Risk and Compliance (GRC) tool, which is managed by the ICSR unit, where the areas responsible complete assessment forms accompanied by evidence supporting each of the controls.

Having completed the assessment, the GRC tool managed by the ICSR unit has a certification module that can be accessed by members of Senior Management. The certification process is based on the hierarchical and organisational ratification, at three levels, of the result achieved in the assessment of the controls.

The Board of Directors delegates the supervisory function regarding the internal control systems to the Board Audit and Control Committee. Every six months, the current situation of the ICSR as a result of new applicable regulatory requirements is reported to the Board Audit and Control Committee and to the Technical Committee on Accounting and Financial Disclosures. In addition, every year after the end of the tax year, the result of the assessment of the controls and the conclusions derived from it are escalated to the Board Audit and Control Committee.

The Institution's business model is geared towards profitable growth that generates value for shareholders. This is achieved through a strategy of business diversification based on criteria related to profitability, sustainability, efficiency and quality of service, together with a conservative risk profile, while maintaining high standards of ethics and professional conduct combined with sensitivity to the interests of all stakeholders.

The Group's strategy promotes sustainable financing and investment to drive forward the transition towards a more sustainable model and a low-carbon economy, offering customers and investors the best possible solutions. Thus, the Bank committed to mobilise €65bn in sustainable finance between 2021 and 2025. Up to December 2024, more than €57.9bn had been mobilised, €19bn of them during this year.

Sustainable financing solutions:

1. Corporate & Investment Banking (CIB)

As at the end of 2024, the Bank had taken part in 112 sustainable financing and investing transactions in the area of CIB:

Corporate Banking: 92 transactions were signed for a total of 2,873 million euros, increasing by 41% compared to 2023. Of these, 50 transactions amounting to 1,298 million euros are considered green and social loans, and 42 sustainability-linked loans were carried out amounting to 1,575 million euros.

Investment Banking: In 2024, Banco Sabadell was the placement entity of green and sustainability bonds in the primary debt market, participating as Joint Lead Manager in public issuances including: • Basque government: sustainability bond of €600 million • Madrid autonomous community: sustainability bond of €1 billion • Xunta de Galicia: sustainability bond of €500 million • Junta de Andalucía: sustainability bond of €500 million • FCC Servicios de Medioambiente: sustainability bond of €600 million

Project Finance: Over the year, 39 projects received a total of 1,228 million euros in finance. According to Infralogics, the Bank featured in the ranking of banks that provide finance for renewable energy projects in Spain and Portugal, ranking second in terms of number of transactions and third in terms of volume of transactions.

2. Business Banking

Green and social loans: In 2024, more than 4.1 billion euros were mobilised through companies using the funds for purposes aligned with the Bank's Sustainable Financing Framework.

Sustainability-linked loans: As at the end of 2024, the Bank had mobilised more than 3 billion euros in sustainability-linked loans for corporates and SMEs to fund green purposes only.

Sabadell Renting's mobility solutions: In 2024, ECO vehicles (hybrid and electric vehicles) accounted for 67% of all vehicles on offer, while the number of new contracts signed for ECO vehicles as a percentage of the total was 43%.

Social loans: In 2024, SMEs and micro-entities were granted more than 2.8 billion euros in finance. This brings the cumulative amount granted between 2021 and 2024 to over 11.5 billion euros, representing 77% of the target set for the 2021-2025 period of 15 billion euros. Out of all SMEs and micro-entities that received financing in 2022, over 68% maintained or increased their number of employees and over 73% improved their sales volumes. In relation to financing granted in 2024 to self-employed professionals, 46% was granted to women.

3. Retail Banking

Green financing solutions for individuals: • Green mortgages: In 2024, the volume of new mortgages with sustainable certification came to more than 589 million euros • Sabadell green renovation loan: financing for home renovations that improve sustainability and energy saving capacity • Sabadell green car loan: for purchasing 'zero emissions' or 'ECO' labelled vehicles • Renting mobility solutions: ECO or green vehicles offered to retail customers

Social financing solutions for individuals: • Basic Payment Accounts: 580 Basic Payment Accounts were opened in 2024 including 70 opened by vulnerable customers • Benefits for customers aged 65 or over • Customer service model particularly mindful of vulnerable customers • Code of Good Practice applied when granting financing transactions

4. Sustainable savings and responsible investment solutions

As at 2024 year-end, 24 Sabadell Asset Management funds (€8,303 million) promoted environmental or social characteristics (Article 8 funds under SFDR). Combined with Amundi mutual funds distributed by Banco Sabadell (€5,717 million), €14,020 million or 84% of Banco Sabadell customer assets invested in non-guaranteed funds promote environmental or social characteristics or have environmental or social objectives.

BanSabadell Pensiones currently manages nine pension funds that explicitly incorporate a Socially Responsible Investment (SRI) mandate in their investment policy, with assets of 1,006.1 million euros as at 2024 year-end.

5. Issuance of Banco Sabadell sustainability instruments

In 2024, Banco Sabadell issued two green bond deals amounting to a total of 1 billion euros. With these deals, Banco Sabadell now has nine outstanding green bond deals amounting to a total of 4,445 million euros. On 21 June 2024, the first green synthetic securitisation was carried out on a project finance portfolio of 1.1 billion euros.

6. Sinia Renovables

As at 2024 year-end, Sinia Renovables has investments in projects with an overall installed capacity of 1,645 MW, equivalent to the electricity consumption of about 1,164,577 households. Of this capacity, the portion attributable to Sinia through its direct shareholding is 271 MW, equivalent to the generation of 619 GWh of sustainable electricity every year. In 2024, Sinia Renovables mobilised more than 37.7 million euros, between invested capital and financing.

7. Green financing in Mexico

In 2024, Banco Sabadell Mexico granted green financing in the amount of approximately €135m. The Bank has access to lines of credit including a $100m facility from the International Finance Corporation (IFC) and a $50m credit facility with the German Development Finance Institution (DEG).

Banco Sabadell Group is firmly committed to ensuring sustainability across all its dimensions and, as a financial institution, it is aware of the important role that it plays in its economic, social and environmental surroundings, fostering care for the environment, supporting social progress and upholding a model of good governance, aligned with international best practice.

The Group, in keeping with its commitment, has been conducting materiality assessments of topics related to sustainability, aligning with best practice in relation to sustainability and transparency. Specifically, in 2022, the double materiality approach was included for the first time and the concept of impact included in the 2021 review of GRI standards was introduced.

In line with this development and with the entry into force of the new European Corporate Sustainability Reporting Directive (CSRD), a new double materiality exercise has been carried out in order to identify the material impacts, risks and opportunities related to sustainability. Under the double materiality approach, this exercise includes assessing the effect of different sustainability topics from two points of view:

1. Impact materiality: referring to the Bank's effects on the environment and society through its activities, both directly and indirectly.

2. Financial materiality: referring to the effects of the environment and society on the Bank's financial position.

Methodological phases:

The methodological performance of the double materiality analysis carried out comprises four key phases:

1. Definition of the perimeter under analysis
2. Impact materiality assessment
3. Financial materiality assessment
4. Definition of materiality thresholds

Definition of the perimeter under analysis:

a. The key sustainability topics for the Institution:

To identify the possible material topics to be evaluated in the double materiality exercise, an analysis was carried out to identify those topics that are, in principle, more important for the Institution from an ESG perspective. The topics referred to in the ESRS were comprehensively analysed, in addition to the topics deemed to be material in previous materiality exercises and the Principles for Responsible Banking, among others.

b. Stakeholder groups to be involved in the exercise:

The Bank's main stakeholder groups were identified. The groups identified for the double materiality exercise were the following:

• Financial Community: investors, shareholders and rating agencies • Employees: Banco Sabadell Group workforce • Suppliers: main suppliers that might be more affected by ESG topics • Customers: retail and business customers • Bodies and Institutions: regulators of the domestic and European framework • Society: citizens, communities and organised civil society • Peers: comparable institutions in the sector

After identifying the stakeholder groups, channels to listen to what they had to say were determined. In the case of suppliers, employees, retail banking customers and business banking customers, questionnaires were sent out through surveys. To determine the number of responses needed to be considered statistically significant, the smallest representative sample of each sample universe was calculated, considering a confidence interval of 95%.

For the General Management stakeholder subgroup, a total of 20 interviews were held with managers from different areas of the Bank.

The way in which the Institution's strategy has embedded material topics for its stakeholder groups is described in detail in the sections included for that purpose in the material disclosures:

• 5.1.3. Strategy (in relation to climate change) • 5.2.2. Strategy (in relation to own workforce) • 5.3.2. Strategy (in relation to consumers and end-users) • 5.4.2. Strategy (in relation to business conduct) • 5.5. Entity-specific disclosures: Tax responsibility

The results of the double materiality analysis, as well as the process and methodology applied, were reported to the Sustainability Committee, the Management Committee and to the Board Audit and Control Committee of the Institution. The double materiality analysis also underwent an ESRS readiness audit carried out by the Bank's third line of defence in 2024.

As a result of the double materiality exercise, the following material impacts, risks and opportunities have been identified:

Material Impacts

Material Risks and Opportunities

Double materiality analysis results

The table below shows the results of the double materiality analysis, indicating the sustainability topics analysed (ESRS) with their relative weight or importance in terms of materiality:

Following the analysis, Banco Sabadell concluded that the current risks identified in the double materiality analysis currently produce no significant effects. This conclusion was reached after evaluating the impact that they currently have on the Bank's financial statements, having verified that they have no material significance.

In relation to current opportunities, including those related to sustainable finance solutions and climate transition advice, as well as digital customer acquisition and cross-selling opportunities, it was concluded that they have material significance and the Institution is working to benefit from them.

Thus, the Bank committed to mobilise €65bn in sustainable finance between 2021 and 2025. Up to December 2024, more than €57.9bn had been mobilised. As a result of the digitalisation strategy, over 150,000 customers were onboarded digitally in 2024.

Specific qualitative analysis of the financial materiality of environmental risks

Every year, the Institution reviews the impact materiality assessment of environmental risks (physical and transition risks stemming from climate change and environmental degradation), identifying all possible factors that can transmit these risks, evaluating them according to a scale of impact intensity and taking different time horizons into account.

The qualitative materiality analysis for 2024 showed that:

• Physical risks: acute climate events continued to occur and chronic climate trends continued to get worse, with a noticeable "tropicalisation" of the climate • Transition risks: remained stable compared to 2023, with a certain decrease of regulatory transition risks

The results showed that the risk with the biggest effect continued to be credit risk:

• Credit risk: Physical risks are expected to increase impact intensity over the time horizon considered. Transition risks are estimated to have a gradually increasing overall impact on counterparties • Market, liquidity and operational risks: The impact intensity of inherent environmental risks is low

Inherent risk results of the 2024 qualitative environmental risk assessment

After considering the rollout of mitigating factors and the initiatives of the Institution's Sustainable Finance Plan, the residual environmental risk is concluded to be low for all of the risks under analysis.

Identification and assessment of impact materiality

The double materiality analysis identified the main positive and negative impacts related to each sustainability-related topic that the Bank has or could have on society and the environment. Each of them are assessed according to their characteristics through the scale, scope, irremediable character and likelihood, the scale being the severity or benefit of the impacts on the environment and society, as well as the time horizon of potential negative impacts. In the case of a potential negative impact assessed as impacting human rights, severity prevails over likelihood.

During the assessment exercise carried out, 1,612 participants, broken down according to the chart below, were actively involved through ad hoc questionnaires and interviews with General Management:

Involvement of stakeholder groups

The Bank's General Management has been involved in both the assessment of impact materiality (scale, irremediable character and likelihood, since the scope of the impact is set by means of an internal analysis) and of financial materiality (financial effects, likelihood and trend over time). On the other hand, retail customers, business customers, employees and suppliers took part in the impact materiality assessment through an analysis of the scale.

In that regard, 56 impacts were identified, which were assessed under the impact materiality perspective.

Identification and assessment of financial materiality

First, the main risks and opportunities of each sustainability-related topic that affects or could affect the Bank's financial statements were identified. These risks and opportunities were assessed in the short, medium and long term through their financial effects and likelihood of occurrence.

This assessment identified 42 risks and 21 ESG opportunities, which were assessed under the financial materiality perspective.

Definition of materiality thresholds and results

Based on the chart analysis of the normal distribution of the results obtained in the assessments of impact materiality and financial materiality, the Impacts, Risks and Opportunities (IROs) that stand out from the entire sample have been identified. The IROs belonging to the group of scores that are above the rest are classified as "material impacts, risks and opportunities".

Internal control processes for the double materiality analysis

As described in section "2.5 GOV-5. Risk management and internal controls over sustainability reporting", the Internal Controls over Sustainability Reporting (ICSR) unit identified risks and designed controls over the new double materiality exercise in order to ensure the correct execution of this exercise and its completeness.

The Board of Directors delegates the supervisory function regarding the internal control systems to the Board Audit and Control Committee. Every six months, the current situation of the ICSR as a result of new applicable regulatory requirements is reported to the Board Audit and Control Committee and to the Technical Committee on Accounting and Financial Disclosures.

Assessment of environmental degradation, social and governance risks

In addition to climate risk, the Institution assesses and monitors environmental degradation, social and governance risks. The Institution, through its own operations, does not cause any negative impacts worthy of mention in the areas of biodiversity, ecosystems or natural resources. Its stock of physical assets is located in urban hubs, away from ecosystems and biodiversity-sensitive areas.

The quantitative assessment of environmental risk materiality that the Institution carries out regularly considers that banking activity has a "Low" impact on the various vectors (air, soil, biodiversity and water) and a very limited impact on waste. This analysis is based on the sector mapping tool of the United Nations Environment Programme Finance Initiative (UNEP FI).

However, the Institution is exposed to potential non-climate-related environmental risks through its suppliers. Therefore, the Institution has several policies and procedures in place, such as: • Procurement Policy • Policy on the Outsourcing of Functions • Supplier Code of Conduct

The Institution carries out an assessment of various environmental aspects with tools that provide relevant information to decide whether or not to engage certain suppliers, through questionnaires based on the "statement of responsibility" of the supplier. Examples include:

• General ESG: whether the supplier has an Environmental Management System or publicly disclosed environmental policy • Biodiversity and climate: whether it promotes actions that minimise impact on biodiversity • Waste and circularity: whether it quantifies waste and has improvement objectives • Water resources: whether it calculates a water footprint indicator

The Institution has outlined a dual objective for 2025: • For 80% of its relevant suppliers to have an ESG score (already achieved) • For 90% of billing with these suppliers to be with those that have the highest scores (A+, A or B)

Environmental degradation risk of the loan book

The Bank conducts an assessment of its exposure to the risk associated with environmental degradation of the business risk portfolio, based on the United Nations Environment Programme Finance Initiative (UNEP FI) methodology. This methodology assigns an environmental impact to each NACE code, obtained by consolidating five non-climate-related environmental factors:

• Management of water resources • Impact on biodiversity • Pollution and use of land • Air quality • Management of resources and waste

1.3% of the business exposure is classified as having "Very High" environmental degradation risk and 10% as "High" risk. The portfolio classified as having "High" and "Very High" risk remained stable compared to 2023. At a sectoral level, environmental degradation risk is concentrated in sectors such as Electricity and gas, Transport, Chemical, and Oil extraction, mining & quarrying.

To ensure that the measurement of the evolution of these risks is supervised, the portfolio's exposure to climate-related and environmental risk is monitored on a quarterly basis and reported to the Bank's Sustainability Committee.

Biodiversity risk

The World Economic Forum estimates that over half of the world's GDP, 44 trillion dollars, is potentially at risk as a result of companies' reliance on nature and its services. The Living Planet Report 2022 revealed an average decline of 69% in species populations since 1970.

Banco Sabadell's regulatory framework includes different guidelines for the protection of biodiversity. At the top level is the Group's Sustainability Policy. Based on this policy principle, the Bank defined the Environmental and Social Risk Framework, which lays down measures to protect biodiversity.

General exclusions: • Companies that pose a threat to UNESCO World Heritage Sites, Ramsar wetlands, Alliance for Zero Extinction locations, and IUCN Category I-IV areas • Companies in material breach of applicable laws and regulations on human rights and the environment

Sector-specific exclusions: • Farms involved in CITES-regulated products scandals • Farming projects involving burning of natural ecosystems or destruction of High Conservation Value Forests • Vessels operating with large drift nets or using drift nets to capture endangered species • Bottom trawling in deep waters • Mountain Top Removal mining methods • Mines without closure and site recovery plans or with improperly managed tailing dams • Mining projects discharging tailings into river systems • Desalination plants without adequate mitigation measures

The Bank monitors the impact generated by companies' activities within its loan book from two points of view:

1. Quarterly monitoring of environmental degradation risk: sectors with the greatest impact are Electricity, Road transportation, Maritime transportation, Agriculture and fishing, and Oil and gas

2. Classification of borrowers according to the Climate-related and Environmental Risk Indicator (IRCA): Companies with "High" or "Very High" environmental degradation risk are given a worse rating

Environmental and Social Risk Framework

This Framework consolidates the set of applicable criteria (sectoral standards) that are intended to limit the financing of customers or projects contrary to the transition to a sustainable economy or that lack alignment with international regulations or best practices.

The Framework integrates compliance with rules and standards at the level of social risk, including the International Labour Organisation (ILO) Conventions and the UN Guiding Principles on Business and Human Rights.

General exclusions limiting financing of companies with high social risk: a. Companies employing child labour or forced labour, or participating in human rights violations b. Companies involved in resettlement of indigenous or vulnerable groups without their consent c. Companies in material breach of laws and regulations on human rights and the environment d. Companies without health and safety policies such as OHSAS 18001 or ISO 45001

Social risk

Social risk takes into account various social factors related to rights, well-being, and interests of people and communities. A series of actions have been implemented for identifying, measuring and managing social risk for both retail and business customers.

Additional aspects assessed include:

1. Advanced Climate-related and Environmental Risk Indicator (IRCA): has a specific module to capture quantitative social indicators including human rights, quality employment, equality, fair compensation, talent management, occupational safety, and supplier/customer management

2. Risk acceptance process: operations require an ESG Annex assessing potential controversies related to labour disputes, community impact, corruption, bribery, and workplace safety

These quantitative indicators are monitored quarterly and reported to the Bank's Sustainability Committee.

Governance risk

The Institution assesses governance risks of counterparties, considering different governance factors related to management and operation, such as anti-bribery and anti-corruption practices and compliance with relevant laws and regulations.

Additional aspects assessed include:

1. Advanced IRCA: has a specific module for governance indicators
2. Risk acceptance process: includes assessment of governance-related controversies

These are monitored quarterly and reported to the Sustainability Committee.

Once the material topics for the Bank have been identified, the sustainability information that is to be disclosed in the annual Sustainability Report is structured. Based on these material topics and the structure of the European Sustainability Reporting Standards (ESRS), this report covers environmental information first, followed by information on social aspects to finally conclude with information related to governance. Thus, the structure of the Sustainability Report follows the table of contents set out below: