National Bank of Canada : → 2023 Climate Report

Table of Contents

1. Forward-LookingStatements
2. Introduction
3. • Introduction
   • About Us

1. TCFD and the Bank's Position
2. • Our ESG principles
3. Governance
4. • Board oversight of ESG criteria
   • ESG Committee

10 Strategy

• Our ambition and priorities
• Our climate strategy achievements
• Future prospects
• Achieve net-zero by 2050
• Support our clients
• Exercise our leadership influence

23 Risk Management

• Identifying and Assessing Climate-Related Risks
• Quantifying Climate-Related Risks
• Managing Climate-Related Risks
• Disclosing Climate-Related Risks

31 Metrics and Targets

• GHG emissions from our Operations
• Reduction Target for our Operations
• Metrics Used to Assess Climate-Related Risks and Opportunities
• Financed Emissions
• Methodology used to calculate financed emissions
• Interim reduction targets
• Our commitment to thermal coal activities
• Oil and Gas Producers
• Commercial Real Estate
• Power Generation
• Next steps

Important Notice and Caution Regarding Forward-Looking Statements

Certain statements made in this report are forward-looking statements. All such statements are made in accordance with applicable securities legislation in Canada and the United States. Forward-looking statements in this document may include but are not limited to, certain statements stated in the Introduction, and other statements with respect to the objectives, priorities and strategies of National Bank of Canada and its subsidiaries (the Bank), of its targets and commitments with regard to sustainability, environment and climate (including reaching net-zero greenhouse gas emissions for its own operating and financing activities by 2050, and the measures that will it will take to achieve them, including its climate strategy and all the objectives related to our efforts toward transitioning to a low-carbon economy and the way to support our clients in this transition), the regulatory environment in which it operates, the causes and potential impacts of climate change globally, its approach to identifying and managing climate-related risks and opportunities, and certain risks it faces. These forward-looking statements are typically identified by words or phrases such as "outlook," "believe," "could," "foresee," "forecast," "anticipate," "estimate," "project," "expect," "intend," and "plan," in their future or conditional forms, notably verbs such as "will," "may," "should," "could," or "would," as well as similar terms and expressions.

Such forward-looking statements are made for the purpose of assisting the holders of the Bank's securities in understanding the Bank's vision, strategy and objectives related to sustainability, environment, and climate, and may not be appropriate for other purposes. These forward-looking statements are based on our current expectations, estimates, and intentions and are subject to inherent risks and uncertainties, many of which are beyond the Bank's control. There is a strong possibility that the Bank's express or implied predictions, targets, projections, expectations or conclusions will not prove to be accurate, that its assumptions may not be confirmed and that its vision, strategic objectives and performance targets will not be achieved. The Bank cautions investors that such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from these statements due to a number of factors. Therefore, the Bank recommends that readers not place undue reliance on forward-looking statements, as a number of factors could cause actual results to differ significantly from the expectations, estimates or intentions expressed in these forward-looking statements. Investors and others who rely on the Bank's forward-looking statements should carefully consider the aforementioned factors as well as the uncertainties they represent and the risks they entail. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.

Our ability to achieve our sustainability, environment and climate objectives, priorities, and targets (including with respect to reducing the Bank's greenhouse gas emissions related to its own activities and energy consumption, reaching net-zero greenhouse gas emissions for its operating and financing activities by 2050, and the measures it will take to achieve them, including its climate strategy and all of our efforts linked toward transitioning to a low-carbon economy, and the way to support our clients in this transition) is based on a number of assumptions and is subject to a number of factors, many of which are beyond the Bank's control and the effects of which can be difficult to predict-among others, climate changes, including the physical risks and linked to the transition to a low-carbon economy and the Bank's ability to satisfy stakeholder expectations on environmental and social issues; the need for active and continued participation of stakeholders (including our employees, our clients, our suppliers, the communities in which we are present, and other main change agents); the availability of comprehensive and high-quality greenhouse gas emission and other third-party data; the ability of the Bank to develop indicators to effectively monitor our advancements; the development and deployment of new technologies and sustainable products; the ability of the Bank to identify climate-related opportunities as well as assess and manage climate-related risks; the general economic environment and financial market conditions in Canada, the United States, and other countries where the Bank operates; changes made to regulations that affect the Bank's business; the development of environmental, social and governance regulatory requirements; geopolitical and sociopolitical uncertainty; the Bank's ability to achieve its long-term strategies and key short-term priorities; the Bank's ability to recruit and retain key personnel in a competitive environment for talent; and possible impacts of major events affecting the economy, market conditions or perspectives of the Bank, including international conflicts, natural disasters, and public health crises, and the measures taken in response to these events.

In addition, the assumptions, the data, metrics, measurements, methodologies, scenarios, and other standards used to develop our assumptions and estimates and to monitor our advances, believed to be reasonable at the time of preparation of this report, may subsequently turn out to be inaccurate. Many of these assumptions, the data, metrics, measurements, methodologies, scenarios, and other standards continue to evolve and may differ significantly from those used by others, those that may be used by us in the future or that may be subsequently mandated by government authorities or other standard setters. Such evolution and changes could affect the assumptions and estimates used by us and could affect the comparability of the information and data across industries or companies and from one reporting period to a subsequent reporting period, as well as our ability to achieve our objectives, priorities, strategies, sustainability commitments and targets.

The foregoing list of risk factors is not exhaustive, and the forward-looking statements contained in this document are also subject to credit risk, market risk, liquidity and funding risk, operational risk, regulatory non-compliance risk, reputational risk, strategic risk, environmental and social risk, as well as certain risks identified as emerging or deemed as significant risks. Additional information about these risk factors is provided in the "Risk Management" section beginning on page 62 of the 2023 Annual Report and may be updated in the quarterly shareholders' report subsequently published.

This report is provided solely for informational purposes. It is not an offer or a solicitation to buy or to sell any security, product or service in any jurisdiction nor is it intended to provide investment, financial, legal, accounting, tax, or other advice and such information should not be relied on or acted upon for providing such advice.

About Us

Founded in 1859, National Bank of Canada offers financial services to individuals, businesses, institutional clients and governments across Canada. We are one of Canada's six systemically important banks and among the most profitable banks on a global basis by return on equity.1

We operate through three business segments in Canada: Personal and Commercial Banking, Wealth Management and Financial Markets. A fourth segment, U.S. and International Specialty Finance, complements the growth of our domestic operations.

We are a leading bank in Quebec, where the majority of our branches are located, and also hold leadership positions across the country in selected activities. We strive to meet the highest standards of social responsibility while creating value for our shareholders. We are proud to be recognized as an employer of choice and for promoting diversity and inclusion.2

We are headquartered in Montreal, and our securities are listed on the Toronto Stock Exchange (TSX: NA).

This report presents the achievements and commitments in terms of climate-related risks and opportunities of the Bank and its main subsidiaries in Canada3 and covers fiscal 2023, unless otherwise indicated.

External accounting

The information contained in this report is unaudited. Groupe AGÉCO, an independent third party, calculated our greenhouse gas emissions.

1. Source: RBC Capital Markets' Canadian Financials Weekly report
2. Women in Governance
3. Some of the information provided in this report does not include Flinks Technology Inc. This has no significant impact on the information provided.

TCFD and the Bank's Position

In keeping with its commitment to protect the environment, the Bank announced in 2018 its support for the

Task Force on Climate-Related Financial Disclosures (TCFD) of the Financial Stability Board. This task force makes recommendations based on the four main pillars of any organization: governance, strategy, risk management, and metrics and targets. These four broad categories are intended to establish a framework for the disclosure of climate-related financial information to help institutional investors make informed decisions concerning their exposure to climate-related risks and opportunities.

The Bank has drawn up a roadmap to implement the TCFD recommendations and improve its disclosure of information related to managing climate-related risks. It is also working with various industry partners to identify and implement sound management practices that promote the transition to a low-carbon economy.

Our ESG principles

In 2019, the Bank adopted nine environmental, social and governance (ESG) principles to highlight the importance of sustainable development and balance the interests of various stakeholders in society.

ENVIRONMENT

Three principles to develop a green economy

1. We consider the fight against climate change in our economic and community activities.
2. We support and advise our clients in their energy transition.

3 We manage and reduce our environmental footprint in all our sectors of activity.

Main UN Sustainable Development Goals addressed by these principles

For more information, consult the 2023 ESG Report, available in the Commitments and Impactsection of nbc.ca.

Governance

The Bank has drawn up an effective governance framework that oversees climate-related risks and opportunities and ensures that ESG initiatives are rolled out, monitored and maintained. Climate-Related risks and opportunities are actively managed by the Bank's executives and are among the priorities monitored by the Board of Directors.

Board oversight of ESG criteria

The Board pays close attention to social and environmental criteria in order to meet the changing needs of our stakeholders. The ESG governance framework relies on the fact that all levels of the organization contribute to our objectives and commitments, including directors, who through the various committees, exercise their role of oversight over ESG criteria. Consequently, in recent years, the Bank has adopted measures enabling it to extend its commitment in this regard, notably through structured ESG governance and by deploying a renewed environmental, social and governance strategy, which continues to be based on the ESG principles adopted by the Board in 2019.

In addition to exercising a strategic oversight role, the Board ensures ESG governance practices are fair, transparent and supported by solid mechanisms, such as dialogue with stakeholders. The Board ensures that ESG criteria are integrated into long-term strategic objectives while monitoring the progress of ESG initiatives and commitments. The Board and its committees- the Conduct Review and Corporate Governance Committee, the Risk Management Committee, the Audit Committee, the Human Resources Committee and the Technology Committee-have all been assigned ESG responsibilities according to their respective roles and the expertise of their members. The objective being to ensure that the Bank's activities are conducted in accordance with stringent corporate responsibility standards.

The Board and its committees are supported by the Senior Leadership Team in exercising their functions, as well as by various internal committees such as the ESG Committee.

For more information on our governance practices and the main ESG responsibilities and achievements of the Board and its committees in 2023, consult the 2024 Management Proxy Circular, available in the Investorssection of nbc.ca.

Strategy

As a Canadian bank, we recognize our responsibility and the role we have to play in supporting the transition of the real economy and helping to fight climate change.

Our ambition and priorities

The Bank's policy ambition is to be a key player in the fight against climate change and to support the transition of Canada's real economy to a low-carbon economy. The Bank aims to become a strategic partner by supporting its clients in their transition, taking into account the complex and interdependent efforts of many stakeholders across the economy. In accordance with the Paris Agreement targets, the Bank has committed to achieving net-zeroby 2050 for its financing activities as well as its own operations. To reinforce its net-zerocommitment and its willingness to play an important role in financing the energy transition, the Bank joined the Net-ZeroBanking Alliance (NZBA) in 2021.

Following a strategic review of the new three-year plan, the Bank concretized its ambition by formalizing three climate priorities and developing an implementation plan, integrating concrete initiatives and guided by our structured financing and investment activities, decision-making process and climate commitments. Our approach to addressing our climate priorities is detailed in the following pages of this report.

We recognize that pursuing a positive global impact for future generations requires sustained investment. Today, more than ever, we are determined to play our part and remain committed to the fight against climate change, while supporting the vitality and sustainability of the Canadian economy.