National Bank of Canada : → 2023 Report on Environmental, Social and Governance Advances

INTRODUCTION

Forward-Looking Statements

Take Action

for a Sustainable Future Today

Our One Mission

About Us

About This Report

How We Support

Sustainable

Development

Our ESG Dashboard

ENVIRONMENT

SOCIAL

GOVERNANCE

APPENDICES

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, statements set out in the messages from executives and other statements with respect to the objectives, priorities and strategies of National Bank of Canada and its subsidiaries (the Bank), the Bank's environmental, social and governance targets and commitments (including with respect to reducing greenhouse gas emissions related to the Bank's own activities and its energy consumption, reaching net-zero greenhouse gas emissions for its operating and financing activities by 2050, its inclusion, diversity and equity commitments and the measures it will take to achieve them, its climate strategy and all objectives related to transitioning to a low-carbon economy and supporting 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 verbs or words such as "outlook," "believe," "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 environmental, social and governance vision, strategy, and objectives, 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. The Bank therefore 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 factors set out below 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 environmental, social and governance objectives, priorities, and targets (including with respect to reducing greenhouse gas emissions related to the Bank's own activities and its energy consumption, reaching net-zero greenhouse gas emissions for its operating and financing activities by 2050, its inclusion, diversity and equity commitments and the measures it will take to achieve them, its climate strategy and all objectives related to transitioning to a low-carbon economy and supporting 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, including, among others, climate change, physical risks, risks related 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 to assess and manage climate-related risks; the general economic environment and financial market conditions in Canada, the United States, and the other countries where the Bank operates; changes made to regulations that affect the Bank's activities; 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 the Bank's outlook, including international conflicts, natural disasters, public health crises, and the measures taken in response to such events.

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 compliance risk, reputational risk, strategic risk, environmental and social risk, and certain emerging risks or risks deemed significant. Additional information about these risk factors is provided in the Risk Management section starting on page 62 of the Bank's 2023 Annual Report and may be updated in the quarterly shareholders' reports subsequently published.

This report is provided solely for informational purposes. It does not constitute 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 or acted upon for providing such advice.

2023 ESG Report National Bank of Canada

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INTRODUCTION

Forward-Looking Statements

Take Action

for a Sustainable Future Today

Our One Mission

Take Action for a Sustainable Future Today

About Us

About This Report

How We Support

Sustainable

Development

Our ESG Dashboard

ENVIRONMENT

SOCIAL

GOVERNANCE

APPENDICES

Message from the President and Chief Executive Officer and the Senior Vice-President, Communications, Public Affairs and ESG

2023 was another year marked by many social, environmental and economic challenges, once again illustrating the importance of everyone taking action and contributing to the health of our communities.

At the Bank, our commitment to change continues to be driven by our mission to make a positive impact. We believe that it is through concrete, concerted action and open dialogue with our stakeholders that we can make a lasting contribution to the economic and social vitality of our society, which requires ongoing decarbonization initiatives.

A Fair and Pragmatic Energy Transition

We are now at the heart of the energy, economic and social transition. As a leading player in Quebec and Canada, we play an important role in supporting a just transition, which we believe must also promote the energy independence and security required to create wealth and economic strength that will secure our social fabric for future generations.

While we recognize that much remains to be done, we believe that a pragmatic approach and a concrete commitment to action are the best ways forward and we are focused on both fronts within our reach: managing the impact of our own operations and actively supporting our clients in their own transition.

With humility and commitment, we are making progress in achieving our operating and financing objectives. At the same time, we have continued to grow our loan portfolio related to renewable energy for several years. In this respect, the Bank ranks 4th among all banks in North America in renewable energy financing, a position that is supported by the talent and expertise of our teams and that gives us great pride.

As a founding signatory of the United Nations Principles for Responsible Banking, the Bank is also proud to stand out for its 5th consecutive year of membership. Beyond our climate commitments, we have identified financial health as the second area where the Bank can have a significant positive impact on society by enabling more people to build a resilient financial future. This includes a good understanding of personal finances and savings.

A Governance Framework that Fully Integrates Our ESG Approach

At the Bank, we view ESG as a major driver of value creation, a conviction that must be felt throughout our organization in order to maximize our positive impact on our clients, our teams and the communities in which we do business. With this in mind, we have evolved our ESG governance framework so that the business objectives of the Bank's various sectors are fully aligned with the Bank's strategy, organizational structure and

internal practices.

To ensure that each employee can achieve their full potential while contributing to the achievement of the Bank's ESG objectives, we are also pursuing our initiatives, training and awareness efforts at all levels of the organization as well as with our external partners.

In addition, this new governance of ESG provides us with greater agility to effectively respond to growing external expectations in terms of sustainability, and regulatory requirements characterized by increased demand for data.

INTRODUCTION

Forward-Looking Statements

Take Action

for a Sustainable Future Today

Our One Mission

About Us

About This Report

How We Support

Sustainable

Development

Our ESG Dashboard

ENVIRONMENT

SOCIAL

GOVERNANCE

APPENDICES

Contributing to the Well-Being of Our Communities

As a high street bank, we attach fundamental importance to the development of the communities in which we are present. Through our generalist philanthropic approach, we want to contribute to the well-being of society, and the commitment of our employees is an indispensable pillar of this approach. This is all the more essential at a time when the difficult economic conditions of recent years have accentuated needs, particularly among the most disadvantaged members of our society. The annual fundraising campaign ran by our teams for the United Way Centraide broke a new record this year. In the face of need, our teams are always present.

This year, we published the management's commitment to relations with Indigenous peoples and we also obtained the first level of certification to develop progressive relationships with Indigenous peoples at the Canadian Council for Aboriginal Business. We are committed to adopting an approach that takes into account Indigenous specificities and issues, and we intend to continue learning to strengthen our relations with the various nations and partner with them on promising projects.

The Bank firmly believes that it is important for the community to benefit fully from the contribution of each of its members. We are honoured to have been named Best Bank for Newcomers to Canada by MoneySense magazine in 2023, thanks to the quality of our offers, initiatives and service. The Bank also supports a number of organizations working to promote inclusion, and actively supports several initiatives that foster the development and growth of women, visible minorities, people with disabilities, Indigenous peoples and members of LGBTQ2+ communities.

It is important that our values are reflected and realized with our current and future clients. In this respect, this year we are proud to have granted our first loan with the "social mission" designation to a company with a social vocation, which employs people with disabilities.

Our ambition is to go even further in supporting organizations working to achieve ESG objectives, and we have implemented a financing framework dedicated to companies whose activities include an environmental and social value creation component.

With a growing number of Canadians and newcomers, affordable housing is an important societal issue that will continue to require leadership and dialogue with the various levels of government and the private sector to address it. As a Bank, we remain responsive and committed to action, maintaining our position as one of Canada's leading lenders for affordable housing, energy efficiency and accessibility. In this regard, we exceeded our financing objectives for green real estate projects this year.

Working for a Sustainable and Wealth-Building Canadian Economy

While many challenges remain, we are fully committed to contributing to the collective effort and achieving our ESG objectives. Backed by a determined Board of Directors and strong governance, our management and teams can build on a solid foundation to move forward with conviction and humility, while supporting our clients through the major transitions of our time.

By working with all of our stakeholders, we are contributing to a sustainable, wealth-creating Canadian economy for all. Today and tomorrow.

2023 ESG Report National Bank of Canada

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INTRODUCTION

Forward-Looking Statements

Take Action

for a Sustainable Future Today

Our One Mission

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 globally 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. Specialty Finance and International, complements the growth of our domestic operations.

We are a leading bank in our core Quebec market, where most 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).

About Us

About This Report

How We Support

Sustainable

Development

Our ESG Dashboard

ENVIRONMENT

SOCIAL

GOVERNANCE

APPENDICES

National Bank at a glance

(as of October 31, 2023)

2.8 million Clients3

31,243 Employees4

458 Branches5

2,339Banking machines6

Our financial performance7

$10.2B Total revenue $3.3B Net income

$424B Total assets

$29.2B Stock market capitalization

Our contribution

to economic activity

$3.4B Compensation

and employee benefits7

$1.6B Spent on goods

and services in Canada7, 8

$1.09B Income taxes and other taxes in Canada9

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INTRODUCTION

Forward-Looking Statements

Take Action

for a Sustainable Future Today

About This Report

The ESG Report is published by National Bank of Canada. Intended for all of our stakeholders, it presents our commitments and achievements in sustainable development and our key performance indicators.

The Report is drawn up by the ESG team, with input from dozens of experts and collaborators. It is approved by the ESG Committee, which is made up of executives from different sectors of the organization, and revised by the Conduct Review and Corporate Governance Committee.

Our One Mission

About Us

About This Report

How We Support

Sustainable

Development

Our ESG Dashboard

ENVIRONMENT

SOCIAL

Scope

Unless otherwise indicated, this report presents relevant content associated with the activities of the Bank and its main subsidiaries in Canada;1 it refers to fiscal 2023 (November 1, 2022 to October 31, 2023) and all amounts are expressed in Canadian dollars.

Stakeholders

This report is part of the Bank's ongoing dialogue with various stakeholders, including clients, employees, communities, shareholders, suppliers, interest groups, international organizations and regulatory authorities. Our commitment to constructive, open and transparent dialogue enables us to include stakeholders in our strategic decisions, enhance our practices and adopt the latest disclosure standards.

Reference framework

Our approach to communicating information follows well-known disclosure guidelines, including the Sustainability Accounting Standards Board (SASB), the United Nations (UN) Sustainable Development Goals (SDGs), the United Nations Principles for Responsible Banking (PRB), the CDP, and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

External certification and accounting

Certain indicators are extracted from Management's Discussion and Analysis and the Audited Annual Consolidated Financial Statements of the 2023 Annual Report. Unless extracted from the Audited Annual Consolidated Financial Statements

of the 2023 Annual Report, the information contained in this report is unaudited. Groupe AGÉCO, an independent third party, calculated our greenhouse gas emissions.

GOVERNANCE

APPENDICES

For more information, please refer to the Stakeholder engagement Guidelinesand the 2024 Management Proxy Circular, available in the Investorssection of nbc.ca.

1 Some of the information provided in this report does not include Flinks Technology Inc. This has no significant impact on the information provided.

2023 ESG Report National Bank of Canada

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INTRODUCTION

Forward-Looking Statements

Take Action

for a Sustainable Future Today

Our One Mission

About Us

About This Report

Additional publications

This report mentions other publications available on nbc.ca under About us:

Commitments and impact

Presentation of our responsibility in terms of sustainable development and our ESG principles.

Investors

Reports, circulars and other information concerning the Bank's financial results.

Governance

Corporate governance and governance practices, including codes and commitments.

Unless otherwise indicated, when this report refers to publications, the following versions are intended:

How We Support

Sustainable

Development

Our ESG Dashboard

ENVIRONMENT

SOCIAL

GOVERNANCE

APPENDICES

Climate

Report

20Annual Report 23 20

23

Management

Proxy Circular

Meetings of April 19, 2024

Notice of meeting to the annual and special meeting of holders of common shares

Notice of meeting to the special meeting of the holders of first preferred shares

2024 Circular

Corporate Social

Responsibility Statement

20

23

Take action

for a sustainable future

today

2023 Corporate Social Responsibility Statement

2023 ESG Report National Bank of Canada

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INTRODUCTION

How We Support Sustainable Development

Forward-Looking Statements

Take Action

for a Sustainable Future Today

Our One Mission

About Us

About This Report

How We Support

Sustainable

Development

Our ESG Dashboard

ENVIRONMENT

SOCIAL

GOVERNANCE

APPENDICES

Our relative importance matrix

Supporting sustainable development is an intrinsic part of our One Mission. Environmental, social and governance considerations play a key role in our business and operational decisions.

As such, we are committed to identifying, understanding and effectively managing the ESG priorities that matter to our stakeholders. We make regular efforts to address material sustainable development issues as part of our ongoing dialogue with stakeholders.

In 2022, we carried out an initial assessment of the relative importance of the various ESG priorities to fuel our discussions and better understand the changing expectations of our stakeholders.

We consulted our clients, employees and suppliers via a survey, which was completed by more than 1,000 respondents. This exercise aimed to determine the importance of the various issues and their potential impact on the Bank, as seen by various stakeholders (employees, clients and suppliers).

At the end of this consultation process, we tallied the results and ranked the ESG issues to illustrate their importance for our stakeholders and for the organization.

All the ESG issues identified in the matrix are important to us and our stakeholders.

The responses received allowed us to prioritize them according to their level of importance and impact. These results, which have been presented to the Senior Leadership Team and to the ESG Committee, are a valuable resource for the Bank. They contribute to our dialogue with stakeholders and help us take action where we can have the greatest impact.

The exercise was enhanced in 2023 to include efforts to analyze and prioritize issues where the Bank could have a positive impact, while understanding the scope of our potential impact. This involved setting out a non-exhaustive list of the Bank's actions in targeted domains.

Fighting climate change and promoting sustainable finance

In particular, the Bank has positioned itself as an actor of change in the fight against climate change, aware of its potential impact in this area. For example, the Bank can have a positive impact on decarbonization and the transition to a low-carbon economy by stimulating green financing and offering adapted products (sustainable finance).

Inclusion and financial literacy

Given its positioning and the concrete impact it wants to have on the financial health of its clients, the Bank also prioritizes the inclusion of vulnerable clients as specified in its Report on the Principles for Responsible Banking.

Also, to contribute to the financial health of its clients and the community, the Bank clearly states in its principles its desire to promote financial literacy and support education, among others.

Inclusion, diversity and equity

Promoting inclusion, diversity and equity is also an integral part of the Bank's guiding principles. As an employer and a member of the community, the Bank's influence can have a positive impact on the lives of people from all communities.

Protecting personal information

The Bank's commitments also include protecting its clients' personal information in order to build and maintain a relationship of trust with them. This topic is very important to our stakeholders.

This assessment of issues and their impact is an evolving activity, which allows us to identify certain trends and prioritize our actions. We will reconduct the exercise next year, in order to monitor the evolving expectations of our stakeholders.

2023 ESG Report National Bank of Canada

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