Materiality Identification Process

Materiality Identification Process

Step 1: Understand the organization’s context and assess the significance of the impacts

The Sustainability Report Working Team, under the supervision of the Sustainability Committee, in collaboration with multiple business units, including the Corporate Strategy and Planning Group, Risk Management Group, Compliance Group, etc., identifies Krungsri Group’s business activities, and ESG materiality related to the sustainability context and development, including issues related to being a financial service provider and also identified sustainability topics significant for stakeholders. In this regard, the identification of organization’s context and the assessment of the significant impacts are in alignment with the ‘Double Materiality’ concept that take into account the balance between the organization’s “financial materiality” and the “impact materiality” throughout the entire value chain, including the public urgent social and environmental agenda and goals, at the domestic and international levels. Details are as follows:

1. Significance of economic, environmental, and social Impacts:
   1. Identify the relevance of sustainability materiality to the organization, such as
      • Philosophy, visions, and core values
      • Business direction, strategies, policies, and business practices
      • Enterprise-wide risks (degree of relevance)
   2. Consider the impact of sustainability materiality on operations, profitability, and business growth from an outside-in perspective. For example, examining how climate change might affect the Bank’s financial performance. This consideration will cover the following impacts on the organization:
      • Financial aspect
      • Operational aspect
      • Strategy aspect
      • Reputational and image aspect
      • Legal, regulations, or business practices, etc.
   3. Consider the impact of organization activities on the environment and society, both within the Bank’s vicinity and beyond the operational areas. This consideration reflects an inside-out perspective. For example, examining how business activities, investments, and lending affect greenhouse gas emissions, which may impact people and the overall environment.
2. Influence on stakeholder assessment and decisions, including issues of interest and expectations of stakeholders, issues that influence stakeholder decision-making, etc. This is conducted through diverse forms, e.g., meetings, in-person conversations, seminars, interviews, opinion surveys on Krungsri Group’s sustainability performance, etc. Views and recommendations received are used for the materiality assessment process.
3. Identify sustainability materiality in alignment with domestic and international standards
   Krungsri also takes into account material topics completed and reported in the previous year for reconsideration, along with sustainability best practices, indices and assessments of diverse national and international organizations, such as:
   • The SET ESG Rating by the Stock Exchange of Thailand (SET)
   • The Bank of Thailand (BOT)’s monitoring and assessment of commercial banks in alignment of the sustainable banking principles
   • Guidelines based on the Corporate Governance Report of Thai Listed Companies carried out by the Thai Institute of Directors (IOD)
   • The S&P Global Corporate Sustainability Assessment (CSA)
   • International sustainability indices, e.g., Dow Jones Sustainability Indices (DJSI)
   • The Sustainable Banking Assessment (SUSBA) Report of the World Wide Fund for Nature (WWF)
   • The Policy Assessments of Thai commercial banks by Fair Finance Thailand

Step 2: Identify and prioritize material topics

The Sustainability Report Working Group, under the supervision of the Sustainability Committee, identifies environmental, social, and governance (ESG) issues that are relevant and significant to the business and stakeholders. Then, each issue is prioritized and categorized before submitting them to the Sustainability Committee for approval.

Step 3: Validate material topics

Sustainability Committee which consists of the top executive (President and Chief Executive Officer)as Chairman and senior executives from various business units of the Bank as members verified and approved material topics on an annual basis to ensure relevant issues are thoroughly considered. The verified material topics were proposed to the Executive Committee for acknowledgement and consideration. The outcome is then used as the base information for communications to all business units, so that they can stipulate sustainability action management as per their priorities and urgency as well as preparation of the Sustainability Report.

Step 4: Review material topics

Krungsri establishes the process for reviewing material topics after the dissemination of the Sustainability Report each year, by providing channels to get feedback and recommendations from all stakeholder groups, namely our website, www.krungsri.com, a questionnaire form (attached herewith), or other channels. Therefore, the feedback will be used to set the Bank’s directions for sustainability practices and operations, as well as disclosure in the next Sustainability Report.

Key Amendments in the Sustainability Report

Based on the review, analysis, and reassessment of Krungsri’s material sustainability topics for 2025, it was found that most of the key sustainability issues remain consistent with those identified in 2024. However, Krungsri has added a new topic on Artificial Intelligence (AI) Governance, disclosing information on its implementation alongside the topic of Cybersecurity. This addition demonstrates the Bank’s accountability and commitment to comprehensive management and governance of AI technology, in alignment with the expectations of key stakeholders such as customers, regulators, and national and international sustainability organizations.

Additionally, the changes in the prioritization and sequence of material sustainability topics reflect Krungsri’s current strategic direction and urgent business agenda, which are closely linked to the Environmental, Social, and Governance (ESG) dimensions, reinforcing the Bank’s commitment to achieving sustainable banking in a tangible manner.

Krungsri's Materiality