XP Inc.
Annual Report 2023

Plain-text annual report

Integrated Annual Report 2023 Integrated Annual Report 2023 Contents Introduction About XP Value creation Strategy and management Financial performance Quality in relationships Society Environmental responsibility Corporate Governance Risks GRI and SASB index 03 12 17 27 39 58 79 88 99 124 142 2 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I About this report GRI 2-2 | 2-3 | 2-5 | 2-12 |2-14 Consolidated Financial Statements 2023-2022-2021 Presents the financial performance of XP Inc. for the year, in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB), known as the IFRS Welcome to the Integrated Annual Report of XP Inc., a Brazilian company that went public in Accounting Standards. The financial statements were submitted to evaluation by independent auditors. 2019 on the U.S.-based second largest stock exchange in the world, Nasdaq. As part of our commitment to transparency and creating long-term value for our audiences, Integrated Annual Report 2023 we have consolidated information in this document on how we impact and are impacted in our Provides a more comprehensive view of business management and performance in alignment with our short, interactions and relationships. Our financial and non-financial data is reported in two annual reports, which consolidate the performance of XP Inc. and its subsidiaries, in line with the requirements of Form 20-F, filed annually with the United States Securities and Exchange Commission (SEC) and posted on our Investor Relations website. Period covered by reports: January 1st to December 31st, 2023.1 : the XP group is currently made up of 57 entities, including XP Inc. and our 1 Entities included in this report subsidiaries, of which 53 are controlled by us, 45 are incorporated in Brazil and 8 are incorporated in other countries. For more information, go to page 44 of the 20-F Form submitted to SEC (U.S Securities and Exchange Commission) in April 2024. GRI 2-2 medium and long-term strategies. It expresses the opportunities and risks related to social, environmental and governance issues, represented by the acronym ESG (Environmental, Social and Governance), and our ability to create value for stakeholders. Adopted standards and guidelines The 2023 Integrated Annual Report was prepared under the guidance of the 2021 Universal Standards of the Global Reporting Initiative (GRI) and the standards of the Sustainability Accounting Standards Board (SASB) and the Integrated Reporting Framework, of the Value Reporting Foundation. It also considers the recommendations of the International Sustainability Standards Board (ISSB). Responsibility for information GRI 2-14 The accuracy and integrity of the content of this report is under the responsibility of the Board of Directors of XP Inc. The CFO, who was also responsible for the Investor Relations area during the process of preparing this report, contributed to creating the content, until the end of his term in April 2024. The document was validated in May by the Audit Committee, the Board of Directors, and the Executive Committee. The materiality update, conducted between the end of 2023 and the beginning of 2024, was also validated by these three decision-making bodies. For more information, contact: relacoes.investidores@xpi.com.br 3 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Dialogue channels with our audiences GRI 2-29 We maintain channels of dialogue and frequent interactions with our stakeholders in order to understand the real and potential impacts of our organization for each group, define actions to prevent and mitigate potential negative impacts and enhance positive ones. Stakeholder Dialog mechanism Satisfaction survey SAC WhatsApp +55 11 4935 2720 Frequency Yearly Individual and Corporate Clients Telephones: 11 4003 3710 (capitals and metropolitan regions); 0800 880 3710 (other locations); 55 11 4935 2701 Permanent (customers abroad); 0800 771 0101 (people with hearing or speech impairments); 0800 772 0202 (questions, guidance and complaints) Ombudsman: 0800 722 3730 E-mail: relacoes.investidores@xpi.com.br Permanent Permanent Form for sending questions, concerns and suggestions Permanent Investors Earnings results conferences XP Investor Day Annual Shareholders Meeting Pulse survey Quarterly Yearly Yearly Monthly Collaborators Society Confidential Reporting Channel 0800 721 0744 Permanent XP Educação Service 55 31 3047 3611 (Monday to Friday, 11 a.m. to 7 p.m.) Permanent 4 4 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Message from senior management Letter from the CEO GRI 2-22 “ In recent years, the financial system has undergone a technological transformation that has definitely changed the way Brazilians use banking products and services to transform their lives. We at XP Inc. are proud to have contributed to breaking paradigms in this industry. From the beginning, our mission has been to strengthen the role and autonomy of citizens in terms of investments, democratizing access to opportunities that, until recently, were practically inaccessible to small investors. We made a true revolution in this market and, in 2023, we continued to implement our short, medium and long-term strategies, focused on quality, improving governance, digital transformation, growth and creation of new businesses to expand the services offered to customers. The year began with an uncertain macroeconomic outlook marked by deteriorating credit, a decline in business investment and high interest rates. We were able to deftly respond to this extremely challenging scenario. We maintained cost discipline and capitalized on emerging opportunities, demonstrating the resilience of our business model. In addition to the challenges faced by the market as a whole, we are experiencing an intense period of adaptations designed to solidify our transition from an investment company to a multiple financial conglomerate that, over the last three years, has begun to embrace the activities of commercial banking, private banking, wholesale and insurance, among others. During this transition, our pioneering culture has demonstrated all its power. For the first time, we surpassed R$1 trillion in client assets under custody, a monumental milestone that we celebrate as it signals the trust placed in us by our clients. 5 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Throughout the year, we continued to focus on our three main strategic pillars: 1) Leadership in investments; We have evolved in incorporating environmental, social, climate and governance themes into our activities 2) Improve our cross-sell capacity; and 3) Wholesale synergies. At the center of these pillars is our and decisions. This is not a linear journey, as it requires a learning curve that we continue to build through commitment to a culture of quality – our third wave of differentiation. investment in technology and the internal spread of the ESG culture. Throughout the year we also had the acquisition and subsequent integration of Banco Modal, which marked In 2023, for example, training on the topic also became mandatory for the more than 14 thousand investment a significant step in our journey, expanding our capabilities and improving the set of products and services advisors who work with us. We saw a significant increase in ESG assets under custody, reaching R$13.4 offered to customers. This integration is almost complete at this point, providing revenue synergies and billion, improved risk management processes on all business areas and submitted 100% of our operations cost efficiencies. and suppliers, both individuals and companies of all sizes, to social, environmental and climate risk analysis. Our New Verticals and Large Enterprises & SME initiatives continued to thrive, playing a significant role Deepening this perspective, at the beginning of 2024, we recalibrated public goals and commitments in in the diversification of revenues – over 17% of our total gross revenue for the year, including Retirement synergy with our material topics, advanced in improving governance, and published our Human Rights Plans, Cards, Credit, Insurance, Foreign Exchange, Global Investments and Digital Account. The recognition Policy. of our credit card as the Best in Brazil by Melhores Cartões is proof of our commitment to offering superior quality products and services. Our priorities for this year involve the quality of service to our customers, governance in the people, management and risk pillars, cost discipline to maintain long-term competitive advantages and the One of the pillars of our mission has been to focus more on the quality of what we offer to customers. consolidation and expansion of our new verticals, mainly the Wholesale Bank, in the Corporate and Large We are dedicated to ensuring access to premium services that were previously available only to Private Corporate segment, and the Digital Bank, in the individual and small and medium-sized companies segment. customers. By extending these offerings to high-income customers, we want to break down barriers and create a more inclusive and scalable financial ecosystem. The initiative reflects our past successes in making premier investment products accessible to a wider audience, emphasizing our commitment to investment excellence. As a result, we posted a positive financial performance with record quarterly revenues and profitability. And we closed the year with an EBT (earnings before taxes) 14% higher than that recorded in 2022, while net profit increased by 9%. Another highlight was the Efficiency Ratio: it was the best we have obtained since the IPO on Nasdaq in 2019. Growth, for us, means going far beyond the pursuit of new financial heights. We want to conduct this process guided by a sustainable development strategy that considers the impacts and opportunities for business and our entire value chain. We remain increasingly confident in our business model and are convinced that our commitments and developments reinforce our purpose of continuing to transform the financial market to improve people’s lives. Enjoy the material! ” Thiago Maffra CEO of XP Inc. 6 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S Letter from the Chairman of the Board GRI 2-22 i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I “ I like to look back because the past tells us a lot about who we are and the way we shape our future. XP was born in battle in 2001, and we discovered paths while continually reinventing ourselves to get where we are. We didn’t know it yet, but we were building the foundations of our culture at that time. Big dreams, an open mind, an entrepreneurial spirit and customer focus are values that have guided our attitudes and decisions since the beginning. We never imagined that our small office of independent agents, which distributed investment products from another brokerage, could go public on one of the largest stock exchanges in the world. We arrived at Nasdaq, in the United States, because we believe in the impossible. From the beginning, we understood that financial education would be essential to form an investor prepared for the debanking that would happen in Brazil, as happened in other markets. We are proud to lead this movement, with a technological and financial solution that provided autonomy and strengthened the investor. 7 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Likewise, we achieved other major milestones, consolidated in 2023, after an intense period of transformations and investments that began in 2019 with the IPO. Until then, we were a company with 2,000 employees and, today, we are a team numbering over 6,600 people. Dreaming together, we created a business where everyone feels ownership, is able to provide their opinion and raise the yellow flag when they believe something doesn’t make sense — all with autonomy and a desire to learn, without fear of making mistakes and knowing how to correct mistakes quickly. Here, everyone faces daily challenges, learns, grows and strives to excel. This is what we usually call a culture of performance, which has been our source of innovation. In this environment full of opportunities, meritocracy and a long-term mentality and a focus on the customer in search of continuous excellence prevail. With the clarity that what brought us to our We believe that it is possible, and necessary, to embrace the challenges of our time and generate positive results for our employees, our shareholders and the entire value chain, improving our skills in social, environmental and governance issues. To this end, the material themes presented in this document serve as a guide for the strategies led by senior management, unfolding in XP Inc.’s business, processes and daily activities. Therefore, we will continue to grow and promote a performance that exceeds 2023, a year that goes down in our history for paving the way for a new cycle of expansion. Our ability to overcome obstacles helped us perform superbly in a period marked by a very challenging macroeconomic environment. And we move forward, firm in our intention to continue transforming the financial market to improve current level will not necessarily take us to the next stage, we need to review the formula, no matter people’s lives. how successful it has been, learn new skills, acquire other habits and think about perpetuity from the company. This is the context in which we continue to transform our businesses to foster an ESG culture. We began this journey in 2020 and have now perfected our strategy, guided by the review of our materiality. It captured perceptions about what is relevant to our stakeholders and to preserving the sustainable performance of the business in the medium and long term. In our reality, adequately addressing social, environmental and governance issues has become imperative to better manage risks, attract investors and talent and reduce costs for raising capital, among other factors that influence the longevity of organizations. ” Guilherme Benchimol Chairman of the Board of Directors of XP Inc. 8 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S Materiality GRI 2-4 | 2-14 | 2-23 | 3-1 | 3-2 | 3-3 This year, we conducted the materiality update developed in 2020, when XP was still in the early stages of its ESG journey. Since then, we have experienced strong transformations in business and felt the need to revisit the material themes mapped to understand whether they remain relevant, both in the current context of the company and the market, and for our stakeholders. We therefore seek to identify the issues with the greatest potential for positive and negative impacts on revenues and that may influence our ability to continue creating value for our stakeholders over time. The methodology adopted was based on the GRI guidelines and covered the following steps: Identification of material topics Stakeholder engagement Materiality review Contextualization and validation of materiality The work began with a benchmarking of six The desk review stage resulted in a list of 40 relevant topics, and the By analyzing insights captured on The material topics were contextualized to financial institutions with which we decided to 21 most aligned with our strategy were prioritized and submitted the desk review and interviews with facilitate the management of the initiatives compare ourselves, observing their ESG strategies, for stakeholder evaluation. Insights from our stakeholders were stakeholders, and considering the that will be prioritized and published by XP commitments and practices. At the same time, we captured through in-depth interviews with the company’s senior interconnections with the company’s Inc. in this report and in the next period, in revisited global and sectoral guidelines (SASB and management and through a survey submitted to a selected group long-term strategies, we carried adherence to the Sustainable Development GRI standards) and key financial industry indices of strategic suppliers, business partners, the community, customers out a materiality review. The 21 Goals that we chose to promote. The result (S&P, MSCI and ISS ESG), in addition to studies on and investors. trends produced by these indices and the World Economic Forum (WEF). This allowed us to deepen our understanding of the main emerging topics on the global stage. At the end of the in-depth interviews and online surveys, stakeholders were invited to assign a score from 1 (low relevance) to 5 (high relevance) for each of the 21 material topics. Weights were also assigned for the final balance of the scores depending on We also analyzed the Brazilian regulatory context the expressiveness of each audience for the business. The ratings (Central Bank, CVM and SUSEP) and other obtained in the survey made it possible to identify the relevance of international markets that have taken the forefront each topic for stakeholders and its impacts on business. on sustainability issues in recent years. Finally, we reviewed XP Inc.’s internal documents and policies. l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I topics submitted to the research of the materiality review was approved by were grouped into thematic blocks, the Audit Committee and Board of Directors, maintaining the philosophy adopted whose members made a commitment to in the previous materiality. In the the guidelines. end, the relevance of the four topics prioritized since 2020 was confirmed, and two new topics were added. 9 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 Our material topics ESG integration in processes, products and services Customer centricity, innovation and technology NEW Diversity and inclusion Create an internal environment that values and promotes Offer financial products and services, in the best interest of Ensure quality services, prioritizing customer focus and centrality diversity and inclusion and carry out actions that encourage the our clients, that promote solutions focused on ESG topics and through technological innovation. adoption of D&I practices in society and in relationships with our support the advancement of our clients on their sustainability different audiences. journeys. Ethics, human rights, compliance and transparency NEW Education and financial inclusion Data security and privacy Promote inclusion through mechanisms that facilitate access to Ensure security controls and data protection with public and Promote ethical conduct, human rights, compliance and financial products and services and, at the same time, contribute transparent policies and risk monitoring. transparency in our practices and in the value chain, with policies to expanding financial education in society, based on alliances with and processes to prevent, address and report practices such strategic partners. as money laundering and corruption, in addition to actions that ensure fairness and responsibility in all communication processes. 10 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Highlights of the year Our team Customer base Sustainable business 6.667 employees allocated to 4.5 million customers 17% R$13.4 billion in ESG assets Efficiency 4% cost reduction Dilution of costs vs. turnover 36,3% Efficiency Ratio 570bps better than the one recorded in 2022 Capital base R$15 billion in Tier I Capital different companies 14 thousand independent advisors throughout Brazil 1.4 million active digital accounts NPS 72 Social, Environmental and Climate Risk under custody 346% from 2020 to 2023 R$23.4 billion in green bonds issued 28% of the Investment Banking fixed income issuances linked to the green economy 38 ESG investment funds on our Business • 100% of the corporate and • 48,22% reduction in the platform private client portfolio to social, intensity of emissions financed environmental and climate scrutiny from the credit portfolio from R$1.1 trillion of client assets under custody 19% Profitability 14% growth in EBT (earnings before taxes) R$15.7 billion gross revenue R$21 billion in the credit portfolio R$3.9 billion net profit 23% • 100% of suppliers submitted to social, environmental and climate analysis • 100% of new products and services evaluated from a social, environmental and climate perspective 25.6% ROTE (Return On Tangible Equity) R$40 billion TPV Cards • 100% of Greenhouse Gas Emissions +17% in gross revenue from new neutralized R$20 billion net worth business verticals • Greenhouse gas inventory submitted 2021 to 2023, reaching 6.24 tons of carbon per each million of Reais invested • -2 percentage points in climate sensitivity of the credit portfolio from 2021 to 2023, reaching 12.72% • 100% of the energy consumed in Brazil comes from renewable sources, based on the purchase R$3.76 billion in assets under management by ESG funds 51 ESG products distributed on our platform 187 thousand clients with ESG investments 201% from 2020 to 2023 12% of all assets of individual clients in Brazil to external audit of i-Rec 11 Integrated Annual Report 2023 ABOUT XP We have built competitive advantages that have allowed us to expand our operations and generate a new experience based on finance, investments and information. 12 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Who we are GRI 2-1 Where we are A company created in 2001 in a small office in Porto Alegre (RS), which made financial education and the inclusion of Brazilians in the investment market the engine of its growth. In just over two decades, we have become one of the leading financial companies in the country, preserving the democratization of access to a wide range of financial services in our DNA. Headquarters • Cayman Islands Espaços XP • Manaus (AM) • Brasília (DF) • Fortaleza (CE) • Recife (PE) 487 outsourced offices that distribute products throughout Brazil Branch offices • Leblon and Botafogo (RJ) • Belo Horizonte (MG) • Miami • New York AM 1 RO 1 PA 3 MT 1 MS 1 MA 2 PI 2 CE 7 BA 12 RN 1 PB 2 PE 6 AL 1 SE 1 TO 1 DF 4 GO 9 MG 41 ES 5 SP 236 Main office • City of São Paulo PR 34 RS 33 SC 16 RJ 70 13 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S Our products and services Investments Large companies and capital markets • Public and private fixed income (bank securities, private credit and government • Issuances of local debt securities (CRI, CRA, CDCA, FIDC and LF), hybrid securities securities traded in the primary and secondary markets) (FII, FIP and FIAGRO) and international securities: bonds, private placements, • Variable income (shares, futures, listed funds, alternative funds, derivatives, structured notes) syndicated loans and structured private credit operations • Financial instruments such as swaps • Investment funds (+600) from XP Asset Management and third parties • OTC derivatives • International investments (dollarized fixed income, stocks, ETFs, REITs, ADRs) • Financial advice on IPO, follow-on, block trade and tender offer • Financial advisory • Mergers and acquisitions (M&A) i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Retail banking • Digital account • Rico and XP brand credit cards • Collateralized credit (with guarantee linked to the equity invested in XP) • Currency Exchange • Insurance (life and property and casualty insurance) • Private pension, with proprietary and third-party plans Institutional • Trading desks • Corporate access • Support staff 14 14 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S Our history n i y t i l a u Q i s p h s n o i t a e r l • XP Investimentos founded in Porto Alegre (RS) • Founding of XP Asset Management • Valued at R$500 million, • Valued at R$1.2 billion, XP XP receives a private equity receives a capital contribution investment of R$100 million of R$570 million from the from the British management management company company Actis General Atlantic • 70 thousand customers l a i c n a n F i d n a y g e t a r t S e c n a m r o f r e p t n e m e g a n a m 2002 2007 2011 2014 2001 2006 2010 2012 • Creation of XP Educação with a focus on financial education • Start of the Securities Brokerage, following the • Acquisition of Infomoney, the • Acquisition of Clear, a stock largest investment website brokerage focused on acquisitions of Manchester and in Latin America investor traders l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I AmericaInvest • #1 in the B3 ranking in asset volume among independent brokers • Launch of XP Securities in Miami (USA) 15 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I • Itaú Unibanco acquired 49% of XP shares, an investment of R$12 billion • Start of activities as a commercial bank • Introduction of digital account, XP credit and debit (Banco XP) cards, Rico credit card and life insurance • Reduced brokerage fees to support • Launches of international investment platform for investors retail and XTAGE for digital asset trading • Buyback of Itaú Unibanco shares 2016 2019 2021 2023 2017 2020 2022 • Largest independent securities • The largest IPO of a Brazilian • Launch of XP Inc. BDRs on B3 • Improvement in governance, with the brokerage in Brazil company at the time on Nasdaq (USA) • Announcement of the Itaú Unibanco • Acquisition of Rico, a 100% virtual • Company valued at R $62.5 billion spin-off investment platform • Introduction of the XP credit card, the departure of Itaú from the XP Board of Directors • R$1 trillion in client assets under custody first with investback in the country (a • Opening of the Nasdaq trading session on portion of purchases are transformed Expert XP. It was the first time in its 50- into investments) year history that Nasdaq opened its trading • Creation of the Instituto XP • XP is a sponsor-investor of the Olympic Committee and the Team Brazil session in Latin America 16 Integrated Annual Report 2023 VALUE CREATION We leverage the synergies provided by our ecosystem to offer financial solutions, information and education, helping to improve the lives of millions of people. 17 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S Our ecosystem GRI 2-6 I GRI 201-1 • Open investment platform • Public and private fixed income • Variable income • Asset issuances (local, hybrid and international debt securities) • Financial instruments such as swaps • OTC derivatives i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I • +600 investment funds from XP Asset Management • Financial advice on IPO, follow-on, block trade and OPA and third parties • International investments • Financial advisory • Mergers and acquisitions (M&A) • Digital account • Rico and XP brand credit cards • Collateralized credit (with guarantee linked to the equity invested in XP) • Currency Exchange • Insurance (life and property and casualty insurance) • Private pension, with proprietary and third- party plans • Trading desks • Corporate access • Support teams • Financial content • Financial education • Training of advisors • Technology and AI training • Training in data science for the financial market • Multi+ Platform 18 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S XP Investimentos Foreign Exchange Broker is the main entity of the XP Group, with the highest The largest and most complete communication ecosystem specialized in economics, finance, investments concentration of employees. It provides securities brokerage and private securities issuance services and business in the country has been part of XP Inc. since 2011. With a loyal and engaged community of to institutional and corporate clients. It offers a wide variety of products and services tailored to each more than 70 million readers, InfoMoney produces quality content across all formats and on dozens of client profile, accessed through the investment platform. platforms. Banco XP S.A. Authorized to operate by the Central Bank on October 11, 2019, Banco XP does business as a multiple bank with commercial and investment activities, in addition to carrying out transactions in the foreign exchange market. Since then, it has been expanding its range of products and services, including digital accounts, An investment platform created in 2011 and integrated into XP in 2016 as part of our objective of Rico and XP branded credit cards, life and property insurance, both proprietary and from other insurers empowering Brazilians to manage their financial lives. It offers straightforward, quality content to guide in the market. It also offers solutions for planning retirement, with its proprietary and third-party private and empower customers when choosing their investments through the website or app. It also offers pension plans. financial services, such as a digital current account. l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Founded shortly after the creation of XP, in 2003, XP Educação is the result of the integration of two The first company to offer zero brokerage fees in Brazil, primarily serving traders (professional investors), schools: IGTI, which became a reference in technology education, and Xpeed, XP’s finance school. The offering the best experience with zero brokerage and custody fees. Founded in 2012, it was acquired by platform offers undergraduate, graduate and bootcamp courses for professionals who wish to excel XP in 2014, receiving strong investments in technological infrastructure. It then began distributing fixed in the digital economy, graduate courses in technology with artificial intelligence, a training journey income assets and trading platforms. for investment advisors with undergraduate, graduate and bootcamps, and another in data science for the financial market. It also offers open and free courses. Some of the content can be accessed by subscription through the Multi+ program. 19 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Expert XP platform An investment content platform for beginners and experts. It features a research group with more than 30 experts supporting retail clients in Portuguese and institutional clients in English. It offers a wide range of content, which includes insights on fixed income, stocks, funds, REITs, asset allocation, economics and politics, among others. The largest investment event in Latin America, held annually and assembles financial market professionals and executives, public sector leaders, investors, experts in economics and finance, entrepreneurs and influential personalities to discuss trends, investment strategies, business opportunities, and other subjects. • + 126.2 thousand participants in 2023 • 188 sponsors • 250 journalists covering the event • + 2.4 thousand articles published in the media 20 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Value creation model CAPITAL INPUTS | RESOURCES OUTPUTS | RESULTS Human 6.667 employees +6 billion added to staff in the form of Meritocracy-focused management 63 eNP Training of leaders and employees Context of the environment in which we operate in 2023 • Highly regulated market (BACEN/ +14 thousand highly specialized 12th place in Interbrand’s ranking of the most valuable brands in • Increase of ESG regulations and Best investment advisory in Brazil, according to Datafolha CVM/SUSEP) Intellectual financial advisors Employer branding Financial Total revenue R$15.7 billion Affordable financial products and financial education Social Taxes Natural Tax incentive laws Risk analysis processes ESG Governance Calculation of emissions in scopes 1, 2 and 3 Growth of distribution channels Manufactured Digital technologies and innovations BUSINESS MODEL Culture focused on the customer, innovation, continuous improvement and entrepreneurial spirit Brazil demands from regulators and Winner of the “Canal Investimentos” category of the iBest 2023 investors award by popular vote • Population with access to Net earnings of R$3.9 billion, an increase of 9% compared to investments in Brazil 2022 Financial and technological education through Instituto XP • High demand for skilled labor and need to attract talent Partnerships with local agents focused on educational solutions • Uncertain macroeconomic outlook, National Award and Financial Education Tournament Sustainable investment solutions Distribution of products labeled as ESG ESG education for stakeholders Cutting-edge digital products and services that address customer needs characterized by deteriorating credit, downturn in corporate investments, default, high interest rates 21 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Distribution of value added GRI 201-1 In 2023, the direct value added generated by our ecosystem totaled R$15.4 billion, positively impacting society, through the collection of taxes, employees, with salaries, benefits and charges, the longevity of the business, with adequate compensation on equity, and customers, in the form of compensation on third-parties capital. Direct Economic Value Generated (R$ billion) 2021 2022 2023 13 14.2 15.4 Distribution of Value Added Year 2021 2022 2023 Personnel and charges Compensation on equity Taxes, fees and contributions Compensation on third-parties capital 37% 46% 40% 41% 42% 42% 20% 7% 11% 2% 5% 7% 22 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S Voluntary commitments and participation in external forums GRI 2-28 i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I We are signatories to the Principles for Responsible Investment (PRI), the UN Global Compact, the Carbon Disclosure Project (CDP) and the Partnership for Carbon Accounting Financials (PCAF), which is a partnership among financial institutions with the objective of developing harmonized methodologies for measuring Greenhouse Gas Emissions. PCAF is the most renowned initiative regarding the measurement of financed emissions, being recommended by the Task Force on Climate-Related Financial Disclosures (TCFD) for disclosure of financed emissions. We have also joined the Climate Commitment, an initiative by Instituto Ekos Brasil that connects companies interested in offsetting their Greenhouse Gas Emissions and projects dedicated to generating social and environmental benefits. We have also assumed voluntary commitments in the areas of diversity, human rights and gender equality, subscribing to the following institutions: UN Women, Mover (Civil Association of the Racial Equity Movement), Pact for Racial Equity, Rede Reis (Business Network for the Inclusion of Disabled people). NEW 23 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Sector development We work alongside class and sector organizations, contributing to relevant topics for the market. At the Brazilian Association of Banks (ABBC), we are coordinators of the Socio-environmental and Climate Risk Commission, which aims to monitor, evaluate and supervise aspects related to good socio-environmental management practices, standardized by regulatory bodies, aimed at strengthening concepts and standards applicable to financial institutions. In the Financial Innovation Lab, we participate in the ESG Risks working group. We also took part in the ESG Integration Commission (CIASG) of the National Confederation of General Insurance, Private Pension and Life Companies (CNseg), with the aim of supporting companies in the insurance sector to incorporate the best market conduct practices. We participate in working groups of the Brazilian Association of Financial and Capital Market Entities (Anbima), related to the Carbon Market, ESG Funds and CMN Resolution 4945. At the Brazilian Federation of Banks (Febraban), we are active in the ESG Committee and four other working groups that focus on specific issues: Climate Squad: develops and implements climate finance management tools, discussing the assessment of physical and transition risk, the measurement of climate sensitivity and financed emissions from the credit portfolio. Regulation Squad: dedicated to discussions and adaptations to new Central Bank regulations, such as the implementation of the loss basis and stress testing.. Sustainable Finance Squad: works to expand knowledge in sustainable finance, promoting debates and training on sustainable debt instruments and corporate credit. Deforestation Squad: discusses the management of deforestation risks in agricultural chains in different segments of banking operations. 24 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Recognitions Best investment Advisory in Brazil Among the most valuable brands in Brazil According to a survey by the consulting firm Interbrand, XP placed 12th in the ranking of the most valuable brands in Brazil. XP was selected as the top investment advisor in Brazil in the “The Best of the Internet” award, sponsored by Folha de S. Paulo. It was also recognized, for the fifth consecutive year, as the best investment advisor Asset leader in number of shareholders in São Paulo in the “The Best of São Paulo” award, from the same media outlet. In a survey conducted by the Trademap platform at the request of Valor Econômico, XP Asset saw the highest growth in the number of shareholders in the liquid funds market in the 1st half of 2023. Top of Mind Santa Catarina We were the investment company most remembered by people from Santa Catarina, in the Top of Mind Largest independent manager survey carried out by the NSC Group. XP Asset was the largest independent manager and the seventh largest asset manager in the country in the Top Asset ranking from Investidor Institucional Magazine. Best credit cards in Brazil The XP Visa Infinite and XP Visa Infinite One were chosen as the best credit cards in Brazil in a ranking Among the best ESG Research in Brazil by the website Melhores Cartões (Best Cards), in a survey carried out at the request of Valor Investe. We are among the top ESG Research teams in Brazil in the Institutional Investor ranking. In addition, our Features such as better benefits, lower interest rates and travel advantages, among others, gained Head of ESG Research, Marcella Ungaretti, was selected as the best ESG Research analyst in the country. prominence. Most innovative investment platform in Brazil iBest 2023 By popular vote, XP was the winner of the Investment Channel category at iBest 2023 awards. InfoMoney In the award sponsored by the Escola Superior de Propaganda e Marketing (ESPM), winning the majority was also the winner in the same category in the iBest Academy vote, made up of a jury of experts, of votes from more than 500 undergraduate students at the university. entrepreneurs and personalities from the digital world. 25 Integrated Annual Report 2023 STRATEGY AND MANAGEMENT What drives us is the purpose of transforming the financial market in order to improve people’s lives. 26 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q l a i c n a n F i i s p h s n o i t a e r l e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Culture Our value proposition Our history is deeply connected to the transformation of the financial market in the country. With a pioneering spirit and a belief that nothing is impossible, we worked to educate investors and created the • We are trailblazers first platform to give them autonomy to choose how and where to invest the money set aside to achieve We build our future with our own hands, tirelessly. We’re proud of what we’ve done and even their life goals. Breaking with the banking standards that had been in place, we reduced and eliminated prouder of what’s to come. fees that penalized returns. By dreaming together with Brazilians, we have become one of the largest financial institutions in the country. And we continue in our determination to broaden our services and grow, thereby promoting • We are transformers the development of people and the country. We seek agility, efficiency and transformation capacity, and spare no effort to adapt to the new. Our values • We are determined Entrepreneurial Spirit We build the future with our own hands with the highest level of commitment and sense of ownership. Client Focus We are determined to exceed our clients’ expectations, always putting them first in our decisions. Open Mind Our openness to new possibilities and our ability to adapt are features that make us evolve and always improve. Big Dream We aim at the impossible, we believe that it can come true, and we can get there together, one step at a time. Behind extraordinary challenges, there are people willing to achieve them, thirsty to learn and open to new opportunities every day. • We are powerful and plural teams What drives us in the same direction is our ambition to do more and be better. We are a powerful combination of different experiences, skills and backgrounds, which results in high performance. 27 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q l a i c n a n F i i s p h s n o i t a e r l e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Long term vision Competitive advantages Our long-term strategy is centered on three verticals: investments, cross-selling and wholesale trend of large global markets, where much of the investment movement takes place outside banks. We banking. In investments, the objective is to expand market share, focusing on high-income anticipated this movement and, in this process, promoted the democratization of access to financial audiences (private banking and retail). We want to use our experience and knowledge to achieve services, with technological solutions, innovation in services and exemption from fees and charges. This leadership in this segment, with different models to serve each customer profile. boldness stimulated the creation of new market parameters, benefiting the consumer, and is the basis In the early days of XP, we could see that the Brazilian financial sector would, sooner or later, follow the of our competitive advantages. We plan to capture a 15% share of the investment volume from individuals and companies - by the end of 2023, this share stood at 11.6%. This will be achieved both by acquiring new customers and increasing the investment share from our current client base . We also want to take advantage of the full potential of cross-selling to expand the penetration Differentiated technology Synergistic distribution system of new products and services such as digital current accounts, insurance, foreign exchange, We have a proprietary cloud-based platform that We offer products and services through our omni international accounts and credit cards in the customer base. We ended 2023 with R$15 billion allows us to innovate and compete efficiently. We channel distribution network, which generates in revenue and we believe it is possible to reach R$26 billion in three years, adding R$2 to R$3 develop data-driven tools and solutions to support a powerful network effect, integrating the retail, billion from cross-selling. In wholesale banking, the focus is on middle market companies, with revenues of over R$200 million. We started with investment banking and added services to these clients. With a holistic view of your needs, we created a journey that makes access to a broad marketplace of financial products and services even easier. One of our differences in this area is our significant reach in the distribution of products for retail. the customer and operate with advantages, institutional, large corporate and capital market efficiency and reduced costs. segments. Premium services available to everyone Specialized financial advisory service At the heart of these pillars is the commitment to a quality culture, our third wave of differentiation. We have made services available to all customers We have a highly qualified team of advisors It encompasses the continuous improvement of all processes and relationships, including that had traditionally only been available to high- who support all corporate clients, from retail to corporate governance, internal climate and employee satisfaction, customer centrality, business income customers at other institutions, such institutional, helping them access international environmental performance and relationships with different actors in society. as financial advisors. We thereby create a more financial services and structuring and issuing inclusive and scalable financial ecosystem. financial products for corporate clients and issuers, among others. 28 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l ESG strategy Good social, environmental and governance practices contribute to business continuity, strengthening the XP brand and generating long-term financial results. With this perspective and guided by the Social, Our Manifest Environmental and Climate Responsibility Policy (PRSAC) (page 127), we have broken down our material To deliver the best solutions for our customers, we need to go beyond and topics into concrete goals and actions to accelerate the ESG agenda in our activities and relationships. understand how these solutions leave a positive legacy for our society. We created an ESG area that, since 2020, has supported the company’s different sectors and businesses in this endeavor, and we have made significant inroads on the aspects that we have decided to prioritize, Changes are necessary and urgent. But for transformation to happen, we cannot rely only on the government and specific initiatives. We all need to be each time involving senior management. protagonists in building a better world. l a i c n a n F i e c n a m r o f r e p We build policies and training that provide a basis for the actions of our professionals and business partners, adhere to public commitments (page 23), structure proprietary methodologies for social, environmental and climate risk analysis that are now divulged in our customer onboarding, approval processes of suppliers, partners and collaborators, development of new products and services and application for credit, foreign exchange and investment products (page 49). We expanded the offer of sustainable products to customers (page 48), developed our proprietary ESG system (page 50) and, internally, began to manage and work to reduce consumption of resources and We recognize our role in supporting the transition to a more sustainable world. We know this is a journey. It will be walked together with our employees, customers, investors, partners, and the market. We are a company of people for people. Therefore, we want to inspire Brazilians on the journey of transforming Brazil. We believe that investments generate value for society and the environment. We want to increase the knowledge, engagement, and development of effective solutions so that the ESG agenda is at the core of business models and decision- Greenhouse Gas Emissions (page 86). We increased the diversity of our employees (page 70), improved making processes. governance and strengthened compliance and risk structures and processes (page 106), entrenching a solid ESG culture in our ecosystem. Make investments your voice. This course was driven by goals related to the themes defined in our first materiality carried out in 2020. At the beginning of 2024, after updating our material topics, we began to operate according to six pillars of action. In this process, we recalibrated the goals and defined another 34, all aligned with the United Nations (UN) Sustainable Development Goals, with general and specific objectives, guiding our management of risks and opportunities to take our business to a new ESG level in the coming years. 29 d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Goals and challenges linked to material topics ESG integration in processes, products and services Our goals How we evolved between 2020 and 2023 Key initiatives 25% of Investment Banking fixed income issuances classified as ESG by 2025. Have the largest ESG product platform in the country By the end of 2023, 28% of our Investment Banking fixed Structuring of Green Bonds, Social Bonds and Sustainability-Linked Bonds, according to the income issuances were classified as ESG. guidelines issued by ICMA (International Capital Market Association). R$23.4 billion in green bonds issued. Structuring of a proprietary framework for ESG issuances (see page 50). 51 ESG products distributed on our platform. We created the ESG Products area to engage and qualify the company in ESG business R$13.4 billion in ESG assets under custody. opportunities. 38 ESG investment funds on our platform. We created an award for the offices that have distributed more ESG products between 2020 and R$3.76 billion in assets under management by ESG funds. 2022. 187 thousand clients with ESG investments. In 2023, we developed our ESG dashboard to follow the monthly evolution of business (page 49). Increase ESG coverage of companies covered by We closed 2023 with a coverage of 88% of companies We published reports focused on ESG matters and held meetings with institutional investors, as the Research area. covered by the Research area. well as events on subjects of interest for the investors (page 55). Be recognized as the best ESG Research in the country. We stood among the best ESG Research teams in Brazil in XP was the first investment company in Brazil with an area dedicated to the analysis of the the ranking of “Investidor Institucional.” environmental, social and governance performance of publicly held companies and identification Our Head of ESG Research was appointed the best ESG of major topics that are shaping this agenda (page 55). Research analyst in the country. Since 2021, we have maintained a recommended ESG portfolio. 30 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q l a i c n a n F i i s p h s n o i t a e r l e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Our goals How we evolved between 2020 and 2023 Key initiatives Perform ESG integration in investment analyses in 93.4% ESG integration in the investment analyses of XP We are signatories to the Principles for Responsible Investment (PRI). 100% of XP Managers by 2025. Managers in 2023. Responsible Investment Policy with guidelines for ESG integration by the managers. Perform ESG integration in 100% of the investment processes of XP Vida e Previdência (XPV&P) by 2025. 100% ESG integration in the investment processes of Social, Environmental and Climate Responsibility of XPV&P with guidelines for ESG integration in XPV&P by the end of 2023. investments. We are signatories to the Partnership for Carbon Accounting Financials (PCAF). Reduce the intensity of GHG emissions of the Emissions of the corporate credit portfolio from 2021 to corporate credit portfolio by 2030. 2023, reaching 6.24 tons of carbon per each million of credit portfolio and monitoring the managerial index of intensity of Greenhouse Gas Emissions. We have developed an internal climate transition plan, with specific targets for reduction of We reduced by 48.22% the intensity of Greenhouse Gas Since 2021, we have been calculating and reporting the financed emissions of our corporate Reais invested. emissions. Maintain the assessment of the climate sensitivity of the corporate credit portfolio within the climate risk appetite. Goal achieved. Reduction of 2 percentage points in climate intensity between 2021 and 2023. In 2023, we included a climate risk indicator in the company’s RAS. We used the methodology that has been developed together with Febraban (Brazilian Federation of Banks) since 2021, to calculate the climate sensitivity of the corporate credit portfolio (page 91). In 2023, we included this indicator in the company’s RAS and established exposure limits. Include at least one social, environmental and In 2023, we included 2 social, environmental and climate We set up the Social, Environmental and Climate Risk Commission, whose members include the climate indicator in the company's RAS. indicators in the company’s RAS. company’s CRO (Chief Revenue Officer). 100% of customers evaluated from the perspective of social, environmental and climate risks. 100% of our customers were evaluated from this We have structured manual and automated assessment processes that are used in accordance perspective by the end of 2023. with factors involving the importance, proportionality, and relationship or transaction risks. We have developed proprietary methodologies to assess the social, environmental and climate risk. We developed a proprietary system for social, environmental and climate analysis and monitoring of relationships and transactions. 31 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l Our goals How we evolved between 2020 and 2023 Key initiatives Proprietary evaluation methodology. 100% of suppliers evaluated from the perspective 100% of suppliers were evaluated from this perspective Inclusion of social and environmental clauses in agreements and contracting instruments. of social, environmental and climate risks. by the end of 2023. Engagement of a suppliers’ platform that generates an ESG score and incorporates our proprietary analysis platform. 100% of new products and services evaluated from the perspective of social, environmental and climate risks. 100% of new products and services were evaluated under Integrated assessment of social, environmental and climate risks into the evaluation process of this perspective in 2023. new products and services. l a i c n a n F i e c n a m r o f r e p Reduce Greenhouse Gas Emissions (scope 1, 2 and We reduced our Greenhouse Gas Emissions (scope 1, 2 and 3) based on 2020. 3) by 13.57% from 2020 to 2023. We have been conducting greenhouse gas inventory since 2019. We have neutralized our GHG emissions since 2019. In 2023, we engaged a consulting firm that helped us refine the methodology and calculation of emissions, which resulted in a reduction of emissions, based on the year 2020. In 2023, for the first time, we submitted our inventory to independent auditors. The neutralization is determined according to the inventory of emissions. In 2023, it was carried out through the purchase of carbon credits and RECs. We have defined a methodology to calculate the internal price of carbon (page 87). Neutralize 100% of Greenhouse Gas Emissions We neutralized 100% of our Greenhouse Gas Emissions (scope 1, 2 and 3). (scope 1, 2 e 3) since 2019. 100% of the energy consumed in Brazil, within the scope of the greenhouse gas inventory, is sourced from renewable energy, based on the purchase of i-Rec. Reduce water consumption based on 2020. In 2023, 100% of the energy consumed in Brazil, within the scope of the greenhouse gas inventory, was sourced Purchase of i-Rec to neutralize part of our emissions. from renewable energy, based on the purchase of i-Rec. We continue trying to reduce consumption, which increased between 2022 and 2023 due to the engagement of 1,472 new employees and inclusion of data regarding our offices, which had not been calculated before. Adoption of the system for input and monitoring of consumption as from 2024. 32 d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q l a i c n a n F i i s p h s n o i t a e r l e c n a m r o f r e p Our goals How we evolved between 2020 and 2023 Key initiatives Reduce electricity consumption based on 2020. Reduce solid waste generation based on 2020. We continue trying to reduce consumption, which increased between 2022 and 2023 due to the engagement of new employees in the period, and inclusion of new data regarding offices that had not been calculated before. We continue trying to reduce consumption, which increased between 2022 and 2023 due to the engagement of new employees in the period, and inclusion of new data regarding offices that had not been calculated before. We observed an increase in the total volume of waste destined for recycling. Adoption of the system for input and monitoring of consumption as from 2024. Adoption of the system for input and monitoring of consumption as from 2024. d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Ethics, human rights, compliance and transparency Our goals How we evolved between 2020 and 2023 Key initiatives Provide a public reporting channel accessible to all stakeholders. 100% transparency of the compliance and governance structure. Public reporting channel accessible to all stakeholders. In 2023, we intensified the internal and external disclosure of our Public reporting channel. Goal achieved in 2023. Public disclosure of the compliance and governance structure in the Integrated Report. 100% of the high-risk value chain trained in ethics We reached 100% of the high-risk value chain trained in Mandatory training programs and booklets on ethics and integrity for the whole high-risk value and integrity. ethics and integrity in 2023. chain. 33 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Our goals How we evolved between 2020 and 2023 Key initiatives 100% full remuneration for Senior Management. 100% full remuneration for Senior Management. In 2023, we started to develop the Conduct Score project, which included integrity criteria in the process of remuneration for 100% of our Senior Management. 100% of employees trained in compliance, risks, In 2023, 100% of collaborators were trained in these Inclusion of compliance, risk, reporting channel and ESG topics in mandatory training programs reporting channels and ESG. topics. for all areas of the company. Zero complaints arising from cases of corruption. We have not recorded any complaints arising from cases Awareness actions, with lives about the Reporting Channel, and the Compliance Week, among of corruption. other initiatives. 36.9% increase the number of advisors trained in Increase the number of advisors trained in governance and integrity from 2021 to 2023. governance and integrity 7,523 investment advisors were trained on the topic in We intensified the training programs on this topic for our investment advisors. 2023. Increase the number of offices with the 65.3% increase the number of offices with the Governance and Integrity Seal Governance and Integrity Seal from 2021 to 2023. Apply disciplinary measures in cases of harassment. 100% resolution of complaints in the confidential channel. The penalties include the dismissal of employees and advisors, warnings and fines, in the case of partner offices. This goal is being achieved. Zero cases of corruption involving public and We have not recorded corruption cases involving public private agents. and private agents. Intensification of training programs and promotion of the Governance and Integrity Seal. Awareness actions, with lives about the Reporting Channel, and the Compliance Week, among other initiatives. Bimonthly monitoring of volumetry and complex cases by the Ethics Committee and the Board of Directors. Awareness actions about the topic. Development of a Human Rights Policy Goal achieved in the beginning of 2024. We have published our Human Rights Policy. Inclusion of the topic of Human Rights in our Code of Ethics and Conduct Improve the corporate governance, with a majority of independent directors in the Board of Directors. Goal achieved in the beginning of 2024. We have included the topic in our Code of Ethics and Conduct. Goal achieved in May 2024, when the Board of Directors We engaged an international consulting firm that supported us in our search for executives and started to count on an independent majority of members. directors with complementary expertise, and restructuring of our corporate governance. Have at least two representatives of social The Board of Directors has two representatives of social Among other matters, the governance restructuring process focused on the maintenance of minorities in the Board of Directors. minorities since 2019. diversity in the Board. 34 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Customer centricity, innovation and technology Our goals How we evolved between 2020 and 2023 Key initiatives Increase the customer satisfaction levels. We are working on increasing our NPS (Net Promoter We have evolved in the creation of a Customer Centricity framework by launching the CX Days Score), which has dropped in the last two years. initiative (page 60). Quality was placed at the heart of our strategic pillars, being our third wave of differentiation. The NPS is now used as a senior management performance metrics. l a i c n a n F i e c n a m r o f r e p Increase the level of employee satisfaction. Increase of 3 points in the eNPS (Employee Net Promoter Score) in 2023. Implementation of a hybrid and flexible working model. Half-yearly 360° Assessment. Bimonthly Pulse Survey. Market survey to assess salary attractiveness. All employees are eligible for the Partnership Program. Education and financial inclusion Our goals How we evolved between 2020 and 2023 Key initiatives Impact 50 million people through financial 11.2 million individuals directly impacted by our financial education initiatives by 2030. education initiatives from 2021 to 2023. Educação Financeira Transforma award, Tino Econômico newspaper, content in partnership with Instituto Kondzilla, XP Educação courses, partnership with Favelado Investidor, Guaranteed Education project. 35 35 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l Our goals How we evolved between 2020 and 2023 Key initiatives Strengthen technological solutions to expand Brazilians’ access to financial products and services. We have a proprietary cloud-based platform that allows us to innovate and compete efficiently. We develop data-driven tools and solutions to support the customer and operate with advantages, efficiency and reduced costs. Creation of Digital First, anchored in the intensive use of technology, with digital advisory and greater scalability. Matcher XP, which supports the engagement of qualified professionals. XP Gênio, which supports investors in choosing their investments with enhanced risk control. Creation of the Technology Governance and Information Security team. Preparation of our platform to process, in an integrated manner, our own-branded products and services, such as XP, Rico and Clear, as well as those of our business partners. l a i c n a n F i e c n a m r o f r e p Diversity and Inclusion d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Our goals How we evolved between 2020 and 2023 Key initiatives 40% of women in the workforce by 2030. 24% of black people in the internal population Increase of 7.9 percentage points in the number of women at the company between 2020 and 2023. Increase of 14.7 percentage points in the number of women in leadership positions in the same period. Increase of 2.4 percentage points in the number of blacks compared to 2020. Review of goals, keeping the commitment to reach new diversity levels in the coming years. Hiring and promotion processes focused on the elimination of biases and subjectivity in decisions. Training on biases. Inclusion of the topic in corporate training programs. 15% black people in leadership. Increase of 10.5 percentage points compared to 2020. Lives organized by Affinity Groups about discrimination, harassment, career challenges for black Exceed 5% of people with disabilities working at Increase of 0.6 percentage points in people with people, people with disabilities, LGBTQIAPN+ and use of the Reporting Channel. the company. disabilities compared to 2020. 36 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p Data security and privacy Our goals How we evolved between 2020 and 2023 Key initiatives Public data privacy policies. 100% of our Data Privacy Policies are public. Publishing and disclosure of policies. Maintain best practices to ensure data security. Technology and Information Security area, with more than 1.4 thousand professionals. Process supported by controls at all levels of the IT infrastructure, regular risk and vulnerability assessments, prevention, detection and incident response measures. Disclosure of functionalities that contribute to the security of personal data. d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I 37 37 Integrated Annual Report 2023 FINANCIAL PERFORMANCE Leveraging cutting-edge technologies, we have gained traction and developed the operational skills necessary to scale the business and continue growing over time. 38 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I More than 22 years ago, we began as independent financial advisors in a 25 m² office in Porto Alegre Fenaprevi (National Federation of Private Pensions and Life) and other sources, accounting for more (RS). Today, we are one of the largest investment platforms in Brazil, owner of the brands XP, Rico, than 4.5 million active clients and R$ 1.1 trillion in assets under custody. Clear, Infomoney and, more recently, Modal. Currently, our largest share is in the group of mid-range clients (with more than R$300,000 in To build our business from the ground up while competing with traditional banks, we dedicated investments), where the work of investment advisors is concentrated. To increase participation in the ourselves to leveraging cutting-edge technologies that helped us stand out and develop the operational range of large investors (over R$10 million), we have customized flows and processes, and created skills needed to scale. Over the last few years, we have invested in managing people and optimizing products such as exclusive funds. For small investors (less than R$300,000), we created the digital processes by adopting agile methodologies. We increased our range of products and services and first project, anchored in the intense use of technology, with digital advice and greater scalability. The strive to find new opportunities and solutions to serve Brazilian investors, making strategic alliances digital first was initially implemented at Rico, one of the group’s brands, and then, at XP. to foster the innovation process. The open nature of our product platform was a key driver of XP’s early success. Until then, traditional financial institutions in Brazil used to favor closed-loop models that significantly restricted the selection of investment products made available to clients. We bring about disruptive innovation by facilitating market disintermediation, breaking with the conventional model. We began to educate new classes of investors, democratizing access to a wider range of financial services, developing new products and using technology to empower our clients and offer the best service and experience in the sector in Brazil. With the mission of providing financial solutions, information and education to improve people’s lives, we have a robust ecosystem that has 6,667 employees allocated to companies in various sectors. We boast a network of more than 14 thousand independent investment advisors throughout Brazil, a growth of 18% compared to December 2022, in addition to a solid corporate structure that allows us to operate in different segments and countries with relevance and efficiency. Accordingly, we have strengthened our growth strategy, anchored in three pillars: expansion of market share in the investment segment; advancement in new business fronts, such as insurance, credit cards and banking operations (traditional checking account); and growth of wholesale banking operations. Today, our client assets represent almost 9% of a market totaling R$12.6 trillion, according to internal research and public data from Anbima (Brazilian Association of Financial and Capital Market Entities), 39 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I 2022. It was also a year of pronounced growth in our new Retail verticals, which include Cards, Credit, Insurance and Pensions, helping us to address the negative impacts of the economic environment on goals. financial planning, which maps the client’s needs in a broader way. This has provided us the tools to carry out strategic planning and Share buyback program deliver an investment portfolio that helps clients achieve their Our Board of Directors approved a new share buyback Key highlights in results for the year Despite the macroeconomic challenges, 2023 brought about major We have also created a central allocation area that is linked to achievements that proved the resilience of our business model. the Research department. Today, we have a CIO (Chief Information We surpassed the R$1 trillion mark in client assets, confirming our Officer) with access to all areas of the company; we reworked client growing presence in the market and the trust that our clients place segmentation and revised the incentive model for investment in us. Our net income was R$3.9 billion, an increase of 9% over advisors to generate greater alignment. We have also created our core business. These revenues grew by 43% compared to the We ended the year with a drop of 21% in institutional revenue previous year, reaching R$1.7 billion, and contributing to 11% of our compared to 2022, due to lower volumes in B3. On the other hand, global gross revenue. We managed to meet our efficiency projections, reducing our administrative expenses by 4%, totaling R$5.4 billion, and remaining within our annual expense guidance for 2023, which revenue from large companies and capital markets was R$1,576 million, posting a 22% jump year-on-year, with a resumption of market activity and the contribution of mergers and acquisitions (M&A). was between R$5 billion and R$5.5 billion. It was also the period in which we distributed the most dividends to We completed the Banco Modal integration process, which marked a significant step in our journey, expanding our capacity, and improving the set of banking and investment products and services. our shareholders, totaling around R$4.5 billion, including dividends and share buybacks. For 2024, we will continue to expand the range of services that had previously been restricted to private clients to a broader audience, thereby gaining scale in a more inclusive financial ecosystem. program, which is intended to neutralize future shareholding dilutions due to the long-term incentive plan for our employees. Under the approved program for 2024, we may repurchase up to 2.5 million Class A common shares in the period from February 28 to December 27, 2024. Our Board will periodically review the buyback program and may authorize adjustments to its terms and size, or suspend or discontinue the program. 40 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Our revenue lines 5% other 75% Retail Administration fees, brokerage fees, rebates, spreads, distribution revenues, exchange and others of gross revenue 10% Large companies & capital markets Commissions, spreads and other income 10% Institutional Commissions, spreads and other income Efficiency Ratio 2021 2022 2023 See the next page for the highlights in major business fronts in 2023. 39.2% 42.0% 36.3% 41 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I XP Investimentos Today, we have 11.6% of assets of individual clients in Brazil. Investors can access our services in different ways: through the direct channels of XP companies, Rico or Clear, or through more than 14,000 independent investment advisors who work in 487 offices throughout Brazil. Our strategy encompasses a broad spectrum of distribution channels, including B2B, B2C, wealth managers, broker as a service and advisors, allowing us to reach a diverse client base and address their unique needs. This diversification allows us to be at the forefront of the financial services industry, adapting to changes and seizing opportunities with agility and vision. Retail bank In 2023, we posted a 16% growth in our retail revenue compared to the same period of the previous year, totaling R$11.8 billion, which represented 76% of our consolidated result. Some factors contributed to this growth, including revenues from float, digital accounts, and fixed income, after a strong recovery in DCM activity in the second half, in addition to cards. Another new feature was the introduction of the global account, with solutions for currency conversion, transfers and payments in dollars, roughly one year after the creation of the international investment account, which allows clients to make investments directly abroad. Gross revenue (in R$ million) 2021 2022 2023 9,793 10,157 11,791 42 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Cards XP is among the 15 leading issuers in the country according to data from the specialized publication Cardmonitor, and our credit card was voted the best in Brazil in a ranking from the website Melhores Cartões. We offer our customers one of the lowest interest rates on revolving credit in the market and zero annual fees, in addition to an “investback” of at least 1%, which allows a discount on all purchases, discounts on products from major brands, restaurants and services, as well as access to more than 1 thousand VIP lounges in 450 airports in 140 countries. The credit card is our most successful cross-sell product, with 20% penetration. As part of the strategy of continuing to evolve our value proposition, we rolled out new benefits related to travel directly on the XP APP in partnership with the company BeFly, and new features to make our customers’ lives easier and boost security when using the card, such as the Virtual Card for single use. +1.1M customers with active cards, including credit and debit 69% revenue growth R$40 billions in transaction volume 285% of the amount recorded in 2022 43 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 Insurance and pensions The offer of insurance, pension plans and consortiums is part of our strategy of becoming an increasingly complete platform that addresses the different needs of our individual and corporate clients. We finished 2023 with 224,000 clients in pension plans and 54,000 clients in the insurance sector. We work in partnership with the largest insurance companies in the world and, adopting the open pension platform model, we allocate plan resources in more than 300 funds run in partnership with the best asset management houses on the market. The experience and number of funds and managers made available by XP Vida e a Previdência helped us become leaders in net market fundraising in the period from January 2021 to September 2023, with the majority of funding coming from portability. Our assets in pension funds topped R$56 billion, an annual increase of 23%. We ended the year with a portfolio of 180,000 customers. In the insurance segment, the first product we launched in 2022 was life insurance. Today, in addition Insurance | Gross revenue (in R$ mi) 2022 2023 97 149 +53% to this segment, our portfolio includes health and dental insurance, coverage for Pix, cell phones, cards Pension funds | Gross revenue (in R$ mi) and the so-called “mass insurance,” whose greatest demand is for products that provide financial protection for loss of income and those aimed at maintenance or equipment replacement, such as extended warranties. In 2023, we added coverage for decreasing death benefit, terminal illness and serious illnesses, with the possibility of signing up for products with a lifelong and temporary term. We also began to operate in the auto insurance market. 2022 2023 333 365 +10% 44 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Credit In 2023, we maintained our focus on the expansion of credit offer, increasing our portfolio of products and the concession thereof through distinct structures with increased relevance in the day-to-day lives of our clients. For example, we offer Credit with XP Collateral, which allows using investments as collateral for a more accessible credit, paying only at the end of the contract. This helps our clients to enhance their investments or increase the flexibility of their asset portfolio. We also began offering Expanded Investment, a dynamic credit limit that is calculated based on the client’s assets, providing the peace of mind of investing without restrictions. Our total credit portfolio totaled R$21 billion in 2023, representing an increase of 23% compared to the same period in 2022. We expect an increase of R$1 billion to R$2 billion in revenues from credit to companies in the corporate, medium- sized and small companies segments, reaching between R$1.8 billion and R$2.8 billion by 2026. Credit granting in 2023 (In R$ million) Loan by type Loan with assets pledged as collateral Retail Companies Credit card Loan with unsecured assets Retail Companies Credit card Total loan operations Expected credit loss Total loan operations 2023 24,845.243 12,366,330 7,054.507 5,424,406 4,036.646 764,712 959,898 2,312.036 2022 20,198.764 10,932.086 5,311.675 3,955.033 2,061.774 309,468 546,678 1,205,628 28,881.889 22,260.538 -329,954 28,551.935 -49,377 22,211.161 45 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I XP Asset Management XP Asset Management ended 2023 with over R$167 billion in assets under management. We offer a complete portfolio of products, structured into 13 strategies: Variable Income, Macro Multimarket, Fixed Income and Credit, Structured Credit, Special Situations, Infrastructure, Real Estate, Agro, Private Equity, Venture Capital, Alternative FoF, XP Advisory and Indexed and International. We have more than 165 qualified professionals dedicated to controlling risks and preserving the capital of more than four million investors, including institutions and individuals. Our commitment is to maintain responsible, ethical and transparent behavior in order to avoid conflicts and ethical deviations. To this end, we maintain our own policies and procedures based on concepts, business principles and rules relating to internal controls, conflicts of interest, control of privileged information, and confidentiality obligations. And our employees are trained on these topics. Our management strategies in numbers, as of December 2023 Fixed Income & Credit R$23,1 bi Structured Credit R$4,8 bi Special Situations R$5,3 bi Multi- Market Macro R$4,8 bi Variable Income R$3,6 bi Indexed & International R$37,7 bi XP Advisory R$43,3 bi Infrastructure R$2,6 bi Real Estate R$13,9 bi Agribusiness R$1,8 bi Alternative FoF R$1,7 bi Venture Capital R$0,8 bi Private Equity R$3,6 bi Wholesale bank Our wholesale bank is made up of six areas dedicated to assisting companies, institutional investors and private clients: XP Corporate, XP Private, XP Investment Banking, Institutional Relations, XP International and Research. Our focus is to ensure a unified, more strategic journey to clients of this segment, based on a single ecosystem that helps them access a broad portfolio of financial products and services. In 2023, our revenue from large companies and capital markets increased by 22% compared to the previous year, totaling R$1.6 billion, which represented 7% of the consolidated result. Growth was driven by a strong resumption of Debt Capital Markets activity in the second half of the year, combined with the continued expansion of our Wholesale franchise. Strategies: XP Asset Management Report, as of 12/29/2023 46 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I A leading financial education platform 100% of startups with more than 1,000 employees include at least one in Brazil. We offer courses, MBAs and of our students in their teams learning tools related to the world of investing, from basic concepts to more sophisticated techniques and advanced strategies. We have developed an innovative teaching proposal that is fully integrated with companies and designed with an eye on the future. 50% of our students work in companies with over 1,000 employees 80% of the most valuable brands have professionals who graduated from XP Educação Courses offered by type 2022 2023 Undergraduate degree Graduate degree in technology Signature Total 5 21 1 27 5 20 1 26 Enrolled students 2022 403 2,869 7,403 10,675 Enrolled students 2023 0 2,981 3,457 6,438 Clear is a leading stock market broker in Brazil. Since it was acquired by XP Inc., in 2014, millions of Reais have been invested in infrastructure and systems, in addition to the launch of new business lines, such as distribution of fixed income assets and trading platforms. The brand offers support and specialized tools that allows traders of all backgrounds to perform at their maximum potential. It was the first broker to offer zero brokerage fees in Brazil. +R$25 BI in custody This is our 100% digital investment platform, which offers simple and uncomplicated content about the world of investments, as well as a complete portfolio of products. Since 2020, no brokerage fees are charged for online share trading, reinforcing the commitment to make investments available to more people in Brazil. +R$33 BI in custody 47 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Our communication ecosystem specializes in markets, investments and business. A pioneer in the digital universe since 2000, its mission is to simplify financial decisions and information, leading the debate on finance and business in the country in an innovative, technological and democratic way. In 2023, InfoMoney’s audience was the largest among the country’s leading investment information sites. There were 237 million visits, 9% higher than the visits to the second place (data from the platform SimilarWeb compiled by InfoMoney). The survey considered 32 investment, finance and business websites. Reach and views +1.9 BI Interactions and engagement +280 MI Users and followers +70 MI Views on Instagram +895 MI Views on X +86.3 MI Views on YouTube +151 MI Podcasts Downloaded +4.64 MI Sustainable Business FN-IB-410a.1 I FN-IB-410a.2 I FN-IB-410a.3 I FN-CB-410a.2 Understanding our role in promoting a low-carbon economy, we have prepared ourselves to support our customers in this transition. This is why we have developed a portfolio of ESG products, including investment funds, fixed and variable income assets and structured operations. We are also taking a social, environmental and climate perspective to new product areas in the Retail, Wholesale and Investment Banking segments. At XP Asset, the Responsible Investment Policy establishes guidelines for integrating environmental, social and corporate governance themes into the analysis, selection, evaluation, acquisition and monitoring activities of assets under management. In order to be classified as ESG, products undergo a due diligence process. Aligned with the Principles for Responsible Investments (PRI), of which we are signatories, in 2023 we reached 93.4% of assets submitted to ESG analysis and we continue to advance towards the goal of reaching 100%. To closely follow the evolution of sustainable business and our capacity to leverage the opportunities of the new economy, in 2023 we developed a dashboard for monthly monitoring of indicators such as ESG AuC (Assets under Custody), ESG AuM (Assets under Management), number of clients with ESG investments, new ESG products and the volume of ESG funding, among others. 48 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I 28% of Investment Banking fixed income issuances classified as ESG (linked to the green economy) R$13.4 billion in ESG-related Client Assets 187 thousand clients allocaed to ESG products 38 ESG investment funds Evolution of ESG investments 2021 2022 2023 ESG Assets under custody (AuC) R$8.8 billion R$12 billion R$13.4 billion % of the total portfolio 1.03 1.30 1.22 Number of clients with ESG investments 182 thousand 227 thousand 187 thousand Assets under management (AuM) of ESG Funds R$2.49 billion R$1.76 billion R$3.76 billion Investment banking fixed income operations (% of the total portfolio volume) 27,8% Green economy 28% Green economy 18,6% Green Bond, Social Bond, Climate Bond and Sustainability-Linked Bonds 19% Green Bond, Social Bond, Climate Bond and Sustainability-Linked Bonds 2022 8,7% Internal Methodology 2023 9,0% Internal Methodology 72,2% Traditional economy 72% Traditional economy 49 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 Framework of classification of fixed income issuances in line with the green economy In Investment Banking, the determination of issuances in line with the green economy follows a specific methodology. To be considered as such, issuances must meet the following criteria: 1. The issuer should not be involved in important disputes relating to social, environment and climate topics. Green Bonds We act as structuring agents in the issuance of 19 green and social bonds that are used to finance our clients’ ESG projects and initiatives. Among them, 10 were classified as Green Bonds, Social Bonds or Sustainability-Linked Bonds, in accordance with ICMA (International Capital Market Association) guidelines. For the other nine, we adopted our proprietary ESG emissions framework, which covers criteria such as the purpose of the transaction or eligible allocation for thematic issuance, verification of relevant 2. The activities of the issuer must be classified as contributing for the green economy, based controversies, sectors related to the green taxonomy and social, environmental and climate ratings. on the criteria of Febraban’s Green Taxonomy, following the guidelines that seek to improve human well-being, promote social equality and reduce environmental impacts. 3. The issuer must be analyzed by the ESG & Social, Environmental and Climate Risk team, which will assess the issuer’s environmental, social and climate quality. 4. The issuer must have an internal social, environmental and climate rating “A” or “B”, which indicates a low risk in these areas. This rating results from an owned methodology that considers the potential of social, environmental and climate impacts, the management capacity in these areas and the analysis of controversial notes and sectors. 5. The issuance should not involve any controversial purpose. The most representative issuances in 2023 include those made for Aegea Águas do Rio SPE 1 and 4, Rio+ Saneamento, Iguá RJ, Raízen and FS Bio. R$23.4 billion in green bonds 28% of total bonds issued in 2023 6. The issuer and the transaction must be monitored during the period of effectiveness. Offering Segment Product The issuances that meet these criteria are accounted for as being in line with the green economy, Aegea Águas do Rio SPE 1 and 4 Sanitation reflecting our commitment to sustainable and responsible practices. Rio+ Saneamento Sanitation Debentures Debentures Iguá RJ Raízen FS Bio TOTAL Infrastructure Debentures Logistics Agribusiness CRA CRA Total Volume (in R$ million) R$5,543 R$2,500 R$2,000 R$1,000 R$750 R$11,793 50 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Aegea Águas do Rio SPE 1 and 4 Iguá RJ Issuance of Incentive Debentures (12,431) for Águas do Rio 1 SPE S/A and Águas do Rio 4 SPE S/A, with surety by AEGEA Saneamento e Participações S/A. The funds will go to future payments or refund of expenditures, expenses or debts relating to investments in expansion and improvement of the water supply system, and implementation, expansion and improvement of the sewage system of the cities served Issuance of Simple Debentures for Iguá Saneamento Rio de Janeiro S.A., a concessionaire that manages and operates water supply and sewage systems in the states of Alagoas, Mato Grosso, Santa Catarina, São Paulo, Rio de Janeiro and Paraná. The net proceeds from the funding will be used in financing or refinancing investments that meet the eligibility criteria and relate to projects with environmental and social benefits. The offering relied on the independent opinion of Bureau Veritas Brasil, which attested the classification of the projects by the issuers in the State of Rio de Janeiro. The offering in the Sustainable Bonds Framework. relied on the independent opinion of Sustainalytics, which attested the classification of the projects in the Sustainable Finance Framework. Raízen Rio+ Saneamento In October 2023, Raízen Energia S.A. issued Agribusiness Receivables Certificates (CRA). The debentures that backed the CRA were classified as “green debentures” based on the commitment of the issuer to allocate the proceeds from the funding Issuance of Simple Debentures for Rio+Saneamento BL3 to projects aligned with the ESG Framework, with a second opinion issued by S.A., a water and sewage concessionaire of Rio de Janeiro. Sustainalytics and available on Raízen’s website. The net proceeds from the funding will be used in financing or refinancing development, renewal, installation, and expansion projects, and/or other capital expenses, as well as grant expenses, maintenance services and other operating expenses of the concessionaire. The offering relied on the independent opinion of Bureau Veritas Brasil, which attested the classification of the projects in the Sustainable Finance and Blue Framework. FS Bio FS Indústria de Biocombustíveis participated in the issuance of Agribusiness Receivables Certificates. The proceeds from the funding will be used in agribusiness activities, and were characterized as Sustainable/Green CRA, based on the certification issued by the Climate Bonds Initiative (CBI), attesting the compliance with the Bioenergy Criteria of the Climate Bonds Standards Version 3.0, according to the report issued by Sustainalytics. Structured Notes In 2023, we issued and made available to investors 11 “XP ESG #Refloresta structured notes”. The product allows the exposure to a proprietary ESG index called “SOLXPESG,” which follows the performance of a set of ETFs, DSI (iShares MSCI KLD 400 Social), PHO (Invesco Water Resources) and ICLN (iShares Global Clean Energy), with potential for unlimited earnings and no foreign exchange risk. For every R$5,000 invested in the product, we donate a native tree sapling to Instituto Terra, which works to regenerate degraded areas in the Rio Doce Basin region, which covers the states of Minas Gerais and Espírito Santo. The product totaled R$427 million in custody in 2023. In addition to the donation, we monitor the planting and growth of the seedlings in partnership with the Institute, while investors receive a planting certificate. 51 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Funds ESG Funds FN-AC-410a.1 I FN-AC-410a.2 I FN-IB-410a.1 I FN-IB-410a.2 I FN-IB-410a.3 We ended the year 2023 with 38 ESG investment funds available on our platform, such as the Trend ESG Global and the JGP Ações ESG 100 Icatu. ESG Funds AVIVA GLOBAL HIGH YIELD ADVISORY INVESTIMENTO NO EXTERIOR FIC MULTIMERCADO CRÉDITO PRIVADO XP AVIVA INVESTORS GLOBAL CREDIT ESG INTEGRATED DÓLAR Net Worth in December/2023 R$ 30,995,849.95 ADVISORY INVESTIMENTO NO EXTERIOR FIC MULTIMERCADO R$ 25,502,317.69 CRÉDITO PRIVADO TREND ESG GLOBAL DÓLAR FI MULTIMERCADO ESG Funds MS GLOBAL OPPORTUNITIES DÓLAR ADVISORY INVESTIMENTO NO EXTERIOR FIC AÇÕES SULAMÉRICA CRÉDITO ESG INVESTIMENTO SUSTENTÁVEL FI RENDA FIXA CRÉDITO PRIVADO LP COMPASS ESG CREDIT SELECTION FIC RENDA FIXA CRÉDITO PRIVADO LP SYSTEMATICA BLUE TREND ADVISORY INVESTIMENTO NO EXTERIOR FIC MULTIMERCADO Net Worth in December/2023 SYSTEMATICA BLUE TREND DÓLAR ADVISORY INVESTIMENTO NO EXTERIOR FIC MULTIMERCADO NORDEA GLOBAL STARS ADVISORY INVESTIMENTO NO EXTERIOR R$ 709,646,976.36 FI AÇÕES R$ 604,307,169.69 BRADESCO FIA SUSTENTABILIDADE EMPRESARIAL TREND CARBONO ZERO FI MULTIMERCADO R$ 249,147,731.24 MULTIMERCADO NORDEA ALFA 10 ADVISORY INVESTIMENTO NO EXTERIOR FIC R$ 153,990,304.71 NORDEA GLOBAL STARS DÓLAR ADVISORY INVESTIMENTO NO JGP ESG AÇÕES 100 PREV ICATU FICFIA AQUA CAPITAL PRIVATE EQUITY AGRO 7 FIP MULTIESTRATÉGIA R$ 137,057,585.77 VINCI IMPACTO E RETORNO ADVISORY FIP MULTIESTRATÉGIA R$ 123,924,627.25 TREND ESG GLOBAL FI MULTIMERCADO FAMA FIC AÇÕES BLACKROCK GLOBAL EVENT DRIVEN INVESTIMENTO NO EXTERIOR FIC MULTIMERCADO MIROVA GLOBAL SUSTAINABLE EQUITY ADVISORY IS INVESTIMENTO NO EXTERIOR FI AÇÕES R$ 92,604,405.14 R$ 81,326,785.17 R$ 68,831,733.92 R$ 34,830,700.47 EXTERIOR FIC AÇÕES NORDEA ALFA 10 DÓLAR ADVISORY INVESTIMENTO NO EXTERIOR FIC MULTIMERCADO TREND LIDERANÇAS FEMININAS FI MULTIMERCADO EB FUTURO SUSTENTÁVEL FIP MULTIESTRATÉGIA J EMERGING MARKETS ADVISORY INVESTIMENTO NO EXTERIOR FI AÇÕES R$ 23,015,412.89 R$ 22,424,160.22 R$ 17,922,126.72 R$ 15,972,721.39 R$ 15,702,538.98 R$ 14,744,587.54 R$ 14,514,942.90 R$ 14,420,036.93 R$ 14,244,310.40 R$ 12,036,257.82 R$ 8,751,957.51 R$ 7,692,251.70 52 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I ESG Funds WELLINGTON EMERGING MARKET DEVELOPMENT ADVISORY INVESTIMENTO NO EXTERIOR FI AÇÕES JGP ESG INSTITUCIONAL ADVISORY FIC AÇÕES M GLOBAL BDR ADVISORY FIC AÇÕES BDR NÍVEL I BLACKROCK ESG MULTI-ASSET ADVISORY INVESTIMENTO NO EXTERIOR FIC MULTIMERCADO Net Worth in December/2023 R$ 5,693,771.34 R$ 5,286,586.49 R$ 4,812,784.93 R$ 3,899,062.36 Trend ESG Global FI Multimercado ESG thematic fund from the XP Trend family focused on international investments. It offers exposure to the performance of 1,050 shares of mostly large companies around the world and with a high level of environmental, social and governance practices, through three ETFs (Exchange Traded Funds, funds listed on the stock exchange): 50% in iShares ESG MSCI USA (ESGU), comprised of more than 300 shares in the United States; 40% in iShares ESG MSCI TREND ENERGIAS RENOVÁVEIS FI MULTIMERCADO R$ 3,828,289.25 EAFE (ESGD), comprised of more than 450 shares in developed markets (except the United AMUNDI BRIDGEWATER ALL WEATHER SUSTAINABILITY DÓLAR ADVISORY FIC MULTIMERCADO AMUNDI BRIDGEWATER ALL WEATHER SUSTAINABILITY ADVISORY INVESTIMENTO NO EXTERIOR FIC MULTIMERCADO SELECTION ESG FIC AÇÕES XPA BLUE FIC MULTIMERCADO CRÉDITO PRIVADO TREND ÁGUA TECH FI MULTIMERCADO BB ASSET NORDEA GLOBAL CLIMATE AND ENVIRONMENT IS INVESTIMENTO NO EXTERIOR FIC AÇÕES BLACKROCK GLOBAL IMPACT ADVISORY INVESTIMENTO NO EXTERIOR FI AÇÕES OSMOSIS GLOBAL EQUITY DÓLAR ADVISORY INVESTIMENTO NO EXTERIOR FIC AÇÕES WESTERN ASSET ESG LEADERS HEDGED SUSTENTÁVEL IS FI AÇÕES BDR NÍVEL I R$ 3,458,711.30 R$ 3,263,286.36 R$ 3,257,156.74 R$ 3,032,645.75 R$ 2,337,872.85 R$ 2,146,378.17 R$ 2,066,080.78 R$ 1,936,223.69 R$ 783,921.70 States and Canada); and 10% in iShares ESG MSCI EM (ESGE), comprised of more than 300 shares in emerging markets. JGP Ações ESG 100 Icatu Seguros FIC Ações Previdenciário The Fund’s objective is to increase the value of its shares through the investment of resources mainly in variable income assets, variable income derivatives, fixed income assets and fixed income derivatives. The Fund’s philosophy is to invest in companies that present high levels of corporate governance and that consider, both in their strategic decisions and in their day-to-day operations, the best practices for sustainable development and preservation of the environment. 53 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S Integrated Annual Report 2023 Real Estate Funds XP Asset has a Responsible Investment Policy and an ESG Committee tasked with guiding and monitoring the integration In 2023, XP Asset released its second Real Estate Sustainability Report. The publication of ESG issues across more than 20 real estate funds under its management. These funds are made up of real assets, obtained the highest score (level A) in the GRESB Public Disclosure tool and is available such as shopping malls, logistics centers and corporate buildings, structured credit funds and development funds. on the website www.xpasset.com.br. Together, they have more than 1.8 million shareholders and total equity of R$13.9 billion in assets. Annually, three Real Estate Investment Funds (REITs) are submitted to evaluation by GRESB (Global Real Estate Sustainability Benchmark), a global organization specialized in assessing the environmental, social and governance (ESG) performance of companies and funds in the real estate and infrastructure sector. In 2022, the three REITs obtained excellent evaluations, which are the result of initiatives such as energy, water and waste consumption data management; stakeholder engagement program; monitoring the percentage of lease contracts with “green” clauses (green lease); and a satisfaction survey conducted with users of the funds’ assets. Based on this survey, plans for improving the management and efficiency of real properties are defined. The ESG Forum of XP Asset’s Real Estate area meets monthly to evaluate the progress of initiatives and indicators. • Our three funds evaluated by GRESB in 2023 (XP Log FII, XP Properties FII and XP Malls FII) achieved the Green Star recognition. XP Log was the third best rated in Latin America and the Caribbean. • Two assets in our portfolio (Catarina Fashion Outlet from XP Malls FII, and Faria Lima Plaza from XP Properties FII), achieved the LEED O+M certification (for building operation and maintenance). 54 n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 Pension Funds Institutional Investors XP Vida e Previdência has under its mandate a pension fund formed by The Institutional Investors channel is responsible for commercial services to closed supplementary pension entities companies with sustainable practices, the “JGP ESG Ações 100 Previdenciário (pension funds), RPPS (Personal Social Security System), insurance companies and financial institutions. Due to the XP Seguros FI em Quotas de Fundos de Investimento de Ações,” a long-only volume under management and the importance to the financial market ecosystem, the allocation made by these ESG mandate equity fund dedicated to companies committed to sustainability institutions impacts the market and dictates trends. in their operations. The ESG agenda is highly demanded by these institutions, which seek to understand how ESG criteria are inserted The fund flexibly adjusts its net exposure to equities between 85% and in processes and products, which generates greater engagement of asset managers on the topic. In 2023, we raised 100% of its net assets and seeks to achieve a risk-return ratio better than a significant volume from an insurance company for the first time for an impact fund manager, and we continue our that of Ibovespa in the long term. The ESG concept has been integrated into efforts to ensure that third-party managers and XP Asset itself have more products adapted to institutional clients. the investment philosophy, complementing a rigorous fundamental analysis and the understanding of market, political and economic cycles. Among the practices adopted, the following stand out: restrictions on investing in certain sectors, use of ESG assessment frameworks in the company analysis process, active engagement in improving the ESG practices of invested companies, and control of the portfolio’s carbon and water footprint. Two other funds, VRB Advisory Crédito Privado and VRB Advisory Multimercado, donate part of the management fee to social projects focused on education that benefited almost 1 million children and young people. +R$81 billion AUC Institutional clients +400 Institutional clients TAOS ESG INVESTIMENTO SUSTENTÁVEL FIC MULTIMERCADO CRÉDITO PRIVADO The fund, started in 2021, ended 2023 with growth of R$340 million, despite being impacted by events in the private credit market. 55 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l l a i c n a n F i e c n a m r o f r e p d n a y g e t a r t S t n e m e g a n a m l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I ESG Research The ESG Research team produces nominal analyses of companies, sector analyses, thematic reports and a daily curation of content to provide guidance on decision-making for both Retail investors and institutional investors (investment funds). This work generates high visibility for our brand in the media. Furthermore, since 2021, we have maintained a recommended ESG portfolio, reviewed monthly, which aims to outperform B3’s Corporate Sustainability Index (ISE) in the long term. In addition, we hold ESG Coffee, a daily summary of the latest news from Brazil and the world on the topic, which, in addition to political and sector updates, discusses the historical performance of the main ESG indices in different countries, comparing them with the performance of IBOVESPA and ISE. Throughout the year, the team published 117 reports focused on ESG issues that covered 136 companies, and held 65 meetings with institutional investors, in addition to exclusive events on topics that are in the crosshairs of investors. Research ESG also led panels on the topic at Expert 2023, the largest investment event in Latin America, bringing the topic to the forefront of the discussion. XP was the first investment company in Brazil to have an area dedicated to analyzing the environmental, social and governance performance of publicly traded companies and identifying major topics that are shaping this agenda. 431 thousand views of the content on the Research ESG page in 2023 3.5 thousand unique users reached 80 thousand views of content on social media 56 Integrated Annual Report 2023 QUALITY IN RELATIONSHIPS By placing the customer at the center, we want to build lasting relationships with our stakeholders, ensuring the continuity of the business and creating long-term value for employees, suppliers and our entire chain of relationships. 57 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I ESG engagement GRI 2-29 Stakeholder engagement in strategy and ESG topics is a daily occurrence at XP in relationships between business managers, advisors and consultants with clients, in sharing challenges with employees, in internal exchanges between areas and in interactions with investors and other stakeholders. Individual and corporate clients Employees • ESG scrutiny in client onboarding. • Internal communication. • Social, environmental and climate risk assessment. • Mandatory policies and training on ESG topics. • Offering products and services with a socio- • Compliance Week, dedicated to raising awareness, Business partners • Mandatory training on topics such as Compliance, Code of Ethics and Conduct for partner offices. • Code of Ethics and Conduct and other policies. environmental bias. • Research area. • ESG themed events with retail, corporate and institutional clients. • Lectures with ESG topics at Expert XP. raising awareness and training in legal, social, • ESG scrutiny when engaging with partners and environmental, climate and governance integrity periodic risk analysis. and compliance. • Attribution of the Governance and Integrity Seal • Participation in Compliance Week. Investors Suppliers Society • Regular schedule of meetings and meetings. • ESG scrutiny in hiring. • Review of the materiality process, identifying • Socio-environmental risk analysis. relevant issues for investors and establishing goals to continue evolving in each pillar. • Code of Ethics and Conduct. • Participation in events, such as Compliance Week. • Financial education, with its own actions and carried out by Instituto XP in partnership with representative, high-impact social organizations. • Transparency in donations. 58 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Customers GRI 417-1 We adopt a holistic approach to customer relationships that is not focused on products, but on solutions that help people and companies develop and prosper with positive social and environmental practices. By placing the customer at the heart of our strategy, we shape a more human approach to addressing their diverse needs. In the Investment area, this strategy is rooted in the intensive use of technology to offer solutions adapted to different types of customers. For large investors, for example, we offer a range of customized processes and exclusive products. For others, we adopt a digital first approach, which prioritizes digital advisory services and scalability through the intelligent use of technology. We implemented this model at Rico, with plans to expand throughout all of XP Investimentos. Technology also plays a fundamental role in the strategy by supporting advisory offices, ensuring operational efficiency, excellence in customer service and ongoing monitoring of risk and compliance. This approach can be seen in initiatives such as the XP Gênio program and Matcher XP. Matcher XP allows offices to determine the ideal characteristics of an advisor, and the system connects them to the most suitable profiles. The goal is to resolve one of the primary challenges faced by financial offices: hiring qualified professionals. XP Gênio, the suitability tool that supports investment decisions FN-AC-270a.3 We created an unprecedented system in the market, XP Gênio, which supports investors to provide them the freedom to choose their investments with enhanced risk control. The tool evaluates the portfolio and alerts advisors about any misalignment with the investor’s profile. In practice, it establishes a score, which ranges from 1 to 100, taking into account the following risks: • Market, related to asset price fluctuations. • Credit, which indicates the likelihood that an asset will not return the money with the agreed interest. • Liquidity risk, meaning the potential variation in the price of an asset depending on supply and demand. The higher the score, the riskier the application tends to be, facilitating the free choice of products, but in different doses suited to the profile of each client. The information provided in the suitability questionnaire (page 116) is added to the information on the financial and asset situation and regular income recorded in the client’s records. This way, the client is always aware of what the risk to their portfolio is and how much the risk increases or decreases when making a move. The tool also allows profile customization, providing a diversified portfolio that is more suitable for each investor. 59 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Customer Committee NPS - Net Promoter Score GRI 2-29 Created in 2023, the Customer Committee is made up of We use customer feedback to inspire new products, services and improvements. One a multidisciplinary team that includes customer-focused of the tools we use for this is NPS. We release quarterly results, both to investors solution design, product development and technology. and our teams. Internally, NPS feeds goals and improvements organically, with each The group prioritizes the company’s main focuses at each product advisor and customer channel adjusting their strategies based on feedback. moment, allocating resources to priority areas according to the customer experience. CX Days To improve our Customer Experience practices, we created CX Days, a two-day program held once a year. During the event, the company’s top executives, board members, directors and leaders actively participate in customer service to better understand the needs and challenges facing consumers. At the end, participants leave with a list of initiatives to improve the customer experience in their respective areas, resulting in concrete actions that help improve the quality of the service offered. We are able to use this in order to impact leaders so that they do not stray from customers’ concerns. NPS is also used as a metric for senior management performance. Executive directors have goals linked to improving the indicator, which are broken down to employees in different areas and business units. In 2023, the NPS dropped by one point. As an example of what happened in the previous year, we attributed this drop to the position the company was in, with the opening of new business areas that are still being structured, as well as the movement in the workforce to bring in people with the skills and abilities needed for the activities involved in the new business verticals, such as Retail Banking. Evolution of NPS - Net Promoter Score 2021 2022 2023 76 73 72 Espaço XP Espaço XP was designed to be an experience hub for investors and financial market professionals. The goal is to have representatives spread across different states and municipalities with XP training and knowledge of local culture. Espaço XP serves both individual investors and businesspeople, that is, from retail to wholesale banking, focused on the relationship between advisors and clients and the promotion of financial education through lectures, events and workshops on topics that impact the lives of investors. 60 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Employees Between 2020 and 2023, we recorded an 82% growth in the number of employees, helping us in our strategy of expanding new business verticals. On this journey, we strengthened our entrepreneurial brand and people management focused on creating opportunities based on merit and long-term vision, with initiatives aimed at attracting, retaining and developing talent. During this period, our employees also changed their profile and became more diverse. Number of employees 2020 2021 2022 2023 3,651 6,192 6,928 6,667 Hybrid and flexible working model Our culture is shaped by opportunities for interaction, collaboration and exchange, which reinforce the trust we build between our teams and with our customers. That’s why we’ve taken the remote working experience to the next level, starting in 2020 with a hybrid and flexible model that combines the best of both remote and in- person work. This model favors freedom with responsibility, people’s well-being and performance with self-management. The portion of time in which each structure works remotely and in person may vary, according to the nature of each role and career and the needs of the company and customers. Sales teams, for example, may have more frequent face-to-face meetings than some staff in more technical and support areas. Employee profile FN-AC-330a.1 I FN-IB-330a.1 Total number of employees, broken down by gender* GRI 2-7 Men Women Total 2021 4,120 2,072 6,192 2022 4,529 2,399 6,928 2023 4,375 2,292 6,667 * Gender as specified by employees themselves (self-declared). Total number of employees, broken down by region GRI 2-7 North Northeast Midwest Southeast South Abroad Not applicable* Total 2023 57 409 169 5,591 345 16 80 6,667 * Offshore employees, who work at the New York and Miami units, are subject to United States labor legislation and exempt from responding to the census upon hiring. 61 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l Total number of employees by type of contract, broken down by gender* GRI 2-7 Total number of workers who are not employees and whose work is controlled by 2023 Men Women Total * Gender as specified by employees themselves (self-declared). Permanent / Full-time Temporary / Part-time the organization by gender* GRI 2-8 4,194 2,199 6,393 181 93 274 Men Women Total 2021 717 534 1,251 2022 688 592 1,280 2023 767 585 1,352 Total number of employees by type of contract, broken down by region GRI 2-7 * Control by region of the number of workers who are not employees and whose work is controlled by the organization is not carried out 2023 North Northeast Midwest Southeast South Abroad Not applicable** Total Permanent / Full-time Temporary / Part-time 57 386 167 5,345 342 16 80 6,393 0 23 2 246 3 0 0 274 “Full-time” and “permanent contract”: CLT employees. Part-time and temporary contract: interns and apprentices, considering the reduced working hours and temporary/maximum-term contracts (two years for interns, for example). *Abroad: considered as any XP employee who does not have their main home in Brazil. **Offshore employees, who work in the New York and Miami units, are subject to United States labor legislation and exempt from responding to the census upon hiring. e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I 62 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I New hires and job turnover Total number and rate of new hires GRI 401-1 Total number and turnover rate of employees GRI 401-1 2021 2022 2023 2021 2022 2023 Number % Number % Number % Number % Number % Number % Broken down by gender* Men Women 2,035 1,335 Broken down by age group** Under 30 years old 1,587 From 30 to 50 years old Over 50 years old Total 1,721 45 3.353 42% 51% 60% 51% 54% 1,487 851 1,357 952 29 2.338 34% 37% 47% 26% 25% Broken down by gender* 953 519 21.8% 22.6% Men Women 656 245 982 465 25 1.472 35.0% 12.5% 16.7% Broken down by age group** Under 30 years old From 30 to 50 years old Over 50 years old Total 344 535 16 895 14% 9% 13% 16% 19% 1,068 534 557 1,007 38 1.602 24% 23% 19% 28% 33% 1,265 630 30.4% 28.8% 801 1,071 23 1.895 31.1% 29.6% 17.4% * Gender as specified by employees themselves. * Gender as specified by employees themselves. **Rule for calculating age: Under 30 years old: younger=30; from 30 to 50 years old: between 30 and 50; over 50 years old: older=50. Turnover= Dismissed (without considering interns)/ Average number of employees in the year (without considering interns) ** Rule for calculating age: Under 30 years old: younger=30; from 30 to 50 years old: between 30 and 50; over 50 years old: older=50. Turnover= Dismissed (without considering interns)/ Average number of employees in the year (without considering interns) Voluntary and involuntary exit GRI 401-1 Voluntary exit Involuntary exit 2022 Women Total 238 296 785 817 2023 Women Total 301 329 928 967 Men 627 638 Men 547 521 63 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Goals and performance 360° assessment GRI 402 | 404-3 We conduct a 360° Assessment every six months, in which all our Meritocracy is one of the pillars that support the way we think about people in the company. We have a robust cycle, with employees are evaluated by their leaders, peers and other stakeholders, well-defined and detailed goals for the teams, ensuring constant results, continuous improvement and transparency about based on two key pillars: performance and adherence to culture. the objectives that need to be achieved. Our cycle of meritocracy and development Meritocracy Cycle Choice of evaluators Check-in Performance assessments Definition of PLR profit sharing, part- nership, promotions Calibration* Feedback and distribution Follow-Up Follow-Up Check-Out Continuous feedback (considering everyone in the company) * Calibration is carried out in the meritocracy cycle of the second half Development Cycle People forums In order to cover all areas of the company, the “People Forums” contribute to calibrate the performance of 360° assessments and goals, eliminating assessment biases and the impact of external factors on individual performance. In 2023, we saw an historic level of employee and leadership participation (96%) in the assessment cycle, ending the year with 96% of assessments completed and calibrated in people forums (below). Employees who were on leave, worked less than 45 days in the 2nd half of 2023 or did not have at least 60 days of employment at the start of the cycle did not participate. 96% of employees participated in the 360º assessment 6.863 professionals evaluated* 34% women 66% men *The total number of professionals evaluated is greater than the number of employees reported on 12/31/2023 given that the evaluation cycle took place in July and November 2023. 64 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Satisfaction and engagement We periodically measure the satisfaction of our employees and provide anonymous channels with no impact on performance evaluations, so that each employee can contribute to our continuous improvement process and be a guardian of our Code of Ethics and Conduct. Pulse survey Conducted bimonthly, the survey provides insights into team satisfaction and engagement. Its results do not influence meritocracy. Our leaders are instructed to set aside a moment in their schedules to analyze the results from the survey and deepen the diagnosis with the teams, better understanding possible shortcomings. Teams are then encouraged to look for solutions to potential issues, creating action plans that will have someone responsible for executing and adhering to deadlines. The progress of each plan is monitored by leadership, which can adjust the course of action when necessary. 77% participation in the survey 5% compared to the previous year Employer Net Promoter Score - eNPS Measured bimonthly, the eNPS assesses the loyalty, satisfaction and engagement of employees and leaders. In 2023, the score obtained was 63. Our People Analytics area cross-references the results of Pulse surveys with eNPS indicators to understand what the biggest predictors of satisfaction are, prioritize People & Management initiatives and guide decision-making. Compensation and incentives Our compensation consists of a fixed monthly salary, whose initial value is a direct consequence of the combination between position and career, in addition to variable compensation based on the company’s earnings and the individual performance of each employee. The practices are regulated by the Corporate Policy on Positions, Merits, Promotions and Effectiveness. The fixed salary is linked to the responsibilities of the position, the area of activity and seniority and may be increased as employees advance in their careers through promotions or annual salary adjustments according to the collective bargaining agreement. Variable compensation is paid every six months and is directly related to the performance of the company, the unit in which the professional is allocated and their individual performance. The performance of the company and the business unit is determined by the goals, while individual performance is evaluated taking into account the results of the 360 assessment. To ensure the attractiveness and competitiveness of our compensation strategy, we conduct market research every two years in which we compare ourselves to other financial services, technology and startups companies in Brazil and around the world. 65 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Partnership Program Ratio of basic salary and compensation of women to men for each employment category The most significant long-term incentive for our employees is the possibility of becoming partners in the company through Restricted Stock Units and Performance Stock Units, with a vesting period of at least five years. The selection process for new partners takes place once a year, and all employees are eligible for the program. We look for four main characteristics in our future partners: culture and leadership, performance track record, growth potential and strategic position. The average time for an employee to become a partner is around three years. GRI 405-2 Position Executives Directors Superintendents Managers Coordinators Specialist 2021 2022 2023 101% 96% 89% 98% 92% 89% 91% 95% 90% 530 employees are partners of XP Full Administration and Operational 91% 93% 93% Senior Administration and Operations 30% do not hold leadership positions Junior Administration and Operations Administration and Auxiliary Operations 23% are people from corporate areas 34 years old (average) Interns Apprentices 87% 102% 78% 97% 100% 91% 97% 100% 98% The calculation considers the average fixed salaries for each gender (female and male), segmented by seniority and by year. 66 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Training and education GRI 404-2 In 2023, we recorded 15,231 hours of training for employees and 33,361 hours of leadership training. Discover the main programs Campus XP Leadership development below. Level up: Udemy Featuring an employee-focused approach and an end-to-end Leadership plays a crucial role in the success of XP Inc., learning ecosystem, the initiative covers all XP employees. It which is why we place a strong emphasis on providing presents a portfolio of regulatory content, as well as training to development opportunities for our high-performing accelerate employees’ careers and develop essential skills for the leaders. Since 2021, we maintain a partnership with Udemy Business in which a set number of licenses for the online course platform are distributed to XP employees. The goal is to further encourage the autonomy and leadership of our talents through a scalable learning program, which offers personalized training wherever they are. 650 participants 37% women 19,856 hours of training in 2023 62% monthly active users future of XP. Brokerage Sales Program We launched the first Broker Training Program in the market in an effort to cultivate our culture from the Broker/Institutional base, attracting the top talent to ensure the sustainability of our excellence over the medium and long term. XPlores Program Through this program, we invested in training software developers in partnership with Trybe, a leading school in the field. Between 2022 and 2023, the initiative made it possible to hire 159 people for the software engineering department – 23% of the number of employees in the area. Throughout the year, 1,000 leaders participated in our development programs, with an average of 33.36 hours of training per leader. In addition to group discussions and lectures, such as the “Leader talk” and the “Lunch for Business Unit and Platform leaders,” we implemented other initiatives. Lunch for business unit and platform leaders Meeting of leaders to discuss and align People, Management and Business topics, with 35 participants over the year. 67 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l Leader Talk Leaders Academy Leadership Offsite Meeting Led by a top XP leader, an exclusive group discusses good People Prepares professionals to exercise leadership. Special emphasis to Meeting to align the areas of People, Management and Strategy, & Management practices and leader skills, with 393 leaders the participation of 800 individual contributor leaders. which assembled 110 executive leaders and director leaders. participating. Leadership Program Shift Program XPonential Executive Program that trains delivery and specialty leaders, with the aim Development journey to leverage XP Inc. leadership and strategy Program aimed exclusively to prepare young talents to become of developing talents who serve in these new roles in XP’s matrix competencies, attended by 60 executives. business leaders. model. In 2023, we trained 64 people in the Products and Design specialty. Other leadership development actions include: Leadership training 2021 2022 2023 Total hours 15,256 19,800 33,361 Average/hours 15 18 33.36 e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I 68 68 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Internship Program Onboarding Program We provide new talent with a unique development path. Our interns are supported through the help and The onboarding process is focused on culture, values and our business strategy. In 2023, we redesigned mentoring of the company’s diverse professionals to improve their technical development and enhance the program, which lasts three days, to provide greater exposure to the topics of People & Management, their interpersonal skills. The program’s workload is 30 hours per week, with flexibility to adapt to equipment and access configuration, XP culture and content about the business. academic activities. The inclusion of executive leaders and XP partners as speakers yielded a positive NPS score, which stood The intern’s focal point throughout the selection process is a person from the Recruitment & Selection at 93, and in engagement of the agenda. During the program, new employees perform an ergonomics team, but they are also evaluated by the leadership of the vacancy in the area of interest and, eventually, test, sending photos of their work environment and, upon analysis, we arrange for the acquisition of by future peers and stakeholders. Those selected go through a stage with 100% focus on culture, which necessary furniture. we call a “Bar Raiser.” In 2023, the hiring of interns was focused on São Paulo. 11.4 thousand applicants 272 hired 1,200 new employees trained in 2023 Welcome Kit with bottle, squeeze, backpack, moleskine and the book Na Raça. Total and average hours of onboarding training per year, per new employee 34% women 6% LGBTQIAPN+ 16,9% black 0,4% PwDs Total hours Average hours 2021 36,102 10.9 2022 23,38 10.8 2023 23,04 16 69 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Diversity and inclusion GRI 2-7 |GRI 3-3 I GRI 405-1 | SASB FN-AC-330a.1 | SASB FN-IB-330a.1 We are committed to moving forward on incorporating all the diversity that exists in society into our work With this in mind, we reviewed our goals, maintaining our commitment to reaching a new level environment and, between 2020 and 2023, we achieved significant progress in this regard. The number of of diversity in the coming years. The redefinition of objectives considered the company’s new women in the company jumped from 26.5% to 34.4%, with 26.7% occupying leadership positions, compared to workforce and our current work model. 12% recorded in 2020. Our hiring and promotion processes have been enhanced to eliminate bias and subjectivity in Likewise, the presence of black people grew from 17.6% to 20%, with 12.5% occupying leadership positions. People decisions, so that they are guided by data and facts throughout the people management cycle. with disabilities now make up 1.3% of our workforce, an increase from 0.7% previously. As for the LGBTQIAPN+ We also promote training on biases and address the topic in leadership training and through presence, we went from 3.9% to 4.8%. internal communication. A more diverse and inclusive environment combines different experiences and perspectives, helping us to better understand consumer requests and to continue innovating and making a difference in the lives of millions of Brazilians. However, there are still a number of challenges that need to be overcome. Our 2030 goals Evolution of diversity in our internal environment 2020 2023 40% of women in the company 15% of black people in leadership positions 34,4% 26,5% 26,7% 20,0% 17,6% 12,0% Number of women in the company Women in leadership positions Black people 12,5% - Black people in leadership positions 0,7% 1,3% People with disabilities 3,9% 4,8% LGBTQIAPN+ 24% black people +5% of people with disabilities 70 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Affinity groups A voluntary initiative by our employees, affinity groups play an important role in allocating our diversity Percentage of employees by employment category GRI 405-1 and inclusion actions. Each group is committed to offering a safe and welcoming space that works as a support network for its members to connect and collaborate to develop each topic internally. 2021 2022 2023 • MLHR3: focused on promoting gender equality and equity, providing mentoring and promoting employee awareness. • INCLUIR: focused on physical, digital and behavioral accessibility and awareness of disability issues. Number % Number % Number % Broken down by gender* Men Women 4,120 2,072 66.54% 33.46% 4,529 2,399 65.4% 34.6% 4,375 2,292 65.6% 34.4% • BLACKS: supports awareness about structural racism and racial injustices in the world of work. Broken down by age group** • SEJA: is the collective for the creation of a safe and diverse environment for LGBTQIAPN+ persons.. Under 30 years old 2,495 40.3% 3,159 45.6% 2.808 42.1% Throughout the year, the groups held livestreams on discrimination, harassment and career challenges for black people, people with disabilities and LGBTQIAPN+ and the use of the Reporting Channel with the participation of internal and external experts. Tickets for the ESG Racial conference, the largest equity event in the country, were also raffled off. We also take advantage of external events to put the topic on the agenda. During Expert XP 2023, we set up a space with manual and electric wheelchairs to help move around at the event, including dedicated volunteers to support mobility and audio description, as well as Portuguese sign language interpreters. From 30 to 50 years old 3,610 58.3% 3,651 52.7% 3.709 55.6% Over 50 years old 80 1.3% 118 1.7% 150 2.2% Broken down by race Asian White Indigenous Black*** Not reported Total - - - - 4,960 80.1% 5,501 79.4% - - - - 1,232 19.9% 1,427 20.6% - - - - 170 4,835 7 1,335 320 6.192 100% 6.928 100% 6.667 2.5% 72.5% 0.1% 20.0% 4.8% 100% * Gender as specified by employees themselves. **Rule for calculating age: younger=30 I between 30 and 50 I older=50. *** Black and brown people, based on self-declaration made by employees. 71 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Physical, mental and financial well-being GRI 403-1 I GRI 403-3 I GRI 403-4 I GRI 403-6 I GRI 403-7 | GRI 403-8 I GRI 401-2 | GRI 401-3 The well-being of our employees is essential to maintaining a Health and dental plans Physical activity collaborative, happy and productive environment. Therefore, we seek to offer a benefits package that supports and promotes the physical, mental and financial health of each professional. XP Educação courses We offer employees, apprentices and interns two health and dental Gympass is a benefit focused on the health of our employees, which, plan options with national coverage, travel insurance, unlimited in addition to entry to gyms, provides access to virtual classes and reimbursements and a wide accredited network of doctors, hospitals physical activity, meditation and therapy applications, according and laboratories. to the chosen plan. We understand that financial education can transform lives. This is Meal vouchers and food vouchers Day care allowance why we provide our employees with free courses or courses with up to 80% discount, in a partnership with Udemy Academic for learning and development programs, with hired per class, following internal criteria, in addition to investment advice and access to exclusive investment funds. Maternity leave and paternity leave Maternity leave is also a valid benefit in cases of adoption by employees who have become parents and who are INSS insured. As part of the Citizen Company program, in addition to the standard leave, we offer an additional 60 days for mothers, totaling 180 calendar days, and 20 days for fathers, 15 more than stipulated by law. The food vouchers and meal vouchers benefit is available monthly The daycare allowance supports the care and education of our to all employees, including minor apprentices and interns. employees’ children. It works as a reimbursement of up to R$510.00 for children up to 60 months old, to pay for caregivers (nanny) or daycare. Discount platform We have partnered with New Value, a benefits platform that offers the opportunity to save money in a simple way. There are over Life insurance 25,000 brands and establishments available in eight categories of Covers natural or accidental death, death of a spouse, with products and services: Culture and Leisure, Eating and Drinking, indemnity of 50% of the insured capital, death of children, with Shopping, Travel and Tourism, Pets, Beauty and Fitness, Education indemnity of 25% of the insured capital, and funeral assistance. and Services. Mental health Zenklub platform, which offers support from professionals specialized in mental health. 72 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Parental leave GRI 401-3 2021 2022 2023 Man Woman Man Woman Man Woman Total number of employees who were entitled to take maternity/paternity leave Total number of employees who took parental leave in the current year. 119 61 Total number of employees who took parental leave in the current year, and whose leave also ends in the current 57 year. Total number of employees who took parental leave in the previous year, and whose leave ends in the current year. Total employees expected to return in the current year Total employees who returned to work after the end of parental leave. Return rate Total employees who returned to work in the previous year and remained employed for another 12 months, which ended in the current year Total employees who returned in the previous year Retention rate * Gender as specified by employees themselves. Occupational accidents GRI 403-9 | GRI 403-10 41 41 13 10 23 40 187 60 56 1 57 60 69 69 27 18 45 69 165 75 71 3 74 75 109 109 39 24 63 109 Freedom of association and trade unions GRI 407-1 We promote freedom of association and unions among our employees. As provided by law, all of our employees are linked to a union. We have no record of operations or suppliers in which the right to freedom of association and collective bargaining has been put at risk. 3 60 61 100% 98% 100% 100% 100% 100% 32 40 8 10 80% 80% 44 60 73% 15 23 65% 40 34 57 70% 45 76% Collective bargaining agreements GRI 2-30 A total of 93.79% of our 6,667 active employees at the end of 2023 were covered by the collective bargaining agreement of the trade union of the respective company to which they are allocated. The 6.21% not covered by the agreement are interns, statutory employees and employees who work outside Brazil. In 2023, we recorded two accidents related to commuting (employees traveling between home and work), without serious consequences. There were no deaths, occupational accidents or occupational illnesses reported among employees or non-employed workers. Between 2021 and 2022, we had no accidents. 73 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Suppliers GRI 204-1 I GRI 414-1 | GRI 308-1 I GRI 409-1 Sector filter We have 4,6 thousand active suppliers, and more than 85% of them are suppliers of local products and services, contracted in Brazil. All of them are subjected to social, environmental and climate assessment during procurement through a process that follows two distinct analysis: one for suppliers with high and medium potential for social, environmental and climate impact, depending on the type of activity they carry out, and another for suppliers with low potential for social, environmental and climate impact. The first group undergoes a more in-depth manual assessment and, for the second, we adopt an automated procedure. We thus cover 100% of our product and service providers, reducing the risk of problems such as slavery-like work, child labor and illegal deforestation, and promoting sustainability in our supply chain. Suppliers’ social, environmental and climate risk analysis flow Companies with high or medium impact potential In-depth manual analysis Negative media + judicial and administrative Result determines proceedings + restrictive whether to hire lists + ESG questionnaire or not. Companies from sectors with high social, Companies from sectors with low social, environmental and climate impact environmental and climate impact 100% subject to in-depth assessment carried out by an analyst. Automated procedure In case of negative media, they are subjected to in-depth analysis. 4.232 suppliers validated in 2023 R$12 billion in amounts paid to providers 97,7% of spending with local suppliers contracted in Brazil 100% assessed from the perspective of social, environmental and climatic risks Companies with low impact potential Automatic analysis Negative media + judicial and administrative proceedings + restrictive lists If there is any note, it goes to the manual analysis. If not, it is approved. Our Social, Environmental and Climate Responsibility Policy (PRSAC) prohibits any type of relationship with companies that maintain labor exploitation practices in conditions analogous to slavery, child labor, human trafficking and others that violate human rights. 74 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S n i y t i l a u Q i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I As we contracted a service that supports us in supplier management, we integrated our methodology Operations and suppliers at significant risk for incidents of child with that provider’s platform (Linkana), which, as a standard, has adopted social, environmental and governance criteria in the management cycle. Based on the company’s CNPJ (Corporate tax ID) in the labor GRI 408-1 validation process, the Linkana platform collects a series of indicators, such as public and private data on compliance and environmental licensing, labor regularity and summonses for slave labor and child labor. In 2023, among our 4,648 suppliers with an active CNPJ, we mapped 12 suppliers (0.26% of total) with a risk of child labor, 11 of them in the textile sector (91.66%), and one in the agricultural sector (8.33%). Nine of these companies are located in the Southeast region, two in the South and one in the Northeast. Cases of corruption, operating license and data on the company’s financial, fiscal and labor health are Looking at the total of 1,929 operations, we identified 56 (2.90%) operations with a risk of child labor, also observed. The indicators form ratings that point to the level of risk, which is taken to our supplier 23 in the textile sector, 33 in the agricultural/livestock sector. management area and to the technical area, where a decision is made whether or not to engage the supplier, in accordance with the validation result. Our goal 100% of suppliers assessed from the perspective of social, environmental and climate risks. How have we progressed 100% of suppliers assessed from the perspective of social, environmental and climate risks. Key initiatives • Proprietary methodology for analyzing social, environmental and climate risk • Definition of governance and approval authority • Inclusion of socio-environmental clauses in contracts and contracting terms • Employing the Linkana system through the generation of ESG scores and incorporation of our proprietary analysis methodology It is important to mention that, although we classify these suppliers as being at risk of child labor due to the higher potential for incidence of cases in these sectors, no active or operational suppliers had any incident of child labor. Operations and suppliers with significant risk of cases of forced or compulsory labor GRI 409-1 Among our 4,648 suppliers with an active CNPJ, we identified 73 companies (1.57% of the total) at risk of cases of forced or compulsory labor. In relation to operations, we mapped 98 operations (5.08%) with a risk of cases of forced or compulsory labor. It is important to mention that, although we classify these suppliers as being at risk of forced or compulsory labor due to the higher potential incidence of cases in these sectors, no active supplier or one with operations with XP recorded an incidence of forced or compulsory labor. 75 Integrated Annual Report 2023 SOCIETY We have an ambitious dream of impacting 50 million people with financial education initiatives by 2030. Together, we will build a more powerful and sustainable Brazil, where people are equipped with the skills they need to shape their financial well-being. 76 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Our social investment is carried out through Instituto XP, which uses financial education and the development of socio-emotional skills as tools for inclusion and social empowerment, impacting millions of children, young people and minority groups each year. Created in 2021, the Institute’s main targets are students from the public school students, women and other vulnerable groups. We chose this approach because we understand that education can transform people’s lives. This is especially important in a country with a high number of indebted and over-indebted households and lack of a deep-rooted savings and investment culture. We understand that this is where we can make our most significant contribution to society. As such, in 2023 we reviewed the portfolio of supported projects to centralize efforts in bringing financial education to schools through projects and organizations with exemplary levels of quality and effectiveness. To enhance these measures, we seek to strengthen relationships with influencers, teachers and researchers through partnerships, content production and awards. The initiatives involve both our own projects and those done in partnership with social organizations. In addition, Instituto XP earmarks funds and resources to social projects through incentive laws, direct donations and volunteering. Our goal How have we progressed Provide financial education to 50 million Brazilians by 2030 11.2 million people directly impacted by our financial education initiatives between 2021 and 2023 Key initiatives • Educação Financeira Transforma Award • XP Educação Courses 600 registrants, total of 480 thousand Reais in prizes for +22 thousand people trained 24 finalists • Tino Econômico newspaper (Murilo Duarte) • Partnership with Favelado Investidor +269 thousand printed copies distributed in schools + 54 thousand young people impacted throughout Brazil +2.8 million students reached • Guaranteed Education Project 2,222 tuition fees sponsored at 45 private partner • Content in partnership with Instituto schools Kondzilla +345 thousand people reached on social media 77 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I We form alliances to develop educators and foster and promote financial skills for everyone. We work to raise awareness among employees, educators, researchers, social leaders, entrepreneurs, customers and society, bringing more people to the cause. Our pillars e c n a m r o f r e p t n e m e g a n a m We adopt professional management with clear goals and monitored results to act consistently and give a long life to the movement. We work in partnership and networks, encouraging people, public and civil society organizations to co-create innovative solutions and promote new practices and policies for a single purpose. Proprietary projects Transforma Financial Education Award The initiative by Instituto XP, the largest of its kind in Brazil, was designed to inspire, recognize, connect and empower individuals and organizations who are actively working to transform financial education in the country. The award has eight categories that, in a complementary way, contribute to financial education in Brazil: researchers, teachers, students, NGOs, digital solutions, people who are part of the XP ecosystem, nano-influencers, and micro-influencers. In 2023 the panel of judges included renowned experts and professionals in finance and entrepreneurship, such as Nathalia Arcuri, Thiago Nigro, Konrad Dantas, and Edu Lyra, in addition to Thiago Godoy, from XP Inc., and Raquel Balarin, editorial director at Infomoney. The event to announce the winners, carried out in March, recorded more than 600 registrants, mobilizing thousands of votes and distributing R$480 thousand in prizes for 24 finalists. Financial Education Network The top three places in all categories of the Financial Education Transforma Award have been invited to participate in our financial education network, created to enhance the initiatives and promote the exchange of learning and opportunities among its members. In 2023, in addition to online meetings, they had the opportunity to participate in Expert XP, in addition to livestreams and promotion of content, among other activities. A live onsite event was also held in São Paulo to welcome the new class of finalists and facilitate the connection with the Network. 78 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Partnerships Nova Escola We have formed a partnership with Nova Escola, a leading platform in social education that involves producing and distributing free content, courses and lesson plans to empower the work performed by public school teachers across Brazil. In 2023, more than 312.2 thousand teachers benefited from lesson plans and content and almost 9.4 million students were impacted. During the year, we also carried out another stage of research on financial education in public schools with the intent of measuring the impact of the Transforma Financial Education program. 873 teachers were interviewed across Brazil from November 6 to 16. They brought their perceptions about the program, evaluated its relevance and application, and the evolution of the implementation of financial education in classes. Financial Education in Schools – Sebrae MG/CVM/MEC Partnership We have joined forces with Sebrae Minas to offer financial education to students in public schools across the country between 2023 and 2027. The goal is to provide knowledge and promote the development of socio- emotional skills in children and young people, right from school age, to help them to become more conscious adults in relation to the use of money. In May, along with institutions such as B3 Educação, CVM and SEBRAE- MG, we participated in the official launch event of the National Financial Education Week (ENEF Week). Partnership with Favelado Investidor In 2023, we entered into a partnership with influencer Murilo Duarte, better known as Favelado Investidor, to produce financial education content in a simple language, based on everyday examples. Over the year, the influencer worked as an ambassador for the Instituto XP in a partnership that offered financial education to 95% of educators believe that financial education is important in elementary school. 85% believe that financial education creates more prepared adults, teaches conscious consumption and helps with family planning. more than 54,000 youths. FinLab Instituto XP partnered with the Anima Institute to develop an Educational Policy Innovation Laboratory that is focused on the design, implementation, monitoring and evaluation of evidence-based programs and projects. The partnership hopes to introduce the first integrated methodology (Finland+Stanford) of financial education in Brazilian public schools, in line with the National Common Curricular Base (BNCC), contributing to the professional development of teachers and public administrators. The project’s mission is to support the transformation of the financial habits and the change in young people’s attitude towards money, emphasizing the making of financial decisions and their implications throughout adulthood, with emphasis on topics such as financial vulnerability, exposure to fraud, participation in informal financial systems, unconscious consumption, debt and savings. 79 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Partnership with iFood Já_é! Program Instituto XP has partnered with iFood to offer financial education to accredited delivery drivers Instituto XP, in partnership with Artemisia, supports the Já_é! Program, which promotes open platform and restaurant employees, from small to large establishments, on the iFood platform. Through models to scale impactful business solutions, validate market opportunities and foster innovation. In 2023, this partnership, we have made the online course Financial Balance available free of charge on aligned with the concept of productive inclusion with an emphasis on promoting the generation of work and the iFood Decola platform, a content portal aimed at the professional development of delivery income through entrepreneurship, Artemisia, with support from Instituto XP, launched the Ja_é! Entrepreneur drivers and business growth. In 2023, almost 1.6 thousand delivery drivers and restaurant Support Day, a free initiative that trained more than 40,000 entrepreneurs. employees took the course. Escola do Trabalhador 4.0 Course Instituto Kondzilla Instituto XP and Instituto Kondzilla forged a partnership to offer financial education to young people through Instituto XP, in partnership with Microsoft Brazil through Escola do Trabalhador 4.0, offers free the web series Vai Pagar para Ver, in which MCs were interviewed to discuss topics related to money. Content courses in digital skills as part of the Caminho Digital Program. The Financial Education Using was also created and published by influencers on social media to raise awareness about financial education in a Excel course, offered by Instituto XP, covers basic budgeting fundamentals, expense control, light and engaging way. In 2023, the content created reached more than 345.7 thousand people on social media. debt prevention, savings and introduction to investments. Tino Econômico Defined as the Financial Times of young people, Instituto XP, in partnership with Magia de Ler, introduced Tino Econômico, a financial education newspaper distributed in public and private schools for children and teenagers. The newspaper also has an online version. The goal is to provide important information in an accessible way, promoting student training and engagement with financial education. Almost 270 thousand printed copies of the Tino Econômico newspaper were distributed to schools across Brazil, reaching more than 2.8 million students. These editions were financed by Instituto XP. XP Educação courses We offer free financial education courses through the website xpeducacao.com.br. The objective is to create opportunities for people to improve their relationship with money, gaining security and autonomy to plan the future. In 2023, we impacted more than 22,000 people through these courses. 80 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Donations and incentive laws In 2023, companies in the XP Inc. group allocated federal incentive funds that benefited 43 projects, directly impacting more than 1.2 million people and indirectly impacting more than 19 million. We also used benefits from Rio de Janeiro’s ISS to invest in 27 projects in different states in Brazil, covering areas such as financial education, cultural support, music festivals, street races, and others. Contribution of incentive laws 2023 9% PRONAS 9% PRONON 37% Culture 8% ISS RJ* 9% Elderly 9% FIA 18% Sports * ISS-RJ: in 2023, the resource was used for supporting Marathon Rio and Fiocruz. FIA (Childhood and Adolescent Assistance Fund). Elderly (Elderly Assistance Fund). Pronon (National Oncology Care Support Program). Pronas (National Program to Support Health Care for People with Disabilities). +R$12.4 million in incentivized funds allocated to projects +4.3MM in direct donations made to more than 10 social organizations working in the areas of education, climate emergency and others Guaranteed Education Project In partnership with the Instituto da Criança, we created the Guaranteed Education Project to provide scholarships for young people in private schools. In 2023, the project ended its cycle, with the following outcomes: • 2,222 sponsored monthly payments • 21 municipalities supported • 45 partner schools 81 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S Integrated Annual Report 2023 Sponsorship of the Brazilian Olympic Committee and Team Brazil We have been official sponsors of the Brazilian Olympic Committee and Team Brazil since the 2022 Tokyo Games and Winter Olympics, including the 2023 Pan American Games and the 2024 Paris Olympics. We have also entered into an agreement with the National Football League (NFL), the most popular sports league in the USA, to support its promotion in Brazil. And, at the same time, leverage the XP brand locally and internationally. To celebrate the agreement, Expert XP had Tom Brady participate, a seven-time Super Bowl champion and one of the top names in the sport. l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I 82 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Promoting diversity and inclusion in society In 2023, we renewed our partnership with entities that promote awareness-raising activities and engage private companies in promoting the inclusion and employability of people with disabilities. We also adhere to the Pact for the Inclusion of People with Disabilities, demonstrating our commitment to complying with all the objectives of the proposed agenda. Civil Association of the Racial Equity Movement – MOVER REIS Network - Business Network for the Inclusion of People with Our partnership with MOVER aims to support the creation of 10 Disabilities thousand leadership and C- Level positions for black people by Through adherence to the Pact for the Inclusion of People 2030. MOVER is an institution that formulates tools for inclusive with Disabilities, we express our commitment to involve recruitment policies, career development, reporting channels, code senior leadership in promoting the rights of this audience of conduct against discrimination, permanence policies, affinity and developing policies and procedures with a view to groups for debates and training and awareness to influence social affirmative actions inside the organization. Our goal is promotion policies related to racial equity. Pact for the Promotion of Racial Equity also to promote an inclusive and accessible culture and environment, in addition to including the topic of planning products, services and customer service. By joining the Pact for the Promotion of Racial Equity, we support actions that encourage greater racial equity, focusing on the JUNTOS McKinsey Conference adoption of affirmative actions, improving the quality of public We participated in JUNTOS McKinsey to foster the education and training black professionals. The Pact is an initiative employability of black and brown people, set up a stand that proposes the implementation a Racial ESG Protocol in the where we promoted our open job positions and offered country, bringing the subject to the center of the economic debate support to participants in creating more attractive CVs. and attracting the attention of large companies, civil society and the government. ESG Racial Conference We participated in a lecture on financial education, given by Gabriela Torquato, head of Instituto XP, promoting and supporting the topic. Future in Black We support the “Future in Black” event, promoted by MOVER in partnership with The Black Entrepreneurs Club (BEC), which assembled over 500 people, including CEOs, vice-presidents, directors, heads, managers and company founders, around the objective of accelerating and leveraging the development of black leaders. Blood donation In August 2023, we helped the administration of the SPCTowers condominium and the São Lucas blood center by contributing to the blood donation campaign, encouraging our employees from the São Paulo office to take part and benefiting around 356 people. 83 Integrated Annual Report 2023 ENVIRONMENTAL RESPONSIBILITY We want to promote the transition to a low-carbon economy by minimizing the environmental impacts of our activities and influencing good practices in the companies with which we interact. 84 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Climate Change We recognize the broad effects of climate change on society and the economy, with a careful eye on both Scope 1 the risks and opportunities to transform our business and continue fulfilling our mission of improving In Scope 1, direct emissions were considered, where we have operational control, obtained by people’s lives. We are aware of Brazil and Latin America’s vulnerability to climate impacts and understand summing all XP Inc. emissions categories, such as stationary combustion, mobile combustion and that the financial sector can exert significant power to influence the transition to a low-carbon economy. fugitive emissions. The main source is fugitive emissions, which account for 54% of total emissions In this sense, we take an active stance in adopting measures to adapt our portfolios and mobilize our ecosystem around the science-based targets assumed by the Paris Agreement. In 2023, we continued to advance in managing climate risks and enabling sustainable business, including measuring and reducing in this scope, arising from the use of R-410A refrigerants in air conditioning systems. our emissions, adhering to the recommendations of the TCFD (Task Force on Climate-related Financial Scope 2 Disclosures), reducing the intensity of financed emissions and the climate sensitivity of our credit portfolio, and developing products that encourage choices and investments aligned with this agenda. To calculate Scope 2 emissions, we account for indirect GHG emissions arising from the acquisition of electricity for consumption in our facilities. A significant part of the emissions in this scope comes from our Miami (USA) unit, which accounted for 46.7% of total emissions in this scope. GHG Emissions Scope 3 We use the GHG Protocol methodology to calculate, monitor and provide transparency to our inventory To calculate Scope 3 emissions, indirect GHG emissions resulting from our activities were considered, of Greenhouse Gas Emissions in scopes 1, 2 and 3. In 2023, we refined our emissions calculations, coming from sources that do not belong to or are not controlled by the company. Our inventory expanding the scope to cover all sources and business units and, for the first time, we submitted our accounts for emissions related to trips made by motorcycle couriers, waste generated in operations, carbon inventory to external auditing. business trips and home-to-work emissions, with the business trips category having the greatest impact on the result. 85 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Drop in total emissions Even with the significant expansion of our business, our total Greenhouse Gas Emissions fell by 4% in Comparison of total emissions (tCO2e) by categories GRI 305-2 | GRI 305-3 2023, totaling 6,322.191 tCO2e. We also observed a 56% reduction in emissions related to Scope 1 coming from direct sources owned or controlled by XP. These changes are mainly explained by the adaption of Total Emissions (tCO2e) 2022 2023 Range the calculation methodology, made after feedback from the external consulting firm that verified our inventory. In scope 3, related to the supply chain, we posted a 37% increase in GHG emissions. This increase is due to factors such as the provision of air conditioning, the inclusion of private aviation fuel consumption in corporate travels, a new positioning in relation to home office arrangements, and the proportional increase in emissions from home-to-work commuting. Direct (Scope 1, 2, 3) of Greenhouse Gas Emissions (GHG) GRI 305-1 | GRI 305-2 | GRI 305-3 Scope 1 Stationary Combustion Mobile Combustion Fugitive Emissions Scope 2 Location approach 3,238.54 1,410.08 -56.46% 0.88 0.00 4.19 375.90% 539.35 0.00% 3,237.66 866.55 -73.24% 143.77 522.27 263.26% 143.77 522.27 263.26% Emissões diretas Scope 1 (tCO2e) Scope 2 (tCO2e) Scope 3 (tCO2e) Total Greenhouse Gas Emissions (tCO2e) * Increase recorded due to energy costs in the NY and Miami offices. 2022 2023 Range 3,238 143 3,214 6,597 1,410 522 4,,390 6,322 -56% 265%* 37% -4% Scope 3 3,208.80 4,389.83 36.81% Upstream Transport and Distribution Waste Generated Business travel 5.55 291.11 0.01 161.31 -99.76% -44.59% 2,412.39 2,962.34 22.80% Home-Work Emissions 499.76 1,266.17 153.36% Total 6,591,118 6,322.191 -4.08% 86 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Emission offsetting Between 2019 and 2020, we offset 100% of our GHG emissions through the purchase of carbon credits generated by forest conservation and regeneration projects. We also neutralize Scope 1 and 2 emissions by acquiring emission reduction certificates from REDD+ projects, a United Nations mechanism that Internal carbon price promotes conservation, sustainable management and the increase in forest carbon stocks. In Scope 3, neutralization was done through biogas recovery and renewable energy projects. Since 2021, we have calculated the internal price per ton of carbon based on the average price of the carbon credit purchased in the year. In 2023, the average price To advance this agenda, we became members of the Climate Commitment, which since 2017 has connected was R$15.00/ton. companies interested in offsetting their emissions and projects dedicated to generating positive social and environmental impacts. The origination of credits follows a strict technical and legal analysis, in addition to eligibility criteria, with the aim of minimizing reputational risks and guaranteeing the quality of the credits. Accordingly, in 2023, we neutralized Scope 1 and 3 emissions through the Climate Commitment, with the acquisition of around 5,800 carbon credits from renewable biomass projects. Scope 2 emissions were offset with the purchase of Renewable Energy Certificates (iRec), which guarantee that the energy consumed comes from renewable sources. 100% of our emissions offset with the purchase of carbon credits and iRec Carbon market We have contributed to the voluntary carbon market since 2019, through the purchase of carbon credits and the origination of investment products. In addition, we work in advocacy, participating in working groups organized by Febraban and Anbima focused on the regulated market. 87 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Financed emissions GRI 201-2 | GRI 305-3 I FN-AC-410b.4 I FN-CB-410b.4 The financed emissions (scope 3, category 15) relate to greenhouse gases originating from assets present in the portfolios of financial institutions, and they are largely made possible by loans and financing for their clients’ activities. According to CDP, financed emissions are, on average, 700 times higher than direct emissions from the financial sector. In our case, only 9.72% of total GHG emissions relate to our own emissions, which are completely neutralized. The remaining 90.28% is due to financed emissions from the credit portfolio, the intensity of which we seek to manage with a customer engagement strategy, in order to help them move forward, with XP, in the transition to a low carbon economy, mitigating risks and capturing opportunities that may arise in the new scenario. We demonstrated our commitment to climate responsibility by joining the Partnership for Carbon Accounting Financials (PCAF) in early 2022, when we formally started using the PCAF methodology to calculate our financed emissions. In the previous year, we had already made calculations based on this methodology, as part of our goal of improving the governance of socio-environmental and climate risks, which are a significant concern for our institution. XP Inc. emissions profile 90,28% Financed emissions 9,72% Own emissions Total emissions 65.023t 88 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I How have we progressed and where we want to get When we began to measure our financed emissions in 2021, we recorded an intensity of 12.05 tons of carbon per million Reais borrowed, with a credit portfolio exposure of R$3.2 billion. In 2022, when the credit portfolio more than doubled in size, reaching R$6.9 billion, the intensity of financed emissions fell to 9.23 MM/t/CO2e. In 2023 we recorded a new milestone: the credit portfolio increased to R$9.3 billion and the intensity of financed emissions reached 6.24 MM/t/CO2e, a reduction of 48.22%. We will continue to deepen the portfolio growth strategy with a significant improvement in its climate quality, with the goal of significantly reducing this indicator by 2030. 2021 2022 2023 12.05 9.23 4,81 4,58 4,59 37,214 6.24 3.2 64,621 58,701 9.3 6.9 Intensity of financed emissions MM tCO2e Weighted quality score* Financed emissions tCO2e Exposure of the credit portfolio R$ billions * The PCAF methodology assigns a score from 1 to 5, with 1 being the most accurate calculation. As our portfolio is mainly made up of small and medium-sized companies, which normally do not disclose their emissions data, we achieved a score of 4.59. 89 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Improvement in the methodology In 2023, we advanced the methodology for calculating financed emissions, increasing the precision and scope of data relating to our clients’ activities. Using the TCFD sector classification, we are able to engage our customers more accurately, obtaining a more in-depth view of the environmental impact Sector benefiting from credit of our business. Financed emissions (tCO2e) Sector benefiting from credit Financed emissions (tCO2e) Agriculture Food and Beverages Financial services Commerce Transport Industry Petrochemical and chemical Metals and mining Administrative services Paper and forest products Textile Energy 12.385.93 7,832.65 6,771.22 6,033.51 3,450.1 3,368.81 3,169.67 3,163.55 2,553.59 1,689.67 1,184.29 1,173.44 Exposure of the credit portfolio R$ billions 170.24 622.53 3852.75 689.52 215.45 222.6 70.71 135.17 587.06 62.09 98.66 83.12 Intensity by sector, weighted by percentage of Health Tourism and Leisure Real estate management and exposure 1.318.110 0.83355 0.720593 0.642086 0.367159 0.358509 0.337316 0.336665 0.271753 0.179815 0.126033 0.124877 development Wood and furniture Construction Technology Pharmaceuticals and Cosmetics Motor vehicles and auto parts Others Recycling Education Communication Sanitation Total 875.36 863.73 806.58 652.71 628.06 563.94 389.26 387.22 235.91 230.96 228.91 46.06 16.38 58,701.52 9,396.73 Exposure of the credit portfolio R$ billions 673.49 424.2 318.8 23.56 695.64 174.67 9.5 78.54 59.39 2.62 103.92 22.1 0.42 Intensity by sector. weighted by percentage of exposure 0.093156 0.091918 0.085836 0.069462 0.066838 0.060014 0.041425 0.041208 0.025106 0.024579 0.024361 0.004902 0.001743 6.247012 90 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 Climate sensitivity of the credit portfolio GRI 201-2 | GRI 305-3 Stress test To assess the climate risk of our credit portfolio, we still use the Climate Risk Sensitivity Ruler, a The Social, Environmental and Climate Risk area analyzes all XP customers on a broad basis, methodology we developed along with Febraban, based on TCFD recommendations. It allows measuring covering 100% of the credit portfolio for companies. Portfolio quality is monitored according how sensitive the client or operation is to the physical and/or transitional effects of climate change. The to its exposure to the Social, Environmental and Climate Rating. The stress test is updated at company’s sector, credit quality, average term of the operation and the representativeness of the sector least once a year and its guidelines and results are discussed and approved by the Executive or client in the credit portfolio are taken into account. Board. Combined, these variables help to classify portfolio exposure into three levels of climate sensitivity Although stress testing is only mandatory for entities in the S2 segment, we adopt a dedicated (high, medium or low), defining the customers most sensitive to climate factors. This process covers idiosyncratic scenario that seeks to aggravate specific revenues from potentially exposed 100% of the credit portfolio of legal entities and indicates the degree of risk, providing guidance on the businesses. As of next year, hypotheses about changes in climate patterns and the transition decision-making on whether or not to go ahead with closing the deal. to a low-carbon economy will be included. At the end of 2023, our portfolio’s climate sensitivity reached 12.72%, a reduction of two percentage points compared to 2021, when we started this measurement. We thus improved the climate quality of the credit we grant and, consequently, of our credit portfolio. Still in 2023, the climate sensitivity indicator was incorporated into the company’s RAS, with exposure limits and monthly monitoring. Climate sensitivity of our credit portfolio 2021 2022 2023 TCFD recommendations Published in 2017, the recommendations of the Financial Stability Board’s Task Force on Climate- Related Financial Disclosures (TCFD) aim to encourage the disclosure of financial information related to climate risks and opportunities, allowing investors to make more informed decisions. 14.50% We recognize their relevance and firmly support this commitment, advancing our adherence to the recommendations throughout 2023 in each of the four disclosure pillars. 12.62% 12.72% Also, see how our social, environmental and climate risk analysis process works on page 127. 91 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S Governance Risk management • The Board of Directors, the Executive Committee, the Audit Committee and the Risk, • We carry out climate risk analysis for 100% of our customers and credit operations. Credit and ESG Committee monitor the evolution of the ESG agenda as a whole, including the company’s climate agenda, with pre-defined periodicity and agendas. • In addition to these governance bodies, the Social, Environmental and Climate Risk Committee and the Social, Environmental and Climate Risk and Responsibility Committee monitor the climate agenda with pre-defined periodicity and agendas. • Our corporate policies link employee compensation to compliance with climate-related guidelines, including at the executive level. • We carry out training and disseminate the topic across the company, through training and live sessions related to the topic. • We develop a proprietary climate risk assessment methodology that impacts the credit rating. • We manage the climate risk of our credit portfolio through climate risk management indicators. • We have a specific climate risk indicator in the company’s RAS. • We monitor the climate risk of our credit portfolio. • We consider climate risk in stress testing programs in a dedicated idiosyncratic scenario, which seeks to aggravate specific potentially exposed business revenues. • We engage our customers to reduce the impact of climate change on our business. Strategy • We map our exposure to climate risks and potential impacts for the company. Targets and metrics • We have a climate transition strategy, with internal goals and respective deadlines for • We have our own emissions reduction targets. compliance defined. • We established targets for reducing the intensity of financed emissions in the credit • We have targets for reducing our own emissions and financed emissions. portfolio. l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I • We calculate the internal carbon price. • We have contributed to promoting the carbon market in the country, participating in sectoral working groups, meetings with representatives from the most diverse sectors, clients and other players interested in the subject. • We develop climate-related financial products and services. • We measure and neutralize 100% of Greenhouse Gas Emissions from our activities (scope 1, 2 and 3*). • We implement financed emission intensity and climate sensitivity metrics of the credit portfolio. • We report our climate sensitivity and financed emission metrics under the TCFD. 92 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Eco-efficiency Energy We strive to minimize the negative impacts of our activities by promoting sustainable practices, efficient resource unit (RJ) into the measurement,(RJ), following the acquisition of Banco Modal. In addition, use, and proper management of water and energy consumption, waste and effluent generation, and Greenhouse 1,472 new employees were hired during the year. In 2023, we refined our calculation of energy The total energy consumption increased, which is explained by the incorporation of the Botafogo Gas Emissions. We offset 100% of our Scope 1, 2, and 3 emissions. Seeking the lowest possible impact of our facilities, we prioritize green buildings when selecting and leasing properties. Our main office, located in the city of São Paulo, for example, is located in a building with LEED (Leadership in Energy and Environmental Design) Platinum 3.0 Core and Shell precertification, which guarantees the highest levels of energy efficiency and sustainability. See below how the consumption of resources and the management of waste and emissions evolved in 2023. consumption, also including the two external offices, located in New York and Miami. It’s also worth noting that our Belo Horizonte office uses photovoltaic energy in all common areas. Total energy consumption within the organization GRI 302-1 In kWh Total 2021 2022 2023 1,641,476,00 1,586,193,00 3,516,084,22 Energy consumption by unit GRI 302-3 Unit São Paulo Botafogo Leblon Belo Horizonte New York Miami Total (kWh) Total (MWh) 1,835,296,65 97,902,00 151,040,00 27,198,00 782,627,87 622,019,70 1835,30 97,90 151,04 27,20 782,63 622,02 93 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Water GRI 303-1 I GRI 303-5 Waste The increase in total water consumption recorded in 2023 is mainly due to the change in the measurement Each building is responsible for collecting and controlling the waste generated on each floor, which is scope. Until 2022, we only considered the consumption in our São Paulo offices. In 2023, data from the recorded monthly by the number of bags used, with capacity for 10 liters each. Later on, the conversion Leblon, Botafogo and Belo Horizonte offices also began to be considered. is made to tons, since in some units, such as São Paulo, accounting is done in bags. Total water consumption of all areas Total water consumption in megaliters (ML) Total water consumption By Physical Unit in megaliters (ML) São Paulo Botafogo Leblon Belo Horizonte 2021 3,003 2021 3,003 - - - 2022 5,229 2022 5,229 - - - 2023 11,232 2023 7,318 2,692 1,054 0.169 The total volume of waste generated in the year increased due to the incorporation, in the counting, of the Botafogo and New York units, whereas in previous years only waste generated in the São Paulo offices was counted. Likewise, we observed an increase in the total volume of waste destined for recycling. Total waste generated and total waste with final disposal in landfills and sent for recycling GRI 306-3 | GRI 306-5 Total weight of waste generated in metric tons and a breakdown of this total by waste composition Destination Type of waste generated 2021* 2022* 2023* Landfill Organic Recycling Recyclable Total amount of waste generated (bags) Total amount of waste generated (tons) 8,128 14,563 22,691 8,999 7,060 16,059 161 12,860 9,214 22,074 221 *In 2021 and 2022, only waste generated in the São Paulo office was considered. 94 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Waste not intended for final disposal GRI 306-4 Destination Waste generated (Bags) 2022* Glass Plastic Metal Paper Recycling Total waste in bags Total waste in tons *Waste monitoring is carried out only in the SP office. 151 2.684 300 3.925 7.060 2023 255 3.418 353 5.188 9.214 92 Electronic waste We carry out reverse logistics and correct disposal of our electronic waste not classified as environmentally hazardous, which consists of IT equipment, such as monitors, desktops, cables and others. We work in partnership with the company Manureversa, specialized in electronic waste management, which “purchases” obsolete electronics from XP, converting the value into a quantity of native tree seedlings, which are donated to the Amigos da Mata project, run by Instituto Refloresta, which works to recover degraded areas. Equipment that is not part of the “buy and sell” proposal is exchanged for one native tree seedling for every 50 kilos of discarded equipment. The seedlings are donated to local farmers, and planting is done in springs and sensitive areas, such as riverbanks and deforested springs in the Atlantic Forest biome. Since we started supporting, in 2020, we have donated 253 trees. Total waste not intended for final disposal GRI 306-4 Destination Recycling Total electronic waste (in kg) Waste generated (kg) Electronics 2023 3,429 3,429 95 Integrated Annual Report 2023 CORPORATE GOVERNANCE We continue to improve our processes, policies and decision-making bodies, seeking the highest standard of governance in all businesses and activities. GRI 2-13 96 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I The year 2023 marked the beginning of a cycle of changes in our governance structure, which has employees, culture and other strategic HR topics. In addition, slate elections for the appointment of been based on two key drivers. The first is compliance with the Central Bank´s prudential regulation, directors by the Annual Shareholders’ Meeting were eliminated, allowing for the individual selection due to XP’s classification in the “Segment 2” of the National Financial System. of directors, thereby increasing their accountability to shareholders. In October 2019, we received authorization from BACEN to act as a multiple bank, with commercial and investment portfolios, and to operate in the foreign exchange market. Until then, XP had been classified in Segment 3, with operations restricted to the investment area. Since then, we have worked hard to meet prudential capital and risk requirements. Another relevant fact is that in July 2023 the shareholders’ agreement signed between Itaúsa and XP was terminated. The decision, a consensus between the parties, led to a significant improvement in our governance and ending the prerogative of Itaú Unibanco, one of our main competitors, to appoint two members to our Board of Directors and one member to the Audit Committee. With the resignation of the Itaú Unibanco representatives, we reduced our Board from eleven to nine members and began to reformulate this decision-making body by adopting best market practices. We hired an international consultancy to support us both in the search for executives and board members and in defining their roles and responsibilities and adding new committees. We entered 2024 with significant progress in this process. We increased the number of independent directors, who now form the majority. We also created two new advisory committees to the Board: the Risk, Credit, and ESG Committee, which will oversee, among other topics, market risk factors, liquidity, credit, cyber security, environmental, social, governance, and climate issues, and the Strategy and Performance Committee, which now encompasses goal setting, evaluation of new products, establishment of departments, and other topics. Shareholder structure Shareholder XP Controll LLC Free Float ITB Holding Ltd. Tesouraria XP Total shares Voting rights 18,81% 73,23% 7,77 0,19% 66,55% 25,90% 7,55% 55,5% Independent members on the Board of Directors We have expanded the number of independent members on our Board of Directors, adding individuals with a diverse range of knowledge, attributes, and experiences that strengthen our material issues, helping us align strategies with the questions the company needs to address at each moment, fostering its longevity and its ability to Another novelty was the expansion of the scope of action of the People Committee, which had its generate value. name changed to the Compensation, People, Appointment and Governance Committee, with powers to define succession, compensation, promotion, hiring goals and assessment of executives and 97 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S Governance structure GRI 2-9 | 2-10 | 2-1 | 2-12 | 2-17 Our governance model is made up of four main decision-making bodies supported by internal regulations, which discipline and regulate the role of each senior management body, and by compensation, incentive Board of Directors and evaluation policies, which guarantee the alignment of decision-making mechanisms with the As of December 31, 2023, our Board of Directors was made up of nine members, four of whom are company’s long-term strategies. AGM Fiscal Council Board of Directors Committees Executive Committee e c n a m r o f r e p t n e m e g a n a m Annual Shareholders’ Meeting Held once a year, the Annual Shareholders Meeting decides on changes in the governance structure and independent, with a term of office until October 2025. Three members held positions on the Audit Committee. As part of the restructuring process, which began last year, one of the non-independent directors (Fabrício Almeida) and three independent directors (Luiz Felipe Calabró, Frederico Seabra de Carvalho and Cristiana Pereira) resigned from their positions on April 24, 2024, effective as of May 24, 2024. Five new independent directors were then appointed after an extensive period of prospecting conducted by the consulting firm hired to support us in this process. The number of directors was maintained at nine, however, the majority is of independent directors. The chairman of the Board does not hold an executive position in the XP group. With these changes, approved at the Annual Shareholders’ Meeting held on May 24, 2024, the highest governance body expanded its supervisory scope, gained greater representation of non-controlling shareholders and had greater breadth, capabilities and experiences. The new members added, for example, expertise in topics such as risk management, retail banking business, people management and medium and long-term investments to be made. The Extraordinary Shareholders Meeting takes place whenever the shareholders deem it necessary. The minimum quorum for both is 50% of the shares diversity & inclusion. entitled to vote. We seek, then, to ensure that the Board of Directors is well positioned to direct long-term strategies, exercise its role in guiding management and leadership, protect and enhance XP’s culture as it grows and evolves, and ensure robust succession planning. Other important roles include leading the evolution of governance processes and strengthening risk and control management as XP’s operations become increasingly complex, balancing and complementing management’s expertise on key business-related topics. 98 l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I The term of office for all Board members is two years, and the members who did not resign from their previous positions were presented for re-election at the Annual Shareholders’ Meeting, even before the expiration of their terms. Shareholders thus had the right to individually elect the Directors, in accordance with the best corporate governance practices. Gabriel Leal Member The company’s highest decision-making body meets at least quarterly, with a defined agenda that includes the approval of strategies, the business plan and the annual budget, and the creation and eventual changes in policies and other directions, including on social, environmental and governance issues relevant to the company. The CEO of XP Inc., Thiago Maffra, and the CEO of Banco XP, José Berenguer, participate in the meetings as guests, bridging the gap between advice and the definition of plans and priorities to be put into practice. In 2023, eight meetings were held, four of which were attended by 100% of the Board Members. In three others, the attendance rate was 90.9% and in one of them, held in mid-February, the attendance rate was 72.7%. Current composition of the Board of Directors, approved at the Annual Shareholders’ Meeting held on May 24, 2024. Guilherme Benchimol Chairman of the Board Bruno Constantino Member. Until August 2024, he also holds the position of Chief Financial Officer (CFO) of XP Inc. Martin Emiliano Escobari Lifchitz Independent member José Luiz Acar Pedro Independent member Melissa Werneck Independent member Bernardo Amaral Member Oscar Rodriguez Herrero Independent member João Roberto Gonçalves Teixeira Independent member To learn about the experience and profile of each member of the Board of Directors, access the Proxy Statement document on the SEC platform. 99 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Senior management compensation GRI 2-19 | GRI 2-20 The annual compensation for the Board of Directors consists of an identical fixed compensation for all members and additional compensation for those who also chair or are members of the Audit and Compensation Committees. Board members who hold executive positions are not remunerated, avoiding duplication in compensation. In November 2023, the Board approved a compensation recovery policy in compliance with new SEC and NASDAQ regulations. Under the new policy, if a financial update causes executives to receive greater incentive compensation than anticipated in the original financial information, the excess amounts must be recovered. The Executive Committee’s compensation is guided by a set of goals related to short-term financial performance and another set linked to the health and sustainability of the business over the long term. For the CEO, short-term financial goals in 2023 included EBT Margin, Net Profit and an expense efficiency metric. The long-term goals were made up of: • Net Funding • Customer satisfaction (NPS) • Employee turnover • Capabilities score, a metric designed to measure the progress of areas and roles that are critical for the company in the long term, such as Risks, People, Management, Technology, Products and Operations. The CEO’s goals are broken down into specific goals for each director who is part of the Executive Committee and, from there, for each leader and employee of all business units. Diversity on the Board Currently, our Board of Directors has a woman, Melissa Werneck, and Martin Emiliano Escobari Lifchitz, a Bolivian who represents minority and underrepresented Latin ethnicities, according to the SEC’s concept of ethnicities, the United States Securities and Exchange Commission. Performance assessment of governance bodies GRI 2-18 All executives are evaluated every six months by leaders, colleagues and stakeholders based on culture and results, as is the case with other employees. In addition, Board members carry out an annual self-assessment that seeks to identify, classify and point out how their performance impacts the organization’s economic, environmental and people management. Once the self- evaluation cycle is complete, the Board meets to discuss opportunities for improvement and, when appropriate, the realignment of both composition and organizational practices. 100 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Collective knowledge of the highest governance body GRI 2-17 In 2023, the members of the Board of Directors participated in an in-company workshop on Best Practices for the Board of Directors, organized by IBGC - Brazilian Institute of Corporate Governance. Risk, Credit and ESG Committee NEW Defines and ensures compliance with the ESG strategy, monitors the evolution of indicators, goals and projects, evaluates the adherence and effectiveness of the actions implemented to comply with our ESG policies and strategy and monitors regulatory compliance related to ESG and social, environmental and climate risks. It also defines the risk appetite in coordination with the Audit Committee. Advisory committees Composed of independent members of the Board of Directors who do not have decision-making powers, the committees are responsible for advising the Board of Directors and making recommendations on the topics that fall under their respective jurisdiction. Audit Committee CoAud is made up of three independent members, meets every six months and is governed by the prudential regulation of the Central Bank and the Private Insurance Superintendency (SUSEP). They maintain a schedule of monthly conversations with the business, risk, ESG and internal and external audit areas, making recommendations and monitoring risk prevention and containment plans. The progress of initiatives are reported to the Board of Directors at least every quarter. Crucial concerns are regularly communicated to the company’s highest governance body, through the Risk Committee of the Board of Directors. Strategy and Performance Committee NEW Responsible for reviewing business strategies and supervising relevant structures and performance indicators related to the company’s capital and organizational structure. Compensation, People, Nomination and Governance Committee EXPANDED SCOPE With its expanded scope of action, it now supervises not only executive compensation, but also recruitment, promotions, retention and evaluation of executives, directors and employees. 101 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Executive Board José Berenguer Chief Executive Officer of Banco XP Guilherme Resendes Leonardo Cardoso Chief Product Officer Chief Risk Officer Guilherme Sant’Anna Channels Officer Leonardo Cardoso Chief Risk Officer Bruno Constantino Chief Financial Officer (CFO) Victor Mansur Finance and Strategy Officer. From August 2024, he will also hold the position of CFO Gustavo Pires AMS and Security Officer Luiza Ribeiro Chief Human Resources Officer Lisandro Lopez Chief Marketing Officer (CMO) Cristiano Ayres Banking Products Officer Marino Aguiar Chief Technology Officer (CTO) Lucas Rabechini Financial Products Officer Fabrício Almeida General Counsel, Compliance and ESG 102 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Number and percentage of individuals who were part of the organization’s governance bodies on 12/31/2023, broken down by race and gender GRI 405-1 ESG governance GRI 2-13 On December 31, 2023, the Board of Directors consisted of nine members, all white. See the composition by gender below. By gender* Men Women Total 2021 2022 2023 Number 11 1 12 % 92% 8% 100% Number 10 1 11 % 91% 9% 100% Number 8 1 9 % 89% 11% 100% * Gender as specified by employees themselves. Number and percentage of individuals who were part of the organization’s governance bodies on 12/31/2023, broken down by age group GRI 405-1 By age group Under 30 years old From 30 to 50 years old Over 50 years old Total 2021 2022 2023 Number 0 10 2 12 % 0% 83% 17% 100% Number 0 9 2 11 % 0% 82% 18% 100% Number 0 9 0 9 % 0% 100% 0% 100% Our ESG governance is structured around the Board of Directors and the Executive Committee (Comex), which are responsible for monitoring the evolution of this agenda and social, environmental and climate risks in the group’s companies. The topic is included in the meetings of the Board and the Executive Committee. The General Counsel and Compliance and ESG Officer, who is responsible for the Social, Environmental and Climate Responsibility Policy (PRSAC) with the Central Bank, leads discussions on the topic at Comex, providing input and participating in decision-making. He and the Head of the ESG & Social, Environmental and Climate Risk area, who reports to the Executive Board and the Risk, Credit and ESG Committee, present the progress of practices, challenges and opportunities related to the ESG scenario at meetings of XP Inc’s highest governance body. The Board of Directors therefore closely monitors the progress of the company’s social, environmental, climate and governance initiatives and defines macro strategies with the support of two advisory committees: Audit Committee and Risk, Credit and ESG Committee. The ESG governance structure is complemented by the ESG Committee, which maintains a close proximity to the Executive Board, in addition to the Social, Environmental and Climate Risk Committee, linked to the Executive Risk Committee and reporting to the CRO (Chief Risk Officer), and to the Social, Environmental and Climate Risks and Responsibility Committee, reinforcing our commitment to the integrated management of social, environmental and climate risks with other risks managed by the company. The company also has the Credit Decision Committee, Corporate Initiatives Committee and the Credit Product Distribution Committee as governance bodies related to ESG topics and social, environmental and climate risks. 103 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Learn about the responsibilities and roles of the bodies that form our ESG governance. Audit Committee It receives biannual reports on the evolution of ESG agendas and social, environmental and climate risks and monitors the development of topics in the organization. ESG Committee Board of Directors Monitors the progress of the company’s ESG agenda and initiatives focused on social, environmental and climate risk. Thiago Maffra Chief Executive Officer of XP Inc. Risk, Credit and ESG Committee A Committee that advises the Board of Directors on defining, implementing and monitoring the ESG strategy. It receives biannual reports on the evolution of the organization’s ESG agendas and social, environmental and climate risks. Executive Committee It is responsible for approving the Social, Environmental and Climate Responsibility Policy and its amendments, ensuring its compatibility with other group policies and with the recommendations of the Central Bank. It also supervises and monitors the ESG strategy, evaluating the degree of adherence of the actions implemented to PRSAC. Fabrício Almeida General Counsel, Compliance and ESG Leonardo Cardoso Chief Risk Officer Fabio Simabukuro Cruz Head of ESG and Social, Environmental and Climate Risk at XP Inc. Social, Environmental and Climate Risks and Responsibility Committee 104 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S Social, Environmental and Climate Risks and Responsibility Committee NEW Social, Environmental and Climate Risk Commission Credit Decision Committee The Credit Decision Committee is responsible for approving credit Permanent executive body composed of independent members Monitors exposure to social, environmental and climate risks, limits and operations, including deliberating the credit risk arising of the Board of Directors, which reports to the Executive Board. deciding on the definition of exposure limits and risk appetite. from social, environmental and climate events through social, Its bylaws are governed by the prudential regulations of BACEN. It monitors management indicators and adherence to sectoral environmental and climate risk assessments as a basis for decision It advises management on the establishment and the review of regulations and self-regulations. It discusses, deliberates and making. the PRSAC. It assesses the degree of adherence of the actions approves policies implemented to the policy, ensuring good risk management and mitigation practices, internal controls, information security, fraud prevention, conflict of interests and social, environmental and climate issues. When necessary, it proposes measures for improvement, keeping a record of recommendations. and procedures related to risk management, prohibited or restricted sectors, climate risk management in the portfolio and climate transition plans. It also tracks the progress towards goals and contributes to deepening the integration of social, environmental and climate risks into decision-making and business processes. Legal, Compliance and ESG Executive Board ESG Commission Corporate Initiatives Committee The Corporate Initiatives Committee is responsible for deliberating on requests to implement new strategic projects, including, but not limited to, the inclusion of new products and services, decisions to create new businesses, platforms, channels and experiences, observing, among other aspects, ESG and social, environmental and climate risk factors. Assists the Board of Directors in decisions related to PRSAC, responsible for initiatives that guarantee the effectiveness of the policy, monitoring and evaluating the actions implemented. It works to improve practices if gaps are identified. Linked directly to the Legal, Compliance and ESG Executive Board, the Commission meets whenever necessary to decide on operations with a high potential for social, environmental and Credit Products Distribution Committee climate risks, especially those involving the financing of projects and companies that do not have a good reputation for sustainability. When necessary, it resorts to the impartial external opinion of a specialized consulting firm, and may approve or reject operations. In case of disagreement, the CEO of XP Inc. has the final say. The Credit Products Distribution Committee is responsible for ensuring the effectiveness of the assessment and monitoring of credit risk for the selection and subsequent monitoring of securities eligible for allocation by the client base through fundamental analysis of private securities issuers, as well as the assessment of their guarantee structures and/or payment sources, including social, environmental and climate risk assessments. 105 i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Compliance GRI 2-15 | 2-16 | 2-25 | 2-26 | 205-1 | 205-2 | 205-3 The Code of Ethics and Conduct aligns all employees, executives, partners and senior leadership of XP Inc., its subsidiaries, affiliates, offices, independent agents and suppliers around the highest standards of ethical conduct in all our activities and relationships. The code promotes an internal culture of adherence to laws, regulations and good business practices, defining behavioral standards to prevent and combat illicit practices, ensure the confidentiality of information and resolve conflicts of interest. GRI 2-24 The Compliance Policy complements and strengthens this way of acting, establishing disciplinary measures in case of non-compliance with established guidelines. Our employees and business partners are also required to comply with specific policies, such as Anti-Corruption, Prevention of Money Laundering and Terrorism Financing (AML-TF), Conflicts of Interest and Social, Environmental and Climate Risk. At the beginning of 2024, we also introduced the Human Rights Policy and updated our Code of Ethics and Conduct to spread the topic throughout our ecosystem. GRI 2-23 | GRI 3-3 The activities are coordinated and managed centrally by the Compliance area with support from senior management. Made up of more than 60 professionals allocated to technical groups, the team is responsible for formalizing procedures, internal controls, monitoring adherence to policies, auditing and due diligence in cases of deviations. Another important role of the area is the training of employees and service providers and regular communication on the topic, fostering a culture of Compliance in our network. The Code of Ethics and Conduct and other policies are approved by the Board of Directors and provide for processes to identify and mitigate risks in our different interactions and relationships. These processes are managed and audited periodically. All documents and policies are public and available on the Compliance website. The XP group does not make donations to political causes and organizations. GRI 2-23 | GRI 415-1 106 Integrated Annual Report 2023 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Reporting channel GRI 2-16 | 2-26 | 205-1 | 406-1 I FN-CB-510a.2 |FN-AC-510a.2 |FN-IB-510a.2 Our Reporting Channel receives and addresses issues that violate the Code of Ethics and Conduct, laws and regulatory standards, as well as other XP Group policies. The channel can be accessed by employees, partners, customers, suppliers and society in general. Reports can be carried out anonymously or identified, with the complainant’s data being preserved. The channel operates 24x7 with electronic support, and from Monday to Friday, from 9 a.m. to 5 p.m., with analysts for telephone support. All reports are analyzed and investigated. After investigation, the cases are discussed by the Internal Committee if any irregularity is identified that requires the application of disciplinary measures. Furthermore, the Compliance area reports bimonthly to the Ethics Committee and the Board of Directors the volume and the details of cases received and handled. In 2023, crucial concerns were communicated involving 147 advisors and 266 employees, with the average regulatory deadline for compliance and completion being met. Combating discrimination and harassment GRI 406-1 The Code of Ethics and Conduct prohibits any type of discrimination and psychological and sexual harassment and encourages the use of the Reporting Channel when any person in our network has had their dignity violated. In 2023, we had no cases of discrimination. We registered a case of harassment, in which the disciplinary measure applied was the dismissal of the employee involved. Penalties may also involve warnings and fines, in the case of partner offices. 0800 721 0744 | Monday to Friday, from 9:00 am to 5:00 pm. Assistance provided in English and Portuguese. www.canalconfidencial.com.br/xpinvestimentos 107 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Ombudsman, BACEN and other channels The complaints received by the Ombudsman’s Office are dealt with and addressed within a maximum of fifteen days. They are consolidated monthly and taken to customer forums, serving as a basis for the adoption of improvement plans for processes, products and services. The same happens with complaints addressed by BACEN, the Consumidor.Gov.br portal and other channels. The goal is to continually improve the customer experience. In 2023, the XP Investimentos Ombudsman Office registered 14,188 requests relating to the group’s brokerage firms, of which 7,484 were received through internal channels (0800 and Ombudsman Office Form), 1,990 via the Consumidor.gov.br portal, 4,000 via regulators (CVM and BACEN) and 714 from other channels. In relation to Banco XP, the Ombudsman Office registered a total of 8,402 requests, of which 3,908 were registered on the Ombudsman Office’s internal channels, 2,140 through BACEN, 1,842 through the Consumidor.gov.br platform, and 512 on other service channels. Regarding requests related to Seguradora XP, 123 cases were registered with the XP Seguros Ombudsman Office, 52 of which came from the Ombudsman Office’s internal channels, 43 through the Consumidor.gov.br platform, 26 through BACEN, and 2 through other channels. 0800 722 3730 Monday to Friday, 9am to 6pm https://www.xpi.com.br/ouvidoria/ Evolution of requests received - XP Investimentos 2021 2022 2023 9,853 4,368 14,188 Evolution of requests received - Banco XP 1,288 1,263 2021 2022 2023 8,402 Evolution of requests received - XP Vida e Previdência 2021 2022 2023 45 69 123 108 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Training and awareness GRI 2-24 | 205-2 | GRI 410-1 XP’s onboarding program includes a week of training on corporate and compliance policies, ensuring Total and average number of hours of compliance training per year, per employee* a solid foundation for new employees. All professionals, including executives and senior management, GRI 404-1 must also complete an annual training exercise on the topic. Training is done through an online platform, with a content retention test and a certificate issued at the end. Anyone who does not submit their evaluation or does not complete the courses within the established deadline is subject to punishment, such as cutting access to our systems. Main mandatory training: • Anti-Corruption and Compliance Procedures • Code of Ethics and Conduct 2021 2022 2023 Total hours Average hours Total 14,907 2 *Segmentation by region and functional category not available. Total hours 5,246 Average hours 2 Total hours 15,231 Average hours 3 • Sexual and Psychological Harassment and Confidential Channel Compliance Week • Personal Investments • Suitability • Prevention of Money Laundering and Terrorist Financing (AML-TF) • Information Security and the General Data Protection Law (LGPD) • Financial Risks and Risk Management, including social, environmental and climate risk • Circulation of Information • Reputational and Social Media Each year, we dedicate an entire week to dialogue, awareness and training on compliance topics. In 2023, the topics covered ranged from regulatory changes in the crypto active investment fund industry to PLD-FT, abusive practices, anti-corruption policy, relationships with influencers, social, environmental and climate risks, combating fraud and LGPD, and others. Some of the lectures are open to the general public. Conduct Score In addition, we require a series of certifications for professionals working in certain business areas, In 2023, we began to implement the Conduct Score project, with the objective of creating an indicator such as investments and foreign exchange. For security personnel, who are outsourced, we provide that considers compliance criteria in the recognition actions of XP Inc.’s meritocracy cycle. The result the Integrity Booklet, reinforcing awareness of compliance and human rights aspects among service obtained in the score may impact variable compensation and eligibility for promotion of employees, providers. including executive leadership. The initiative was discussed and approved by the senior management. The first calculation was carried out in the 1st half of 2024. 109 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S Compliance framework i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Director of Legal, Compliance, and ESG Head of Compliance Compliance Platform Team dedicated to Compliance area support, supporting the development of indicators and monitoring to identify possible irregularities and KPIs, applying data analytics and ML. Owner of the BUDEX system. AML-TF Trade Surveillance Regulatory and Control Room Advisor Governance Social, Environmental and Climate Risk Takes care of the customer Monitors and follows client and Responsible for monitoring of Serves, guides and supervises the Analyzes client operations from a onboarding process and monitors Treasury operations from the policies, procedures and controls network of independent agents, social, environmental and climate the transactions carried out by them perspective of rules on abusive aligned with the latest standards in correspondents, brokers and internal perspective, ensuring that processes, from the perspective of preventing market practices. all XP Inc. companies. advisors. money laundering and terrorist financing. procedures and policies comply with current standards. It also develops ESG methodologies for the organization. 110 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Compliance Platform The Compliance Platform is a team that serves, in a transversal way, all areas of Compliance, supporting the development of data, indicators and KPIs. It also monitors to identify possible atypicalities, using data analytics and machine learning tools. The group manages our proprietary compliance platform (BUDEX), which integrates more than twenty internal sources of transactional, registration and reputational data from customers and investment advisors, as well as APIs from external bureaus to capture historical information from customers, creating mathematical models for assigning risk scores. The system uses advanced technologies and machine learning to monitor day-to-day transactions, identifying suspicious transactions and making information, such as customer rating and product eligibility, available in the company’s critical flows and systems. It thereby provides a solid data base for decision making. Constantly improving, the tool supports the Compliance area units in the centralized management of risks associated with non-compliance with codes, policies, laws and regulatory frameworks. It therefore provides high efficiency in preventing money laundering and behavioral monitoring of investment advisors. It also has a module dedicated to social, environmental and climate risk, connected to XP’s registration database and to bureaus that provide information such as inclusion of clients on restrictive lists of work similar to slavery, embargoed areas, illegal deforestation, contaminated areas, indigenous territories, “quilombola” areas, among others, discrediting media related to social, environmental or climate issues, as well as judicial and administrative proceedings related to social, environmental and climate issues. 111 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Business areas and processes integrated into the Compliance Platform +100 million pieces of information to fuel compliance controls each month +R$200 million saved with rating generation and prevention of illicit activities +3 terabytes of data used in the analysis processes Registration Exchange Procurement and Suppliers Institutional Compliance Partners TAC/NAC* Advisor Governance Social, Environmental and Climate Risk People International Account AML-TF Fraud TAC = Transaction Approval Committee | NAC = New Activities Committee Banco XP 112 Credit Cards Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S Prevention of money laundering and terrorist financing Conflict of interest GRI 2-15 We have a Conflict of Interest Policy that defines rules that must be observed by all executives, employees and investment advisors. To ensure compliance, we We have a dedicated due diligence unit to prevent money identify atypical patterns and activities, such as “orange” supervise employees’ personal investments, carry out due diligence in partner laundering, terrorist financing and the proliferation of (fraudulent) accounts opened with the consent of the offices, conduct reputational analyses and promote an annual campaign to update weapons of mass destruction, in addition to combating true holders, leading to the closure of accounts, inclusion the Know Your Employee Form. abusive practices in the market. The objective is to identify of holders on restrictive lists and communication to the atypical situations in operations that may indicate the Financial Activities Control Council (COAF). use of XP products and services in criminal practices. In addition, the Personal Investment Policy defines rules for employees’ personal investments, avoiding legal, regulatory and image risks related to the use of Another focus was the prevention of money laundering privileged information. The tool evaluates the portfolio and alerts advisors about The area monitors transactions with customers to in the foreign exchange market, with a series of activities any misalignment with the investor’s profile. identify atypical situations in accordance with rules aimed at mitigating risks in foreign exchange operations, and parameters established for each product or service especially those related to bookmakers (bets). More than (current account, foreign exchange, fixed and variable 20,000 analyzes were carried out on such transactions, income and loans, among others). And it applies a scoring an average of 1,600 per month. model to classify customers into different risk levels, with specific procedures for each level. The system generates alerts that are directed to the Compliance area. All higher risk operations undergo rigorous analysis, which includes due diligence, and may lead to discontinuity in customer relationships, denial or cancellation of operations. In 2023, for example, we performed a scan to identify irregular practices using Pix. The study made it possible to 20.2 thousand risk analyses in foreign exchange operations in 2023 113 i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Tax approach GRI 207-1 | 207-2 | 201-4 We adopt a tax approach based on strategies to ensure rigor, correct calculation and declaration of taxes to the tax authorities, in all jurisdictions in which the group has operations, including units domiciled outside Brazil. The process is In 2023, XP was not exposed to legal actions involving unfair competition practices. A process initiated in August 2022 by CADE (Administrative Council for Economic Defense) to investigate allegations of infringement related to the investment distribution market, made by interested third parties and competitors of XP, was archived in March 2024. CADE determinedthat guided by a group of tax experts who work in Tax Legal and Tax Compliance. there was no evidence of anticompetitive conduct by XP. Legal actions GRI 206-1 The topic’s governance structure is complemented by the Fiscal Committee, which validates the strategies that are disseminated across the different business lines and must be observed in all company products and services. We therefore seek the best tax design and, at the same time, act to prevent and address risks of illicit or unethical behavior in relation to taxes. In case of a relevant impact, tax issues are taken to the Executive Board. In 2023, we will use tax incentive laws that allow us to direct part of our income tax to social projects in the areas of sport and culture, among others. For the same purpose, in some cases, we also made use of tax incentive laws on taxes on services. Monetary losses resulting from legal proceedings FN-CB-510a.1 I FN-AC-510a.1 I FN-IB-510a.1 In 2023, we recorded three cases of monetary losses resulting from financial sector regulations. As a preventive measure, we adopted process improvements to avoid exposure to risks in this area. • A fine of R$25 thousand applied for delay in sending the declaration of Foreign Capital to the Central Bank in October 2022. The measure adopted next was the review of control flows for exchange rate reporting. • In view of the analysis of full compliance with the Offer Code, carried out by Anbima within the scope of Process No. OP002/2022, XPI CCTVM SA presented a Proposal for a Term of Commitment and paid a fine in the amount of R$222,000.00. • Within the scope of BSM Supervisão de Mercado’s Operational Quality Program, the absence of prior orders from XPI CCTVM SA resulted in the signing of a Term of Commitment and payment of a fine of R$30 thousand. 114 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Advisor Governance Fostering an ethical and compliance culture in the network made up of 14 Governance and Integrity Seal thousand investment advisors, in addition to insurance and pension brokers and banking correspondents, we have an area dedicated to closely monitoring the activity of these professionals, from onboarding the maintenance of partners and collaborators who perform these duties. Advisors are required to comply with capital market rules, policies and procedures established in the Code of Ethics and Conduct for Investment Advisors. The We have a qualification program for investment advisory offices that periodically diagnoses advisors and awards the Governance and Integrity Seal to those who perform well in the following criteria: • Internal controls and best corporate governance practices (self-assessment). • Integrity in activities and relationships in the twelve months prior to the assessment carried out by Compliance. document defines behavioral standards and practices to resolve conflicts of • Engagement in the training carried out (presence and grades from advisors in assessments). interest, guarantee the security and confidentiality of information and promote practices to prevent and combat illicit activities. In an effort to improve this process, in 2023 we updated the Investment Advisor Compliance Manual, which consolidates, in a single document, all the policies and guidelines to be followed by companies and professionals who provide services to our clients. Adherence to the Manual is formalized at the time of establishing a contractual relationship. The advisor governance team uses data and analysis to identify atypical events in the operations and services provided to clients by advisors, monitors, audits and performs due diligence to ensure compliance with good business practices. Issues alerts to the different compliance cells and adopts punitive measures, when appropriate. It also works to raise awareness, train and guide professionals. The initiative aims to mitigate possible risks and engage the network of advisors, on an ongoing basis, in legal compliance and compliance with the rules, internal policies and guidelines of XP Investimentos. Advisors trained in compliance, participated in the assessment process and were certified Year 2021 2022 2023 Participant Offices with Offices Seal Trained Advisors 263 (69.5% of 49 (12% of the 5,495 (53% of the network) network) the network) 270 (71% of the 44 (11% of the 6,573 (64% of network) network) the network) 253 (65% of 80 (21% of the 7,523 (60% of the network) network) the network) 115 80 Governance and Integrity Seals awarded to partner offices in 2023 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Suitability The profile of investors is identified through a questionnaire filled out by the customer when opening their account and the analysis of registration information, including financial situation, assets and regular income maintained by the client. Based on this data, risk scores are assigned and the investor is classified as conservative, moderate or aggressive, according to Anbima rules and CVM Resolution 30/2021, delimiting the products recommended to them. The questionnaire can be updated by the customer at any time. Furthermore, we periodically re- evaluate product recommendations and maintain a public Suitability Policy that explains, step by step, our analysis methodology. Learn more about the Policy on the XP website. Anti-corruption practices GRI 205-1 | GR 205-2 | GRI 205-3 | GRI 3-3 The Code of Ethics and Conduct, the Anti-Corruption Policy and other company policies establish clear rules for combating bribery, kickbacks, extortion and other forms of corruption. In 2023, no cases of this type were registered in the group’s companies. The policies apply to XP Inc. companies and subsidiaries, its employees, independent investment agents, third parties and business partners. As part of the Compliance Program, we evaluate the reputation of everyone involved in business with group companies, including customers. The objective is to avoid discrediting situations in terms of reputational, competitive, socio-environmental risk and corruption. Employees also comply with rules for receiving gifts, sponsorships, participation in external events and relationships with the Government, and receiving any improper invitations that could be characterized as bribery and corruption are prohibited. In compliance with Brazilian law, the US Foreign Corrupt Practices Act, and the UK Bribery Act, among others, we also carry out work to assess corruption risks in the Know Your Customer (KYC), Know Your Employee (KYE) and Know Your Partner (KYP) reputational analysis flows and in evaluating relationships with politically exposed people. Likewise, operations involving public entities are evaluated and monitored within money laundering prevention flows. The data is reported to regulatory bodies. The anti-corruption topic is reinforced annually as part of the regulatory training track, so that employees, investment advisors and professionals from partner offices are periodically trained on these issues. In addition, we make an effort to raise awareness, with 37 communication actions carried out in 2023, including communications on regulatory issues, awareness pills and reinforcement of guidance. 116 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Total number and percentage of members of the governance body to whom the anti-corruption policies and procedures adopted by the organization were communicated GRI 205-2 Total number and percentage of employees to whom the anti- corruption policies and procedures adopted by the organization were communicated, broken down by region GRI 205-2 2021 2022 2023 Employees reported, by 2023 Number 11 1 12 % 92% 8% 100% Number 10 1 11 % 91% 9% 100% Number 12 1 9 % 89% 11% 100% Total and average number of hours of training in anti-corruption practices carried out by the organization’s employees GRI 205-2 2021 2022 2023 Total number of hours 14,907 Average/h 2 Total number of hours 5,246 Average/h 2 Total number of hours 15,231 Average/h 3 Note: We do not control by gender and employment category region North Northeast Midwest Southeast South Abroad* Not applicable** Total Number 57 409 169 5,591 345 16 80 6,667 % 0.85% 6.13% 2.53% 83.86% 5.17% 0.24% 1.20% 100.00% *Abroad = considered as any XP employee who does not have their main home in Brazil. **Offshore employees, who work in the New York and Miami units, are subject to United States labor legislation and exempt from responding to the census upon hiring. 117 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Technology and information security FN-CB-230a.2 Training and engagement of employees, customers and suppliers We have more than 40 standards, policies and procedures that guide the company’s and our customers’ information security, data protection and privacy processes. This framework is reinforced by daily awareness and training that seeks to engage 100% of our employees and business partners in Main standards and policies a strong cybersecurity culture, which supports the success and sustainability • Information Security Policy of the business in the long term. Our Technology and Information Security area includes over 1,400 professionals who are dedicated to protecting our information assets against internal and external threats, ensuring the confidentiality, integrity and availability of data. This process is supported by adequate controls at all levels of the IT infrastructure, regular risk and vulnerability assessments, prevention, detection and incident response measures. Another approach is the use of technology to transform businesses. In this sense, in 2023, a Technology Governance and Information Security team was created and a mapping of competencies to be developed in the coming years was carried out to further increase the company’s maturity and capabilities in this area. We have also evolved in the formalization of data processes and made progress in technological risk management, financial management and service level. One of the highlight projects of the year was the preparation of our platform to process, in an integrated manner, products and services from our own brands, such as XP, Rico and Clear, and from business partners. The initiative brought about agility, cost reduction and improved customer experience. Onboarding of new employees includes content on information security and data privacy. Upon arriving at the company, everyone signs an employment contract with confidentiality clauses and specifications of responsibilities. Employees follow a training routine provided by the Compliance area and regularly receive information on the subject through our communication channels. Phishing simulations are also carried out • Data Privacy Policy for employees • Data Privacy Policy for customers in order to identify and mitigate potential risks. Another initiative is • Information Security and Data Privacy Policy for Suppliers and Business Partners • Standard for Acceptable Use of Assets Visit the XP Investor Relations page to learn more about public policies. the Security Champions Program, which trains system developers to apply secure techniques. Our business partners and IT service providers undergo an information security and data privacy assessment by a forum of experts. The contract contains clauses that require compliance with requirements and the adoption of controls, processes and care regarding the topic. We also maintain a monthly flow of communication with customers, informing them about the main types of scams and frauds and how to prevent them. In addition, we disclose features that contribute to the security of personal data, such as hiding assets in the application, blocking access, facial biometrics and others. We provide a page with specific content on the XP website. 118 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Structure of the information technology and security area CTO (Chief Technology Officer) CISO (Chief Information Security Officer) Identity and Access Management Security Operations Application Security Information Security Privacy, Governance, and Supplier IS Fraud Prevention Engineering Identity and access management We have a group that takes care of granting, changing and revoking access in all XP environments, defining policies and controlling user access to systems, applications and data, in an integrated manner with XP’s security and identity management systems. Performs audits and adopts security measures to protect users’ identity data against unauthorized access, theft or compromise. Security operations The area tests, designs, implements and continuously monitors the security of the organization’s infrastructure, networks and systems. Identifies and responds quickly to incidents, implements security and traffic control measures, and performs analysis to identify suspicious activity or anomalies that may indicate a security breach. 119 Integrated Annual Report 2023 s k s i R e t a r o p r o C e c n a n r e v o G l a t n e m n o r i v n E y t i l i b i s n o p s e r y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Application security Critical incident reporting The team works to ensure that projects, systems and APIs are planned, built and delivered in accordance In 2023, we did not record any data breaches or damage to our environment from cyber-attacks or with information security requirements. In addition to guiding developers to create secure code that any other means. We adopt an incident response plan with clear and objective guidelines for quickly adheres to best security practices, it reviews code, carries out tests to identify vulnerabilities in and effectively carrying out actions to contain problems in the event of crises. applications and systems and coordinates correction. Privacy and information security governance Area focused on actions to meet data privacy requirements (LGPD) at XP in our service providers. The team manages regulatory compliance and security guidelines by measuring performance indicators and continuous improvement, maintaining policies and standards for suppliers and affiliates. Total number of substantiated complaints regarding violation of privacy and loss of customer data GRI 418-1 2021 2022 2023 Fraud prevention engineering Responsible for developing and implementing models, algorithms and systems to detect and prevent Complaints received from independent parties and substantiated by the organization Complaints from regulatory agencies fraudulent activities. It analyzes large volumes of data, develops rules and heuristics and implements Total number of substantiated complaints real-time detection systems. Continuously tests and validates detection models and mitigation regarding breaches of customer privacy strategies, and keeps the company up to date on trends in fraud and prevention technologies. Total number of leaks, thefts or losses of customer data that were identified. If the organization has not identified any 42 15 - 0 34 3 - 0 substantiated complaints, a brief statement N/A N/A of that fact will suffice. 0 3 0 0 0 120 Integrated Annual Report 2023 RISKS We adopt centralized management of financial and non-financial risks, which covers all our activities, processes, products and services, business partners and strategic suppliers. 121 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Risk Management The main risks associated with the industry in which we operate are the volatility of domestic and international financial, bond and equity markets, funds and other asset classes, in addition to intense competition, extensive regulation and litigation risk. We are not subject to emerging risks. GRI 201-2 Another risk inherent to the financial market is related to the poor performance of investment products recommended or sold by our advisors or distributed through our platform. We are also exposed to substantial fluctuations in the volume and price level of securities and dependence on the solvency of various parties and third parties. Our Integrated Risk Management Policy establishes the principles and guidelines to foster a risk culture in the organization, defining the processes for identifying, measuring, evaluating, monitoring, reporting, controlling and mitigating risks. The Risk Appetite Statement establishes acceptable levels of risk that we are willing to assume. In 2023, we reinforced risk management as a responsibility for all employees, expanding internal communication actions and at corporate events. Every month, we release a Risk videoclip newsletter, with information and guidance and the topic is part of Compliance Week (page 109). The CEO of XP Inc. included the Risk Mitigation Index in his personal goals, moving the company around the topic. The indicator allows not only the mitigation, but also the maturity of the risks in each area of the company. 5.077 professionals trained in risk and compliance in 2023 122 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Lines of defense Risk governance The highest decision-making body for risk is the Executive Board, supported by the Audit and Risk Committee, which advises the Board of Directors, Internal Audit and nine committees that are under the management of these areas. The Risk, Financial and Legal departments join forces in risk prevention and mitigation initiatives, with regular reporting of these initiatives and decisions to the Risk Committee. The Risk Department has six structures dedicated to the management of each of the following risks: market, interest rate risk of banking book, credit, counterparty, non-financial, administrator and social, environmental and climate risk. The Financial Department is responsible for risks related to the management of assets, liabilities and capital, controllership and financial results. The Legal Department, in turn, is responsible for legal and compliance risks. First line Business and support areas. They are responsible for identifying, evaluating, reporting and controlling the risks inherent to their activities. Second line Control areas. They are responsible for defining the risk management strategy and structure, analyzing and monitoring operational risk limits and challenging first-line functions. Third line Internal Audit. Independent assessment of the risk management structure, governance and internal controls. 123 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S Executive Risk Board Executive Board Audit Committee Treasury Committee Economy Committee Internal Audit Company Compensation Committee AML/TF Committee Corporate Initiatives Committee Ethics Committee Risk Committee Credit Products Distribution Committee Credit and Policy Monitoring Committee Credit Decision Committee l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Risk Department Financial Department Legal Department Market, IRRBB, Liquidity and Capital Risk Credit Risk Counterparty Risk Non-Financial Risks Administrator Risk Social, Environmental and Climate Risk Assets, Liabilities and Capital Management Controllership Managerial Results Legal Compliance 124 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Our main risks Credit risk Liquidity Risk It is the possibility of losses associated with non-compliance by the borrower or counterparty. The non- Liquidity risk is associated with the possibility that the institution will not be able to efficiently honor compliance may be due to the respective financial obligations under the agreed terms, the devaluation expected and unexpected, current and future obligations, including those arising from binding guarantees, of the credit contract resulting from the deterioration in the borrower’s risk classification, the reduction without affecting daily operations and without incurring significant losses. Or, even, that the institution in earnings or compensation, the advantages granted in the renegotiation and the recovery costs. will not be able to negotiate a position at market price, due to the large size in relation to the volume Credit Risk also covers other risks, including: • Counterparty Credit Risk: possibility of non-compliance, by a given counterparty, with obligations relating to the settlement of operations involving the trading of financial assets, including those relating to the settlement of derivative financial instruments.regulatórios inerentes das atividades da instituição, gerando assim possíveis riscos de sanções legais ou regulatórias, multas ou penalidades, perda financeira ou danos à reputação resultantes do descumprimento de leis, regulamentos, regras ou requisitos regulamentares. • Country Risk: possibility of losses associated with non-compliance with financial obligations under agreed terms by a borrower or counterparty located outside the country, as a result of actions carried out by the government of the country where the borrower or the counterparty is located, and Transfer Risk understood as the potential for obstacles occurring in the exchange rate conversion of amounts received. • Concentration Risk: the possibility of losses associated with significant exposures to the same counterparty; to counterparties operating in the same economic sector, geographic region or product and service segment; to counterparties whose revenues depend on the same type of merchandise or activity; to financial instruments whose risk factors, including currencies and indexes, are significantly related; to the same type of financial product or service, and whose risk is mitigated by the same type of instrument. normally traded or due to some discontinuity in the market. Market Risk Market risk is the potential for loss resulting from fluctuations in the market values of proprietary positions. The risks involved are variations in interest rates, share prices, exchange rate variations and commodity prices for instruments classified in the Trading Book and Banking Book. Social and Environmental Risk Social and environmental risk is the probability of losses resulting from exposure to environmental and social events related to the Company’s activities. 125 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S Climate Risk It is understood as the possibility of losses caused by the emergence of physical risks, including extreme events and chronic changes in climate patterns, or transition, including reputational, legal and market risks, which may manifest themselves as a consequence of the transition of a low-carbon economy. Business Continuity Management Business Continuity Management is a comprehensive process that identifies potential threats to XP and the possible impacts on our operations if the threats materialize. Its objective is to build and continually improve organizational resilience, so that the company is able to respond effectively to risks and safeguard the interests of the parties involved, its reputation, brand and value-added activities. The process is divided into five macro stages: identify, analyze, define, perform and monitor. i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S Regulatory and Compliance Risk Regulatory and Compliance Risk refers to potential litigation, investigations and regulatory processes inherent to the institution’s activities, thus generating possible risks of legal or regulatory sanctions, fines or penalties, financial loss or damage to reputation resulting from non-compliance with laws, regulations, rules or regulatory requirements. l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I 126 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Social, Environmental and Climate Risk GRI 201-2 For us, social and environmental risk represents the probability of Additionally, we have a Social, Environmental and Climate losses resulting from exposure to events related to these topics Responsibility Policy (PRSAC) that aims to reinforce the principles in the company’s activities. Climate risk is understood as the and guidelines applied to our business, activities, processes and possibility of losses caused by the materialization of physical risks, relationships with stakeholders. PRSAC seeks to prevent and including extreme events and chronic changes in climate patterns, mitigate negative impacts and increase positive impacts on the Prohibited and restricted sectors We prohibit any type of link or relationship with companies involved in slave labor or slavery, child labor and prostitution. Furthermore, all operations carried out with companies in restricted sectors are subject to a detailed assessment by or transition, including reputational, legal and market risks, which environment and society, based on the principles of relevance and the ESG & Social, Environmental and Climate Risk area. may manifest themselves as a consequence of the transition of a proportionality and our other specific internal policies. low carbon economy. We also have the Social, Environmental and Climate Risk Procedure In this sense, we manage these risks in our activities and operations, (RSAC), which establishes and documents the guidelines, rules and Restricted sectors in our customers and suppliers and in our products, including the procedures for analyzing and managing social, environmental and • Weapons and Ammunition steps for identifying, classifying, analyzing, monitoring, mitigating, climate risk, directing our practices for identifying and managing controlling and recording the occurrence of losses related to social, risks and opportunities. environmental and climate aspects. The guidelines take into account the principles of relevance and Recognizing the importance of effectively managing these risks in proportionality of these risks, with a synergistic vision of all activities • Tobacco and smoke products • Asbestos • Coal business, we created the ESG & Social, Environmental and Climate and businesses. This process is supported by the Compliance • Slaughterhouses Risks area in 2020 directly linked to the Legal, Compliance and Platform (page 111), which integrates information about clients, ESG Department. Governance related to these topics is shared and suppliers and investment advisors and assigns a risk score to each integrated, at the executive level, by the Executive Risk Committee individual or company that interacts with us. through the Social, Environmental and Climate Risk Committee and the Social, Environmental and Climate Risks and Responsibility Committee. Within the scope of the Board of Directors, governance is formed by the Risk, Credit and ESG Committee and the Audit Committee. 100% of customers, suppliers and products subjected to RSAC analysis • Mining • Wood • Steel industry • Agribusiness • Petrochemicals • Radioactive materials 127 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I How the social, environmental and climate risk analysis cycle works During Client Onboarding, the first filter is automated, following the rules defined by the Compliance Platform (page 111). This filter layer also identifies the client’s sector and, if it fits into the list of restricted sectors, it is sent to the ESG & Social, Environmental and Climate Risk team for analysis. The same happens when negative situations are verified, such as discrediting media, inclusion on restrictive lists and judicial or administrative proceedings related to social, environmental or climate issues. The impacts of new operations, such as the creation of Project Finance at the Wholesale Bank, are also analyzed, establishing the operational requirements necessary for a safe implementation from an ESG point of view. We therefore ensure that products are launched in a responsible and ethical manner. In the same way, we evaluate our product and service providers and foreign exchange operations. In credit, we adopt an automated process that signals the need or not for in-depth analysis, in accordance with the pre-established credit policy for each company. It is mainly used for collateralized credit operations, in which the company’s investment is given as collateral. As the credit risk is low in these cases, approval is usually quick, except for companies in sectors of attention, which are automatically directed to a social, environmental and climate risk analyst. The second stage of the process is formed by a more in-depth analysis of the company or operation, which is subsequently submitted for analysis by the Credit Committee, which has veto power. More complex cases are addressed to the executive board and, if necessary, to higher decision-making bodies. 128 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Analysis methodology Risk matrix Based on the assessment of the three aspects of our social, environmental Our proprietary methodology considers the potential social, environmental and climate impact of customers and product and service and climate risk analysis methodology, we generate a report for the client suppliers and the capacity they have to manage these topics. There is also a pillar on controversial notes and sectors, which involves company or supplier of products and services along with their respective scanning media, lists and administrative and judicial processes to identify possible situations that discredit the companies with which ratings. Risks can be classified into five levels, from A to E; the higher the we interact. level, the higher the required approval authority. The analysis is applied to 100% of relationships and products, such as foreign exchange, credit to individuals and legal entities and Investment Banking operations, such as Debt Capital Markets (DCM) and Equity Capital Market (ECM) issues. Potential social, Social, environmental environmental and climate and climate management Controversial notes and sectors impact capacity We use the Febraban Green We make a qualitative Taxonomy, the Categorization assessment of the List of the European Bank company's ability to for Reconstruction and manage the key social, Development (Categorization environmental and climate List from the European risks inherent to its activity. Bank for Reconstruction and To do this, we use public Development - EBRD), CONAMA information disclosed in Resolution 237 and Cetesb's W sustainability reports, Complexity Factor to classify websites and ESG rating the risk potential. agencies, among others. We use research in media bureaus, lists and administrative and judicial processes brought together by the Money Laundering Prevention area to carry out a qualitative assessment of social, environmental and climate-related violations in which the client is involved. In the assessment processes, identification of negative media, administrative or judicial processes and lists of a restrictive nature are also considered, such as slave- like work, child labor, prostitution, illegal deforestation, environmental crimes, pollution, contaminated areas, embargoed areas (IBAMA and ICMBio), activities in indigenous and traditional communities, and human rights issues, among others. Social, environmental and climate rating Approval authority very low risk A low risk B ESG & Social, Environmental and Climate Risk Area medium risk C high risk D very high risk E ESG Director (if necessary, the ESG Comission) 129 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Application on business areas We implement social, environmental and climate risk analysis processes in all business areas, from opening checking accounts or investments for individuals and companies to issuing debt securities. In all of them, the final decision on acceptance of the client or the operation rests with the ESG Officer, if the ESG & Social, Environmental and Climate Risk area disagrees with the approval. See below the scope of actions in the different business processes. Customer Onboarding Supplier Certification Process Foreign exchange operations Since 2021, we have incorporated social, environmental and All of our suppliers undergo a mandatory social, environmental All of our foreign exchange operations are subject to scrutiny for prohibited climate topics into the onboarding process for individuals and climate risk analysis, following the guidelines for activities and restricted sectors and go through the automated flow of and legal entities, and adopted specific criteria for customer prohibited activities and restricted sectors, in addition to our negative media research, administrative and judicial processes, and social, acceptance. Analysis is carried out on all new accounts opened, proprietary analysis methodology. environmental and climate restrictive lists (see the “Controversial Notes and following the guidelines for prohibited activities and restricted sectors. The assessment also covers the identification of negative media, administrative or judicial processes and lists of a restrictive nature (see the “Notes and controversial sectors” pillar, on page 129). New products and services process New businesses and products are assessed using the TAC-NAC (Transaction Approval Committee-New Activities Committee) Governance Process, which considers ESG and social, environmental and climate risk criteria. These factors are also observed by the Corporate Initiatives Committee, responsible for deliberating on requests to implement new strategic projects, such as the creation of products and services, businesses, platforms, channels and experiences. Suppliers classified as having low impact potential in these Sectors” pillar on page 129. areas go through a simplified and automated flow, which Those related to the wood, mining (mainly linked to the extraction of gold, involves negative media research, administrative and judicial diamonds and other precious stones), tobacco, weapons and ammunition processes and restrictive lists (see the “Notes and controversial sectors are subjected to detailed manual analysis. For companies in these sectors” pillar, on page 129). On the other hand, suppliers sectors, environmental licenses, authorizations from the National Mining classified as having medium and high impact potential must Agency (ANM), Kimberley Certification (specific to diamonds), FSC Certification also respond to the ESG questionnaire. and a list of suppliers, among others, are required. At the end of the analysis, a social, environmental and climate We are thus able to eliminate the risk of foreign exchange transactions related, rating is assigned to the supplier. The final decision on its for example, to possible illegal practices and money laundering, and the export acceptance is made based on the level at which it has been of illegal wood and ores extracted from protected areas. classified in our risk matrix (page 129). Those with higher risk are subject to higher approval levels than those of the ESG & Social, Environmental and Climate Risk area. The final decision on approving the operation is made based on these assessments, and operations denied by the ESG & Social, Environmental and Climate Risk area are decided by the ESG Officer. 130 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Credit Transactions ECM Operations Since 2021, 100% of our credit operations have been subjected to social, environmental and climate risk Our Equity Capital Market operations have been undergoing social, environmental and climate risk analysis. We follow the guidelines for prohibited activities and restricted sectors, and assess the potential analysis since 2022. All clients listed in restricted and attention sectors, such as weapons industries, impact, the company’s social, environmental and climate management capacity, socio-environmental mining and agribusiness, are subjected to detailed analysis. The assessment also covers the list of notes and controversial sectors (page 129). prohibited activities and information checks in internal bureaus. All operations are also subject to detailed analysis by the ESG & Social, Environmental and Climate Risk team. Often, at this stage, meetings are held with the credit team and the client to clarify labor, supply chain and other aspects. The social, environmental and climate rating assigned to the company or operation is integrated into the qualitative credit rating calculation model, which may even impact credit rates and pricing. DCM Operations Debt Capital Markets operations have been subject, in their entirety, to the social, environmental and climate risk analysis process since 2022. We follow the guidelines for prohibited activities and restricted sectors and our proprietary analysis methodology, which measures the potential impact of the company, its ability to manage these topics, socio-environmental notes and controversial sectors (page 129), with application of the risk matrix. Other operations and activities analyzed Other operations for which technical opinions on social, environmental and climate risk are issued are the issuance of Financial CPR (Rural Producer Certificate) and CCB (Bank Credit Certificate), the sale of energy, the constitution of XP Asset’s funds and fund management, and asset issuances on our investment platform. We also analyze donations and partners benefiting from them. Training in social, environmental and climate risk We carry out periodic training on the topic of ESG and social, environmental and climate risk across the company. This topic is present in the customer and supplier onboarding training trail carried out by Additionally, if there is any urban or rural property offered as collateral in the operation, we assess employees at all levels at the beginning of the relationship with XP. the regularity of environmental licensing and the Rural Property Registry (CAR), the list of embargoed areas from IBAMA and ICMBio, illegal deforestation activities, presence on the dirty list of work similar to slavery, public civil actions, presence in “quilombola” and indigenous territories and integral protection units, soil contamination and other topics. Additionally, between 2020 and 2023, we carried out a series of training courses on the subject for the areas of Risk, Compliance, Audit, Credit, Legal and Commercial, in addition to workshops and lectures for different stakeholders. Last year, we also developed the Advisor Trail, a mandatory annual training for all investment advisors in our network, which will begin to be applied in 2024. 131 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S Social, environmental and climate risk analysis indicators In 2023, we increase the volume of manual assessments carried out by almost 5% compared to the previous year. 780 companies and individuals were the subject of social, environmental and climate scrutiny, in the onboarding, foreign exchange, DCM, ECM, capital markets and energy trading processes, among others. Of this total, 8% were denied due to social, environmental or climate issues or, in other words, the relationship with XP did not move forward. In 2022, the denial rate was 6%. The increase is related to the improvement of risk processes. Additionally, in 2023, we carried out 768 analyses for the Credit Decision and Credit Product Distribution committees, which included derivatives, ACC, CRI, CRA and Debentures operations. Number of analyses of individuals and legal entities 2022 2023 e c n a m r o f r e p t n e m e g a n a m 54 (6% denied) 70 (8% denied) 748 (94% approval) 780 (92% approval) Number of analyses for the credit decision and credit product distribution committees 2022 2023 669 768 l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I 132 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Emblematic cases GRI 201-2 Periodic risk monitoring FN-IB-410a.3 I FN-CB-410a.2 The social, environmental and climate risk analysis processes have made it possible to anticipate risks and prevent XP from being exposed to negative situations related to disrespect for human rights, the protection of indigenous territories, the deforestation of protected areas, among other issues that may violate our ethical and responsible policies and conduct. Additionally, they have helped to mitigate potential reputational, legal and credit risks related to these topics and to prevent money laundering. One of our focuses is foreign exchange operations requested by companies in the mining sector, with a close eye on the risk of illegal mining of precious stones in protected areas. In 2022, In 2022, for example, we blocked a transaction with a company that exports gold. In April 2023, an operation carried out by the Federal Police identified the company’s involvement in illegal practices. Another example was the work of the ESG and Social, Environmental and Climate Risk area in preventing credit loss and reputational risk with the denial of credit, in 2023, to an agro-industrial company that was later exposed for alleged criminal activities in indigenous and “quilombola” areas and, as a result, it filed a request for judicial recovery. We also blocked a DCM transaction with a supermarket chain that, despite its compliance, had signs of land grabbing regarding the property given as collateral, mitigating potential image, collateral and legal risks. Since 2022, we have periodically monitored the social, environmental and climate risk of our customers and operations, in three layers. 1 Automated daily monitoring Of customers, through the Compliance Platform, to monitor possible negative media, administrative and judicial processes, and inclusion in restricted lists, such as slave labor and embargoed areas, among others. When a social, environmental and climate issue is identified, we make an in-depth assessment and change the classification and opinion, which may result in the maintenance of the operation or relationship, change in client’s risk, blocking of the operation and limits and, finally, the termination of the relationship. 2 Semi annual monitoring Of the credit portfolio of legal entities, running 100% of the portfolio in the social, environmental and climate risk module of the Compliance Platform and reclassifying it. Customers reclassified with a “D” or “E” rating are reassessed on a case-by-case basis, with a new opinion being issued and analyzed by the relevant authority. The opinion may recommend maintaining the customer’s operations and limits, blocking possible operations and limits and, finally, requesting the termination of the relationship with the customer. 3 Hand-to-hand monitoring In the last layer, we carry out a closer monitoring of credit portfolio customers with a “D” or “E” social, environmental and climate rating (high and very high risk, respectively), with a manual and more detailed monitoring of each of them. 133 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Social, environmental and climate risk management GRI 201-2 I FN-AC-410b.3 I FN-CB-550a.2 I FN-IB-550a.2 We manage the social, environmental and climate risk associated with our activities, customers, operations, suppliers and products, including the stages of identification, classification, analysis, monitoring, mitigation, control and recording of loss occurrences. The objective is to maintain exposure to social, environmental and climate risk within the tolerances pre-established in our RAS. In 2022, we included climate variables in the definition of the social, environmental and climate rating, such as the potential physical or transition risk of the sector; history of extreme weather events; and the company’s climate management capacity, using information on eco-efficiency targets, public climate commitments, disclosure of Greenhouse Gas Emissions, climate targets, incorporation of TCFD recommendations, existence of a climate change policy, and targets or guidelines for addressing climate The evolution of the monitored management indicators is reported quarterly to the Risk Department, risk. and every six months to the Audit, Risks, Credit and ESG Committees and to the Board of Directors, following the guidelines of the Social, Environmental and Climate Responsibility Policy, the Integrated Risk Management Policy, and the Social, Environmental and Climate Risk Procedure. That year, we also became signatories to the PCAF and adhered to Febraban’s Climate Sensitivity Rule, starting to measure, monitor and manage the exposure of the credit portfolio based on two managerial Management Indicators climate indicators: climate sensitivity and financed emissions (page 88). Monitoring these indicators allowed us to establish, in 2023, our climate risk appetite metrics, with subsequent definition, together with the Social, Environmental and Climate Risk Commission, which is linked to the Executive Risk Committee, of targets for reducing the intensity of financed emissions and the portfolio’s climate sensitivity. This year, we began to assess the resilience to potential climate risks • Exposure to sectors with high potential for social, environmental and climate impact of the credit portfolio, based on the worsening of specific revenues from businesses exposed to the of the corporate credit portfolio climate. • Financed emissions from the corporate credit portfolio • Credit exposure to green economy sectors RAS indicators • Social, environmental and climate quality of the corporate credit portfolio • Climate sensitivity of the corporate credit portfolio We ended 2023 with just 2.2% of the risk allocated to companies with high and very high social, environmental and climate risk in the credit portfolio, that is, within our risk appetite limits. The financed emissions indicator had an intensity of 6.24 tCO2e/R$ MM, with a reduction of 48.22% between 2021 and 2023. Only 12.72% of the risk allocated had a high climate sensitivity classification, being within our RAS limits, with a reduction of two percentage points between 2021 and 2023. These indicators show that our credit portfolio has grown together with the social, environmental and climate quality of the portfolio. 134 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S Main climate risks and impacts for XP, with their possible materialization deadlines and actions taken to mitigate such risks FN-CB-550a.2 I FN-IB-550a.2 Climate Risks Impact Materialization in other risks Climate Risks Impact Materialization in other risks i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m M R E T T R O H S Transition Risk: Regulatory n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Possibility of fines resulting from non- compliance with regulatory requirements. Legal Risk Operational Risk Reputational Risk Credit Risk Reputational Risk Legal Risk Transition Risk: Market M R E T M U I D E M Possibility for the institution of losing market share due to changes in consumer behavior. Credit Risk Market Risk Possibility for client-companies of losing market share due to changes in consumer behavior. Market Risk Reputational Risk Possibility of losing market share due to the imposition of economic barriers. Credit Risk Market Risk Possibility of change in the demand and supply of products. Credit Risk Market Risk Need for climate adaptation measures. Operational Risk Credit Risk Costs with regulatory compliance. Operational Risk Possibility of enforcements related to the reduction of Greenhouse Gas Emissions. Credit Risk Possibility of pricing and/or carbon taxation. Credit Risk Possibility of increased operating costs, with changes in prices due to structural changes or supply shocks. Credit Risk Transition Risk: Legal Possibility of climate litigation unfavorable to the company. T R O H S M R E T Transition Risk: Reputational Risk of greenwashing. Possibility of increasing climate responsibility when taking actions for decarbonization. Legal Risk Reputational Risk Credit Risk Operational Risk Reputational Risk Legal Risk Credit Risk Reputational Risk Legal Risk Operational Risk Credit Risk 135 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S Climate Risks Impact Materialization in other risks How we manage risks T R O H S M R E T Transition Risk: Technological Acute Physical Risk (Extreme Climate Events) Chronic Physical Risk (Long-Term Changes) i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m M R E T M U I D E M n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Need to incorporate new technologies with increased competitiveness and production costs. Credit Risk Market Risk Need to invest in new technologies. Credit Risk Operational Risk Possibility of client-companies losing productivity due to business interruption or asset idleness. Credit Risk Possibility of damage or repricing of family and business assets. Credit Risk Operational Risk Possibility of loss of/reduction in family income. Credit Risk Possibility of reduction in productivity of the agricultural sector. Credit Risk Possibility of reduction in productivity of the agricultural sector. Credit Risk • ESG and social, environmental and climate risks governance implemented at the institution. • Periodic monitoring of the climate-related regulatory agenda. • Management and monitoring of legal and regulatory compliance. • Social, environmental and climate risk analysis process implemented in the onboarding, suppliers, foreign exchange, credit, DCM and ECM processes, where we assess, among other factors, the regulatory compliance related to social, environmental and climate topics, in addition to possible processes and fines related to the topic. • Social, environmental and climate monitoring process implemented for customers. • Social, environmental and climate risk management process in the institution’s portfolios. • Monitoring possible losses related to social, environmental and climate events. • Contingency plan that considers climate events. • Monitoring of the credit portfolio’s climate sensitivity indicator. Possibility of impact on supply chains. Credit Risk • Monitoring the intensity of financed emissions from the credit portfolio. Possibility of impact on company productivity. Credit Risk 136 Integrated Annual Report 2023 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Process for recording losses due to social, environmental and climate issues We have established a detailed process for recording losses arising from social, environmental and • Slave labor at XP Inc. climate damage, both relating to administrative and judicial proceedings (operational risk), or relating to credit operations (credit risk). • Child labor at XP Inc. • Criminal profit from prostitution. The methodology follows the guidelines of Febraban’s “Guide for Recording Losses resulting from • Contamination carried out by XP Inc. Socio-Environmental Damage.” In the case of losses related to administrative or judicial proceedings, we mark the proceedings that result in provisions and/or disbursements arising from the following topics: • Contamination carried out by a customer or supplier. • Climate litigation. • Inadequate discharge of solid waste by XP Inc., including disposal, recycling and reverse logistics. • Inadequate discharge of solid waste by the customer and/or supplier, including disposal, recycling and reverse logistics. For credit operations, for example, events related to environmental licensing, illegal deforestation, slave labor, environmental fines, indigenous lands, among others, are considered. Furthermore, we carry out a process of marking losses in three phases: identification of operations with credit loss; social, environmental and climate verification of the companies involved; and analysis of the relationship • Failure to comply with environmental legislation in accordance with law 6.938 by XP Inc. between credit loss and social, environmental and climate issues, thus ensuring adequate recording • Environmental crime committed by XP, in accordance with law 6.938/1981. of losses resulting from these damages. • Non-compliance with environmental regulations in accordance with law 6.938/1981 by the customer and/or supplier. This approach aims to promote XP’s responsibility and transparency in relation to the social, environmental and climate impacts of our operations and improve the social, environmental and • Environmental crime committed by the customer and/or supplier in accordance with law 6.938/1981. climate risk management process. It is worth highlighting that we did not record any losses relating • Areas and assets with restricted use and/or land occupation and areas of special preservation to events of this type in 2023, which demonstrates the company’s adequate management of these interest, including historical, archaeological and cultural heritage. social, environmental and climate risks. • Environmental licensing, including lack of licensing or non-compliance with conditions set by environmental agencies and legislation. • Discrimination or prejudice in the work environment carried out by XP Inc. • Discrimination or prejudice in the work environment carried out by customers or suppliers. • Customer or supplier working with slave labor. • Customer or supplier working with child labor. We did not record any losses related to such events in 2023, which demonstrates the proper management of the company’s Social, Environmental, and Climate Risks. 137 Integrated Annual Report 2023 Integrated Annual Report 2023 GRI and SASB index Summary of GRI disclosures This report complies with the GRI Standards (GRI 1: Foundation 2021), for the period from January 1 to December 31, 2023. Metric Description Response location Status Comment GRI 2: The organization and its reporting practices (General Disclosures 2021) 2-1 2-2 2-3 2-4 2-5 Organizational details Entities included in the organization's sustainability report Reporting period, frequency and point of contact About this Report, page 3 About this Report, page 3 Information restatements Materiality, page 9 External assurance Not verified GRI 2: Activity and workers (General Disclosures 2021) 2-6 2-7 2-8 Activities, value chain and other business relationships Value creation, page 17 Employees Employees, page 61 Workers who are not employees Employees, page 62 Metric Description Response location Status Comment GRI 2: Governance (General Disclosures 2021) 2-9 2-10 2-11 2-12 2-13 2-14 2-15 2-16 2-17 Governance structure and composition Governance structure, page 98 Appointment and selection to the highest governance body Governance structure, page 99 Chair of the highest governance body Governance structure, page 99 Role of the highest governance body in overseeing the management of impacts Delegation of responsibility for managing impacts Role of the highest governance body in sustainability reporting Governance structure, page 99 Corporate Governance, page 101 About this Report, page 3 Conflicts of interest Compliance, page 106 Communication of critical concerns Collective knowledge of the highest governance body Compliance, page 106 Governance structure, page 98 138 Integrated Annual Report 2023 Metric Description Response location Status Comment Metric Description Response location Status Comment 2-18 2-19 2-20 2-21 Assessment of the performance of the highest governance body Compensation policies Process for determining compensation Total annual compensation ratio Corporate Governance, page 100 Governance structure, page 100 Governance structure, page 100 GRI 2: Estratégia, políticas e práticas (Conteúdos Gerais 2021) 2-22 2-23 2-24 2-25 2-26 Statement on sustainable development strategy Letter from the CEO, page 5 Policy commitments Materiality, page 9 Incorporation of policy commitments Processes to remediate negative impacts Mechanisms for seeking advice and raising concerns Compliance, page 106 Compliance, page 106 Compliance, page 106 2-27 2-28 Compliance with laws and regulations Not applicable Membership associations Value creation, page 23 No significant cases of non-compliance were identified to be reported, as there were no fines applied or important non- monetary sanctions to detail. Not reported GRI 2: Stakeholder engagement (General Disclosures 2021) 2-29 2-30 Approach to stakeholder engagement Quality in relationships, page 4 e 58. NPS – Net Promoter Score, page 60. Collective bargaining agreements Collective bargaining agreements, page 73 GRI 3: Material Topics 2021 3-1 3-2 3-3 Process to determine material topics Materiality, page 9 List of material topics Materiality, page 10 Management of material topics Materiality, page 9 GRI 201: Financial Performance 2016 201-1 Direct economic value generated and distributed Value creation, page 18 Distribution of added value, page 22 139 Integrated Annual Report 2023 Metric Description Response location Status Comment Metric Description Response location Status Comment 201-2 201-3 201-4 Financial implications and other risks and opportunities due to climate change Defined benefit plan obligations and other retirement plans Financial assistance received from the government Financed emissions page 88 Social, environmental and climate risk management, page 134 Tax approach, page 114 GRI 202: Market presence in 2016 202-1 Ratios of standard entry level wage by gender compared to local minimum wage GRI 203: Indirect Economic Impacts 2016 203-1 203-2 Infrastructure investments and services supported Significant indirect economic impacts GRI 204: Procurement Practices 2016 204-1 Proportion of spending on local suppliers Suppliers page 74 Not applicable There are no retirees Not reported Not applicable Not applicable There are no investments in infrastructure and support for services There are no significant indirect economic impacts GRI 205: Anti-corruption 2016 205-1 205-2 205-3 Operations assessed for risks related to corruption Communication and training on anti- corruption policies and procedures Confirmed incidents of corruption and actions taken Compliance, pages 106 e 116 Compliance, pages 106, 109 e 117 Compliance, page 116 GRI 206: Anti-competitive Behavior 2016 206-1 GRI 207: Tax 2019 207-1 207-2 Legal actions for anti- competitive behavior, anti-trust, and monopoly practices Tax approach Tax governance, control, and risk management Tax approach, page 114 Tax approach, page 114 GRI 301: Materials 2016 301-1 Materials used, by weight or volume Not applicable There is no representative use of materials 140 Integrated Annual Report 2023 Metric Description Response location Status Comment Metric Description Response location Status Comment 301-2 GRI 302: Energy 2016 Raw materials or recycled materials used Not applicable There is no representative use of materials 302-1 302-2 302-3 302-4 Energy, page 93 Energy consumption within the organization Energy consumption outside the organization Energy intensity Reduction in energy consumption GRI 303: Water and effluents 2018 303-1 303-2 303-3 303-4 303-5 Water, page 94 IInteractions with water as a shared resource Management of water discharge-related impacts Water intake Water discharge Water consumption Water, page 94 Not applicable Not reported Not applicable There is no energy consumption outside the company There was no reduction in energy consumption Not applicable There is no discharge of effluents Not applicable Not applicable There is no water intake There is no water discharge GRI 304: Biodiversity 2016 304-2 304-3 Significant impacts of activities, products and services on biodiversity Protected or restored habitats GRI 305: Emissions 2016 305-1 305-2 305-3 305-4 305-5 Direct (Scope 1) GHG emissions Greenhouse Gas Emissions, page 86 Greenhouse Gas Emissions, page 86 Greenhouse Gas Emissions, page 86 Financed emissions, page 88 Climate sensitivity of the credit portfolio, , page 91 Energy indirect (Scope 2) GHG emissions Other indirect (Scope 3) GHG emissions GHG emissions intensity Reduction of GHG emissions Not applicable Not applicable There are no significant impacts of activities, products and services on biodiversity There are no protected or restored habitats Not reported Not applicable There was no reduction of Greenhouse Gas Emissions 141 Integrated Annual Report 2023 Metric Description Response location Status Comment Metric Description Response location Status Comment GRI 306: Waste 2020 GRI 401: Employment 2016 306-1 306-2 306-3 306-4 306-5 Waste generation and significant waste- related impacts Management of significant waste- related impacts Waste generated Waste, page 94 Waste diverted from disposal Waste, page 95 Waste directed to disposal Waste, page 94 GRI 308: Supplier Environmental Assessment 2016 308-1 308-2 Suppliers, page 74 New suppliers that were screened using environmental criteria Negative environmental impacts in the supply chain and actions taken Not applicable Not applicable We did not identify significant impacts related to waste generated in our operations during the year. We did not identify significant impacts related to waste generated in our operations during the year. Not applicable We have not identified negative environmental impacts from our supply chain. 401-1 401-2 New hires and employee turnover New hires and job turnover, page 63 Benefits provided to full-time employees that are not provided to temporary or part- time employees Physical, mental and financial well-being, page 72 Physical, mental and financial well-being, page 73 401-3 Parental leave GRI 403: Occupational Health and Safety 2018 403-1 403-2 403-3 403-4 Occupational health and safety management system Physical, mental and financial well-being, page 72 Hazard identification, risk assessment and incident investigation Not applicable There is no hazard identification, risk assessment or incident investigation Occupational health services Physical, mental and financial well-being, page 72 Worker participation, consultation, and communication on occupational health and safety Physical, mental and financial well-being, page 72 142 Integrated Annual Report 2023 Metric Description Response location Status Comment Metric Description Response location Status Comment 403-5 403-6 403-7 403-8 Worker training on occupational health and safety Not applicable Promotion of worker health Physical, mental and financial well-being, page 72 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships Workers covered by an occupational health and safety management system Physical, mental and financial well-being, page 73 Physical, mental and financial well-being, page 72 Physical, mental and financial well-being, page 73 403-9 Work-related injuries 403-10 Work-related ill health GRI 404: Training and Education 2016 404-1 404-2 404-3 Average hours of training per year, per employee Programs for upgrading employee skills and transition assistance programs Percentage of employees receiving regular performance and career development reviews Training and awareness, page 109 Qualification and training, page 67 360º assessment, page 64 GRI 405: Diversity and Equal Opportunity 2016 405-1 405-2 Diversity of governance bodies and employees Ratio of basic salary and compensation of women to men Diversity and inclusion, page 70 Compensation and incentives, page 66 There were no reported deaths, work accidents or occupational illnesses of employees or non- employed workers GRI 406: Non-Discrimination 2016 406-1 Incidents of discrimination and corrective actions taken Compliance, page 107 143 Integrated Annual Report 2023 Metric Description Response location Status Comment Metric Description Response location Status Comment GRI 407: Freedom of association and collective bargaining 2016 GRI 411: Rights of indigenous peoples 2016 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk Freedom of association and trade unions, page 72 GRI 408: Child labor 2016 408-1 Operations and suppliers at significant risk for incidents of child labor Operações e fornecedores com risco significativo de casos de trabalho infantil, page 76 GRI 409: Forced or compulsory labor 2016 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor Operations and suppliers at significant risk for incidents of forced or compulsory labor, , page 76 GRI 410: Security practices 2016 410-1 Security personnel trained in human rights policies or procedures Training and awareness, page 109 411-1 Incidents of violations involving rights of indigenous peoples GRI 413: Local Communities 2016 413-1 413-2 Society, pages 76 e 83 Operations with local community engagement, impact assessments, and development programs Operations with significant actual and potential negative impacts on local communities GRI 414: Supplier Social Assessment 2016 414-1 New suppliers that were screened using social criteria Suppliers, page 74 GRI 415: Public Policy 2016 Not applicable There were no cases of violation of the rights of indigenous peoples Not applicable No operations with significant actual or potential negative impacts on local communities were identified. 415-1 Political contributions Not applicable There were no political contributions 144 Integrated Annual Report 2023 Metric Description Response location Status Comment Metric Description Response location Status Comment GRI 416: Consumer health and safety GRI 418: Customer Privacy 2016 416-1 416-2 Assessment of the health and safety impacts of product and service categories Incidents of non-compliance concerning the health and safety impacts of products and services GRI 417: Marketing and Labeling 2016 417-1 417-2 417-3 Requirements for product and service information and labeling Incidents of non-compliance concerning product and service information and labeling Incidents of non-compliance concerning marketing communications Customers, page 59 Not applicable Not applicable Our products and services do not generate direct impacts on the health and physical safety of customers No cases of non- compliance were identified in relation to impacts on health and safety caused by products and services. Not applicable Not applicable There were no incidents of non- compliance relating to information and labeling of products and services There were no cases of non-compliance in relation to marketing communications 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data Total number of substantiated complaints regarding breaches of privacy and loss of customer data, page 120 SASB index We report information applicable to our materiality in accordance with SASB Financial Sector standards, for the segments: Commercial Banking (CB); Asset Management and Custody Activities (AC); and Investment Banking and Brokerage (IB). Code Metric Page Comment Data security FN-CB-230a.2 Description of the approach to identify and resolve data security risks. Technology and Information, page 118 145 Integrated Annual Report 2023 Code Metric Page Comment Code Metric Page Comment Transparent information and fair advice for customers FN-AC-270a.3 Description of the approach to inform customers about products and services XP Gênio, the suitability tool that supports investment decisions, page 59 Diversity and inclusion of employees FN-AC-330a.1 FN-IB-330a.1 Percentage of representation of gender and diversity groups in executive management, non-executive management, technical positions and all other employees. Diversity and inclusion, page 70 Employee profile, page 61 Incorporation of environmental, social and governance factors in credit analysis FN-CB-410a.2 Description of the approach to embed environmental, social and governance (ESG) factors to credit analysis. Sustainable Business, page 48 Periodic risk monitoring, page 133 Incorporation of environmental, social and governance factors into investment management and advisory services FN-AC-410a.1 Value of assets under management, by asset class, that use integration of environmental, social and governance (ESG) issues, thematic sustainability investment, and screening. Sustainable Business, page 48 ESG Funds, pages 52 e 53 FN-AC-410a.2 Description of the approach to incorporate environmental, social and governance factors into investment and/or wealth management processes and strategies. Sustainable Business, page 48 ESG Funds, pages 52 e 53 Incorporation of environmental, social and governance factors into investment banking and brokerage activities FN-IB-410a.1 FN-IB-410a.2 FN-IB-410a.3 Revenues from underwriting, advisory and securitization operations that include environmental, social and governance (ESG) factors, by sector. Number and total value of investments and loans that include environmental, social and governance (ESG) factors, by sector. Description of the approach to include environmental, social and governance (ESG) factors in investment banking and brokerage activities. Sustainable Business, page 48 Sustainable Business, page 48 ESG Funds, pages 52 e 53 Sustainable Business, pages 48 e 49 Periodic risk monitoring, page 133 ESG Funds, pages 52 e 53 Financed emissions FN-AC-410b.3 Percentage of total assets under management (AUM) included in the calculation of financed emissions. Social, environmental and climate risk management, page 134 146 Integrated Annual Integrated Annual Report 2023 Report 2023 Code Metric Page Comment FN-AC-410b.4 FN-CB-410b.4 Business ethics FN-CB-510a.1 FN-AC-510a.1 FN-IB-510a.1 FN-CB-510a.2 FN-AC-510a.2 FN-IB-510a.2 Description of the methodology used for calculating financed emissions Financed emissions, pages 88 e 90 Total amount of monetary losses arising from lawsuits associated with fraud, insider trading, antitrust, anti-competitive conduct, market manipulation, mismanagement or other related rules or regulations of the financial sector. Monetary losses arising from legal proceedings, page 114 Description of reporting policies and procedures. Reporting channel page 107 Systemic risk management FN-CB-550a.2 FN-IB-550a.2 Description of the approach to incorporate the results of mandatory and voluntary stress tests in capital adequacy planning, long-term business strategy and other business activities GSocial, environmental and climate risk management, , page 135 147 s k s i R e c n a n r e v o G y t i l i b i s n o p s e r e t a r o p r o C l a t n e m n o r i v n E y t e i c o S i s p h s n o i t a e r l e c n a m r o f r e p t n e m e g a n a m n i y t i l a u Q l a i c n a n F i d n a y g e t a r t S Distribution of taxes by sphere of government R$ 2022 2023 Distribution of value added (R$/million) 2021 2022 2023 Federal State Municipal Deferred 787,390.00 1,279,840.00 3,770.00 229,817.00 2,308.00 241,261.00 -396,437.00 -555,062.00 Distribution of value added (R$/million) GRI 201-1 2021 2022 2023 DIRECT ECONOMIC VALUE GENERATED (revenue) Provision of services (before taxes) 6,801,679 6,508,756 7,153,640 Result of operations with financial instruments 5,997,072 7,527,333 8,572,322 Other net operating revenues (expenses) 324,354 256,944 10,638 Reversal (supplementation) of the allowance for doubtful accounts Total Revenues Inputs acquired from third parties Operating Costs -92,560 -94,159 -360,859 13,030,545 14,198,874 15,375,741 Personnel and charges Direct compensation Employees' profit sharing Benefits Social security charges Other Taxes, fees, and contributions Federal State Municipal Deferred taxes Compensation on third-parties capital Financial expenses Rents 3,283,457 3,943,284 3,728,125 1,416,247 1,597,229 1,371,973 1,362,046 1,640,904 1,680,754 130,187 358,878 16,099 1,773,467 1,128,707 2,516 195,763 487,237 22,151 624,54 787,39 3,77 259,053 229,817 223,694 437,377 14,327 968,347 1,279,840 2,308 241,261 383,191 152,23 135,732 16,498 -396,437 -555,062 416,794 402,303 14,491 641,134 617,478 23,656 3,592,460 3,580,211 3,899,391 3,657,592 4,009,818 4,568,409 Compensation on equity Communication and data processing -327,522 -713,022 -771,381 Non-controlling shareholder's interests 3,044 1,161 689 Loss and recovery of asset values Other administrative expenses Gross value added Depreciation and Amortization Net value added produced Value added received from transfer Equity accounting Total value added received from transfer -4,377 - - Retained earnings (losses) of shareholders 3,589,416 3,579,050 3,898,702 - -693,163 -620,048 Distribution of value added 8,801,614 8,564,829 9,236,997 9,041,054 8,782,871 9,415,903 -231,730 -205,877 -252,413 8,809,324 8,576,994 9,163,490 -7,710 -7,710 -12,165 -12,165 73,507 73,507 Total value added to be distributed 8,801,614 8,564,829 9,236,997 148 l e u a V n o i t a e r c P X t u o b A n o i t c u d o r t n I Integrated Annual Report 2023 Integrated Annual Report 2023 Acknowledgments General coordination ESG & Social, Environmental and Climate Risk Area of XP Inc. Fabio Simabukuro Cruz Amanda Oliveira Karla Mesquita Julyo Bezerra Legal, Compliance and ESG Department Fabrício Almeida Compliance Office Renato Ferrari Images Shutterstock Freepik Studio Caco Parise Organization of the process of collecting indicators, updating materiality, writing, graphic design and Casa Azul Conteúdo e Design para Sustentabilidade layout XP Inc. Av. Chedid Jafet, 75 - Torre Sul - Vila Olímpia, São Paulo Investor Relations relacoes.investidores@xpi.com.br 149 

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