Case study: How BANK OF AFRICA takes action on its PRB commitments

2.1 Impact Analysis (Key Step 1)

Show that your bank has performed an impact analysis of its portfolio/s to identify its most significant impact areas and determine priority areas for target-setting.

Scope: BOA’s analysis encompasses 90% of exposures within the corporate portfolio, including both small and medium-sized enterprises (SMEs) and large corporations, as well as the bank’s investment banking portfolio.

The SME portfolio represents 82% of the total, equivalent to 1,144 companies, while the BKG portfolio comprises 5% of the companies. Additionally, 63% of BOA’s financed issues are associated with the SME portfolio.

Footprint results

Financed emissions by sector Portfolio BKG, SME, GE

BOA provides, in its analysis, financed emissions by sector and the number of financed businesses in each sector. The Real Estate & Construction sector accounts for 37% of total financed emissions attributed to BOA.

With the assistance of UNEP-FI, BANK OF AFRICA has incorporated impact analysis into its financing practices and at the portfolio level.

Ongoing Growth in Environmental and Social Financing
To support the Sustainable Development Goals, BANK OF AFRICA Group is committed to evaluating the impact of its initiatives, particularly the effects of the financing extended to its clients. For the third consecutive year, the Group published data on Positive Impact Loans related to Business Loans in Morocco—excluding Public Administrations, Financial Activities, and Intergroup transactions. These loans amount to MAD 56 billion, representing 41.7% of total customer loans in Morocco and 27.8% of total outstanding customer loans within the Group. Among these, loans with a positive impact totalled MAD 17.5 billion, accounting for 31.3% of total business loans in Morocco, a percentage consistent with that recorded in 2022.

Noteworthy is the increase in environmental and social financing: water financing grew by 23%, electricity financing by 25%, and mobility financing by 26%. This growth largely counterbalances the 7.3% decline in financing aimed at economic support, which was due to the legal cessation of marketing Oxygène and Relance Credits.

The breakdown of positive-impact loans to Moroccan business clients is as follows:

• Loans to support the economy / SMEs: MAD 8.9 billion
• Loans with an environmental impact: DH4.76 billion, including:
  • Climate: 2.54 M
  • Water: MAD 2.21 million
  • Circular Economy: 0.01 M DH
• Loans with a social impact: MAD 3.81 billion, comprising:
  • Mobility: DH1.91m
  • Access to electricity: DH1.08m
  • Health: MAD0.74m
  • Education: MAD0.08m

A more comprehensive overview of BOA’s initiatives can be found in its 2024 PRB Reporting and Self-Assessment Template.

2.2 Target Setting (Key Step 2)

Show that your bank has set and published a minimum of two targets which address at least two different areas of most significant impact that you identified in your impact analysis.

The targets have to be Specific, Measurable (qualitative or quantitative), Achievable, Relevant and Time-bound (SMART).

In preparation for the work of BOA’s EHS Committee, various subcommittees were convened in 2023 to delve deeper into several key issues. These included (i) the new sustainability strategy approved by BANK OF AFRICA’s Board of Directors in June 2023 to address updated regulatory requirements and challenges, (ii) enhancing the financial inclusion strategy, focusing on priority groups such as women, Entrepreneurs/VSEs/StartUps, youth, and individuals with disabilities, (iii) establishing the Bank’s framework for sustainable finance, and (iv) developing a project for implementing a low-carbon strategy and a climate risk analysis system.

The targets set are: financial inclusion, climate mitigation, and capacity building for SMEs.

Alignment:

BOA’s Financial Integrated Report refers to frameworks created by the GRI and the International Integrated Reporting Council (IIRC). The Group is also committed to the CSRD (Corporate Sustainability Reporting Directive) in the European Union, the TCFD (Task Force on Climate-Related Financial Disclosures), the Sustainable Development Goals (SDGs) and the Paris Agreement.

Additionally, since May 2010, BANK OF AFRICA has been the sole Moroccan bank to adopt the Equator Principles (EP). These principles, which are founded on the IFC’s performance criteria, serve as the standard for optimal environmental and social practices in project financing.

Actions, including milestones, defined to meet the set targets:

Portfolio Composition: Adjust the portfolio by prioritizing companies with strong climate strategies and divesting from high-emission sectors.
Examples:
▶ Increase the share of companies with Science-Based Targets (SBT) to 50% by 2030.
▶ Completely divest from the Oil & Gas sector by 2035.

Reallocation of Investments:

Alter the portfolio’s composition by shifting investments from one area to another.
Examples:
▶ Shift 10% of investments from industrial companies to technology companies by 2030.
▶ Reallocate 90% of investments in Apple to Facebook starting in October 2026.

Decarbonizing the Portfolio:

Incorporate the decarbonization pathways of portfolio companies into the scenarios.
Examples:
▶ Companies with SBT targets are expected to have reduced their emissions by 90% by 2050.
▶ The carbon intensity of firms in the energy production sector is projected to reach zero by 2040.

Further details on BOA’s progress, actions, and initiatives related to financial inclusion, climate, and SME capacity building can be found in its 2024 PRB Reporting and Self-Assessment Template.

3.1 Client engagement

Does your bank have a policy or engagement process with clients and customers in place to encourage sustainable practices?

Does your bank have a policy for sectors in which you have identified the highest (potential) negative impacts?

Describe how your bank has worked with and/or is planning to work with its clients and customers to encourage sustainable practices and enable sustainable economic activities. It should include information on relevant policies, actions planned/implemented to support clients’ transition, selected indicators on client engagement and, where possible, the impacts achieved.

BANK OF AFRICA’s quality policy is fundamental to its growth strategy, focused on continually enhancing the quality of its products and services. The primary goal is to meet the evolving needs of customers and ensure their satisfaction by actively considering their feedback, which informs ongoing process improvements.

This quality policy is anchored in an enhanced customer feedback system, with the ISO 9001:2015 standard serving as the framework for these efforts. BANK OF AFRICA was the first Moroccan bank to achieve ISO 9001 certification in the early 2000s.

The bank has established a formalized policy through its Code of Ethics and Quality Policy, which provides customers with comprehensive information about products and services, including detailed insights into potential risks and benefits. This is aimed at ensuring that suitable products are offered to clients, aligned with their risk profiles, and preventing misleading marketing tactics, mis-selling, or coercive sales practices. An accessible formal complaint handling system is in place, with clear procedures for addressing any customer complaints. The Code of Ethics and Professional Conduct outlines the principles and guidelines governing the professional and ethical standards for all BANK OF AFRICA Group entities.

The year 2023 was one of consolidation and innovation. The Compliance Division bolstered its risk management system, integrating technological advancements and adopting a broader strategic approach. This proactive strategy has resulted in improved operations and an effective response to heightened regulatory demands.

BANK OF AFRICA has shown a robust capacity to adapt and evolve within a complex regulatory landscape. The advancements achieved reflect a commitment to upholding the highest compliance and ethical standards, while also supporting the bank’s aspirations for growth and operational excellence.

In its dedication to thorough compliance management, BANK OF AFRICA SA continued to play a vital role in combating money laundering and the financing of terrorism in 2023 and adhering to international economic sanctions and embargoes, protecting personal data transparency (FATCA), and preventing and combating corruption—all while upholding its ethical and deontological principles.

At the Group level, BANK OF AFRICA has made strides in implementing projects to enhance compliance, in line with BAM Directive n°6/W/2021 regarding due diligence protocols for credit institutions and similar entities. Notable developments in 2023 included the operationalization of a new Group Compliance organizational structure, consolidating subsidiaries and instituting systematic evaluations of Compliance Officers by the Group AML/CFT Manager. Significant progress has also been made in automating processes, such as activity reporting and centralized transaction monitoring, with several major projects nearing completion, including the automation of compliance risk mapping.

Moreover, the compliance framework has been revised to encompass all areas of compliance and to strengthen management across the Group, with a significant impetus also given to strengthening staffing levels.

Regarding capital market integrity, the Group Compliance provided reports on its ethical activities to the Moroccan Capital Market Authority (Autorité Marocaine du Marché des Capitaux, AMMC). Throughout its various activities and service offerings, BANK OF AFRICA prioritizes the interests of its clients. The bank ensures transparent, fair, and impartial treatment of customers, offering products and services that meet their needs while providing clear and precise information about all terms, conditions, and pricing. Multiple channels are available for customer complaints, which are addressed by dedicated teams and forwarded to the relevant departments within reasonable timeframes.

5.1 Governance Structure for Implementation of the Principles

Does your bank have a governance system in place that incorporates the PRB?

Please describe the relevant governance structures, policies and procedures your bank has in place/is planning to put in place to manage significant positive and negative (potential) impacts and support the effective implementation of the Principles.

Founded in November 2019, BOA’s Environmental, Social and Sustainability Committee – known as the EHS Committee – was established to oversee and manage the implementation and enhancement of the Group’s strategy.

The EHS Committee’s purpose is to monitor the execution of the environmental, social, and sustainability objectives, and it convenes quarterly to fulfill this role.

In this capacity, the committee is tasked with overseeing the implementation of the Group’s action plan in areas such as Social Responsibility and Diversity & Inclusion Action Plans. It also develops and tracks performance indicators related to Impact Finance and supervises the Group’s overall commitments to sustainable development and corporate social responsibility (CSR). Additionally, the committee ensures the efficacy of the Group’s management of environmental, climate, and social risks.

To prepare for the EHS Committee’s work, several commissions have been convened to delve into issues such as: (i) the new sustainability strategy approved by the Board of Directors of BANK OF AFRICA to address evolving regulatory requirements and challenges; (ii) the enhancement of the financial inclusion approach, with key target groups including women, entrepreneurs/VSEs/start-ups, youth, and individuals in poverty; (iii) the establishment of a reference framework for sustainable finance; and (iv) the development of a low-carbon strategy and a climate change strategy alongside a climate risk analysis system.

In terms of the Governance, Appointments, and Remuneration Committee’s work, priority has been given to further strengthening the Group’s governance framework. This includes (i) the appointment of Mrs. Ngozi Edozien as a new member of the Governance, Appointments, and Remuneration Committee; (ii) conducting an annual review of the Board’s operations and independence through performance assessments and conflict of interest declarations; (iii) updating the governance framework in accordance with regulatory developments, including revising the Governance Corpus to reflect all regulatory changes since 2015 and the start of the roll-out and updating of the Governance subsidiaries; and (iv) organizing seminars to keep Directors informed on various subjects. Furthermore, the Governance, Appointments, and Remuneration Committee has engaged with the EHS Committee’s efforts, particularly focusing on the implementation of the new Group CSR Charter at the subsidiary level and the timetable for the Governance Bodies for 2024.

 

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References:

This case study is based on published information by BANK OF AFRICA, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.ir-bankofafrica.ma/sites/default/files/2024-09/4th PRB-Reporting-and-Self-Assessment- BANK OF AFRICA 2024 __.pdf