Case study: How GIB 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.

By late 2021, GIB completed an impact analysis on three of its major business areas: Wholesale Banking, UK Treasury and UK Asset Management. GIB’s Wholesale Banking, Group Treasury and Asset Management (and Investment Banking) business units accounted for 59%, 22% and 8% of its overall business by total income in 2021 respectively.

This analysis encompasses the majority of the Bank by revenue. However, it has yet to include Investment Banking, the Retail Bank, or Group Treasury.

The analysis extended to all the geographies where GIB operates.

Given the nature of GIB’s operations, it is not feasible to update the impact analysis regularly (e.g., annually). Nevertheless, to gain a clearer understanding of its positive and negative impacts, GIB plans to broaden the analysis to additional business units in 2023/2024 and beyond.

Wholesale Banking:
GIB primarily concentrates on the GCC region, where its activities have a large exposure to the Energy, Oil and Petrochemicals, and Financial Services sectors.

UK Asset Management:
GIB’s Asset Management portfolio is highly exposed to the United States (62%), followed by Japan (6.46%). Industry-wise, the portfolio is primarily exposed to Information Technology (23%), Financials (13%), Healthcare (13%), Consumer Discretionary (12%), and Communication Services (10%).

Using the impact analysis tools, GIB identified the following areas of most relevant impacts:

• Climate
• Water Availability
• Waste
• Resource Efficiency and Security
• Housing
• Mobility

GIB regularly engages with various stakeholders, including policymakers, clients, and its employees, to grasp the main challenges and priorities within the countries where GIB operates. Further details can be found in the stakeholder mapping section of GIB’s sustainability report.

Based on the outcomes of the impact analysis across its business lines, GIB has identified the following areas of focus:

• Climate
• Inclusive and Healthy Economies

While the impact analysis provided insights into GIB’s client concentration and overall impact, the bank seeks to further understand the impact these clients have, particularly when it comes to climate.

Consequently, GIB plans to initiate the measurement of its Scope 3 financed emissions in 2023/2024. This initiative will help GIB identify which clients and sectors have a higher impact in terms of their effects on climate.

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).

GIB is dedicated to making a positive impact on sustainable development while minimizing its negative impacts on society and the environment.

Inclusive Economies:

• GIB has established SMART targets aimed at financing micro, small, and medium-sized enterprises (MSMEs). These targets align with Saudi Arabia’s Vision 2030 and the Sustainable Development Goals (SDG 8). Although specific figures have not been disclosed due to commercial sensitivities, they are tracked internally.

Climate:

• GIB has set SMART targets in line with its commitment to the Net Zero Asset Managers Initiative and the Sustainable Development Goals (SDG 13). These targets are applicable solely to the Sustainable World Fund.

Baseline Years:

• MSME: 2021
• Asset Management: 2019

MSME Data: The figures remain confidential due to commercial sensitivities but are monitored internally.

Asset Management Targets:

• Asset Class Goals: By 2035, GIB aims for 100% of in-scope assets to be ‘Committed to aligning,’ ‘Aligning with Net Zero,’ ‘Aligned with Net Zero,’ or ‘Achieving Net Zero,’ with over 50% fully aligned, as defined by the Paris Aligned Investment Initiative methodology.
• Portfolio Scope 1 & 2 Emissions or In-Scope Portfolios: Reduce emissions by approximately 92% by 2050.

To support its goal of achieving net zero by 2050, GIB has set several interim targets for its Asset Management Targets:

Asset Class Targets:

• By 2025, 80% of in-scope assets should be ‘Committed to aligning,’ ‘Aligning with Net Zero,’ ‘Aligned with Net Zero,’ or ‘Achieving Net Zero.’
• By 2030, 90% of in-scope assets should meet the same criteria.

In-Scope Portfolio:

• An emission reduction of approximately 30% by 2025.
• An emission reduction of approximately 55% by 2030.

Additionally, GIB has implemented further actions, including engaging with companies, for better alignment.

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.

As part of GIB’s sustainability advisory services, the bank has been actively engaging with clients to understand where they stand on their sustainability journey and to provide assistance in facilitating their transition towards a more sustainable business model.

Moreover, in order to understand where its clients stand on their sustainability journey, GIB introduced a climate risk and ESG scorecard for corporate clients.

Furthermore, within GIB’s portfolio of sustainable and sustainability-linked financial products, the bank continues to assist clients in identifying the sustainability areas that are material to them in terms of both opportunities and risks, and in establishing corresponding objectives. Detailed information regarding the sustainable and sustainability-linked financing options offered in 2022 can be found in GIB’s sustainability report.

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.

GIB has established a robust governance structure, including systems, policies, and procedures, for managing the impacts of its business. This is integrated into its existing governance structure.

In May 2023, GIB formed a Board-level Sustainability and Climate Change Committee, which includes both directors and members of executive management. This Committee is tasked with ensuring that sustainability and climate change risks and opportunities are effectively integrated into the Bank and Group businesses.

The Group Sustainability Council oversees the development of GIB’s strategy, product offerings, risk management, financial considerations, policies, branding, and other related sustainability issues. It is also responsible for measuring and monitoring sustainability progress, including adherence to the Principles for Responsible Banking (PRB).

Chaired by the Group CEO and supported by the Group Chief Sustainability Officer, the Council convenes quarterly to review the findings from PRB impact analysis exercises and to monitor the targets set for the PRB. During these meetings, the Council also assesses progress against the set targets and discusses any necessary remedial actions.

The established targets are also factored into remuneration, influencing key performance indicators (KPIs) for the relevant departments. The variable compensation for both executives and employees is linked to these KPIs.

The Sustainability Evaluation and Approval Committee is tasked with ensuring that GIB’s range of sustainable finance products maintains integrity and aligns with the agreed framework.

 

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References:

This case study is based on published information by GIB, 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.gib.com/sites/default/files/gib_bsc_prb_report_2022.pdf