Case study: How SAB works with its clients and customers to encourage sustainable practices

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

SAB values the insights of its stakeholders and engages with them actively to build mutually beneficial relationships. These stakeholders provide valuable input regarding impacts, risks, and opportunities as SAB assesses material issues.

Customers: SAB’s customers are central to its business model, driving revenue, shaping SAB’s reputation, and providing essential feedback that fuels its growth. In 2023, SAB’s primary engagement channels and highlights included:

• Strong client interactions in branches as well as through online and mobile banking platforms, leading to an impressive customer recommendation index of 96.4 for Wealth and Personal Banking (WPB) and 93.4 for Corporate and Investment Banking (CIB), up from 95 for WPB and 91 for CIB the prior year.
• SAB’s “Voice of the Customer” initiative, which involves sending surveys to gather feedback and address complaints, allows SAB to continuously enhance its services and improve the overall customer experience.

Employees: SAB’s employees are the cornerstone of its success. SAB is committed to investing in their skills and development to help them realize their potential. SAB’s graduate program creates professional opportunities for young Saudi talent while ensuring their growth. SAB has implemented various initiatives, processes, and policies to foster a diverse, innovative, and supportive work environment for all employees. In 2023, SAB’s key engagement channels and highlights included:

• A Pulse Check Survey that increased SAB’s Net Promoter Score (NPS) from 11 in 2022 to 19 in 2023.
• Town hall meetings addressing specific topics, such as SAB’s transition to its new, more sustainable LEED-certified headquarters.
• Volunteer activities, including packaging food for the Et’aam food bank during Ramadan.
• SAB’s graduate program, which saw the recruitment of 20 new graduates in 2023.

Regulators: SAB operates under the framework of Saudi Arabian laws and regulatory bodies, including the Ministry of Commerce, the Saudi Central Bank, the Capital Market Authority, and the Zakat Tax and Customs Authority. As SAB executes Vision 2030, these regulators are among its most valuable partners in achieving the objectives of the Vision. In 2023, SAB’s significant engagement channels and highlights included:

• EBAC was established by SAMA to integrate ESG principles into finance. SAB’s CEO chairs this committee, with SAB actively contributing to advancing the committee’s goals.
• SAB was selected as one of just two voting members from the banking sector on the Corporate Sustainability Policy Development Working Group (CSPD), which operates under the aegis of the Ministry of Economy and Planning.

Shareholders and Investors: Shareholders play a crucial role in providing SAB with essential capital, networks, and expertise, enabling SAB to create value for the market. As significant stakeholders, they hold SAB accountable and offer invaluable market insights and feedback. In return, SAB is committed to generating value for them. The exceptional performance observed in 2023 highlights SAB’s ability to enhance shareholder value, and SAB is pleased to continue this trend by further improving its performance. In 2023, SAB’s key engagement channels and highlights included:

• Annual General Meeting
• Quarterly earnings calls
• Local, regional, and international investor conferences
• Regular meetings with the analyst community
• Regular meetings with investors, both in-person at SAB’s offices and through virtual platforms
• Documented updates, such as regular presentations, earnings releases, and transcripts available on SAB’s website

Business Partners: SAB’s business partners are essential for executing its mandate. They support SAB’s alignment with Vision 2030, enhance its reputation in the marketplace, and contribute to its financial performance and brand strength. In 2023, the primary engagement channels and highlights for SAB included:

• One-on-one meetings and engagements
• Conferences
• Contracts 

Suppliers and Service Providers: Through partnerships with reliable and competent suppliers, SAB maintains consistency in service and product quality, reliability, and innovation. These partnerships allow SAB to remain competitive and enhance operational efficiency. In 2023, the key engagement channels and highlights for SAB were:

• Vendor assessments
• Personal meetings and engagements

Society and Communities: SAB operates within a broader community, which is of great significance. As a major bank in Saudi Arabia, SAB contributes to the well-being and prosperity of the communities it serves. In 2023, SAB’s noteworthy engagement channels and highlights included:

• The Riyali Foundation, which provided financial literacy education to over 730,000 students between 2022 and 2023
• A partnership with Goumbook to promote regenerative agriculture practices in the region
• A longstanding collaboration with the KAUST startup accelerator Taqadam
• The “Khanzah Project,” aimed at enhancing women’s financial independence through improved financial literacy, thereby enabling better financial planning and management of daily expenses
• Partnerships with Al-Nahda Society focused on women’s empowerment, explicitly targeting enhanced financial literacy among women.

How did SAB work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2023 PRB Reporting and Self-Assessment Template SAB reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

SAB prioritizes its customers as key stakeholders and strives to build a sustainable customer base, ensuring ongoing satisfaction in the short, medium, and long term. In alignment with its goals and the Kingdom’s established ESG objectives and Vision 2030, SAB aims to be the leading ESG bank for all citizens and residents.

Through sustainable financing, SAB plans to utilize SAR 34 billion earmarked for this purpose, focusing on:

• Funding initiatives that help clients transition to sustainable and low-carbon activities
• Offering products and services, including underwriting, direct lending, and trade and receivables finance, which consist of defined use of proceeds requirements aligned with established market principles
• Providing sustainability-linked facilities where SAB plays a role in structuring sustainability performance targets

Scope 3 emissions represent a critical component of SAB’s carbon footprint. Although significant, they are also the most challenging to assess and manage. Specifically, financed emissions pose a particular challenge; therefore, SAB has initiated projects to evaluate its scope 3 emissions comprehensively. Financed emissions refer to the greenhouse gases (GHGs) emitted by the companies to which SAB lends. SAB’s long-term objective is to achieve Net Zero across its entire portfolio. To realize this goal, SAB must first understand its financed emissions to effectively decarbonize the bank and its entire value chain (scope 3, category 15). The bank has started a baselining exercise that consists of three stages:

• In place Transition Engagement Questionnaire
• Ongoing Scope 3 baseline of selected hard to-abate sectors
• Outlook Scope 3 baseline across all sectors

Transition Engagement Questionnaire

As an initial step, SAB launched a Transition Engagement Questionnaire (TEQ). This tool enables frontline teams to gather relevant information to assess physical and transition risks and facilitates discussions between frontline staff and clients regarding the most pertinent ESG risks and opportunities. The primary goal of the TEQ is to collect relevant data from customers in difficult-to-abate sectors. In the second step, SAB has prioritized a select number of these sectors for review, diligently gathering emissions data to quantify its scope 3 emissions, with the aim of completing this exercise in the first half of 2024. The outcomes will inform SAB’s strategy on targets and will be part of future engagements with stakeholders. The final step of SAB’s transparency initiative is to establish a scope 3 baseline across all sectors, projected to occur within a mid-term timeframe, with specific timelines determined in due course. Once SAB gains a comprehensive overview of its portfolio’s carbon footprint, it will enhance its sustainability and climate strategy to establish decarbonization targets for its lending activities.

Financed Emissions

In line with its commitment to achieving Net Zero status by 2060 or sooner, SAB is reviewing its financed emissions baseline for select sectors in 2024. By disclosing its financed emissions footprint, SAB aims to lead by example and provide transparency to key stakeholders. Establishing the financed emissions baseline involves various methodological decisions, including the selection of sectors, clients, and products to include, as well as which parts of the value chain to focus on. SAB considers what is most suitable for its portfolio and operating environment in the Kingdom, utilizing industry standards such as those developed by the Partnership for Carbon Accounting Financials (PCAF). Measuring financed emissions is complex due to limited public emissions disclosure among companies in the Kingdom; thus, SAB must rely on proxies and modelled estimates according to industry norms. Over time, SAB expects improvements in emissions data quality and accuracy as more companies disclose their emissions. Initiatives like the Saudi Exchange’s voluntary ESG disclosure guidelines and the Saudi Central Bank’s evaluation of IFRS ISSB sustainability standards represent encouraging steps toward the disclosure of financed emissions, which SAB will take into account moving forward. As SAB navigates the complexities of measuring and disclosing financed emissions, it remains dedicated to transparency, accountability, and sustainability.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

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References:

This case study is based on published information by SAB, 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.sab.com/esg/SAB 2023 UN PRP Disclosures.pdf

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