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.

Following the materiality analysis conducted in 2017 on its sustainable development priorities, Desjardins polled its members in 2024, with the majority (73%) indicating that sustainable development is important to them. Over recent years, Desjardins has carried out additional surveys of its personal and business members and clients to better understand their priorities and concerns related to sustainability and responsible finance. These surveys have provided further insights into how well Canadians comprehend sustainable development and responsible financial practices.

Surveying stakeholders has helped Desjardins identify what matters most to its members and clients. These priorities are addressed in the “Listening to Our Stakeholders” section of Desjardins’ Social and Cooperative Responsibility Report. Desjardins collaborates with all levels of government, regulators, and other standard-setting organizations on various issues, which are also detailed in the same section of its Social and Cooperative Responsibility Report.

Through numerous partnerships, Desjardins remains committed to supporting communities in the energy transition and taking action against climate change and biodiversity loss. These partnerships foster university research and training, promote the development of practical solutions for economic stakeholders, and enhance climate education and engagement. For more information, please refer to the diagram of Desjardins’ environmental and climate action partners.

Additionally, Desjardins has participated in several working groups organized by UNEP FI to support the implementation of the Principles for Responsible Banking (PRB), the Principles for Sustainable Insurance (PSI), and the Commitment to Financial Health and Inclusion. These groups facilitate discussions and collaborative efforts on ESG issues with financial institutions worldwide.

Desjardins is also a member of the Climate Montreal Partnership (in French only), a coalition of nearly 100 Montreal-based economic, philanthropic, institutional, and environmental stakeholders working together to accelerate Montreal’s decarbonization and build climate resilience within the timelines outlined by climate science. Furthermore, Desjardins participates in the Quebec Climate Partnership’s engagement committee (in French only), which aims to mobilize Quebec City’s economic forces. As an ambassador advocating for enhanced climate action in Quebec City, Desjardins contributes to setting priorities and will participate in upcoming climate action summits in the province’s capital.

How does Desjardins promote a culture of responsible banking among its employees?

In its 2024 PRB Reporting and Self-Assessment Template Desjardins reports that it took the following actions to promote a culture of responsible banking among its employees:

At Desjardins, responsible finance is a core part of its identity as a cooperative. An entire section dedicated to responsible finance is included in Desjardins’ Social and Cooperative Responsibility Report. Desjardins communicates its commitment to responsible finance to all employees through the Desjardins Fundamentals learning pathway, which consists of individual and group activities designed to foster a shared understanding of what it means to operate as a cooperative. In 2022, Desjardins implemented mandatory training on sustainability and responsible finance, complemented by additional modules on climate change and specialized topics such as responsible investment and sustainable insurance. These modules are integrated into training plans tailored for various key roles within the organization. For instance, training on ESG integration was launched in 2023 to educate and raise awareness among all business advisors. In 2024, over 2,028 employees across different departments participated in Climate Fresk workshops to grasp the fundamentals of climate change.

Desjardins’ commitment is also embedded in its processes. For example, there is a procedure for assessing ESG factors in large business financing, which helps identify and manage environmental and social risks within the loan portfolio. For more information on Desjardins’ approach to responsible finance, please refer to section 2.4, Responsible Products and Services, of its Social and Cooperative Responsibility Report.

Furthermore, the organization’s president and CEO, Guy Cormier, champions responsible finance. Desjardins was a partner of the 2023 Sustainable Finance Summit in Montreal, where Guy Cormier participated in a discussion alongside Mark Carney, former Governor of the Bank of Canada and the Bank of England, and UN Special Envoy on Climate Action and Finance. During this discussion, they explored the vital role of financial institutions in promoting sustainable finance and transitioning to a sustainable economy. They also addressed the challenges and opportunities related to sustainable finance, financial innovation and mobilization, as well as the importance of transparency and reporting.

Desjardins has also incorporated an ESG component into its employee and manager incentive structure (bonus plan). This component is based on an indicator that compares Desjardins’ ESG performance to that of its peers in North America, as evaluated by four ESG rating agencies.

 

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.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

 

References:

This case study is based on published information by Desjardins, 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.desjardins.com/content/dam/pdf/en/about-us/community/sustainable-development/reports/2024-principles-responsible-banking.pdf

Note to Desjardins: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

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.

In line with its commitment to corporate social responsibility, Orabank Group has conducted a thorough process to identify and map its stakeholders, in accordance with Principle #1 of the ISO 26000 standard. Orabank Group’s approach is grounded in GRI standards, ensuring a rigorous and standardized methodology. The process started with a review of relevant documents and a benchmarking of international and sector-specific practices, followed by an assessment of how Orabank Group engages with its stakeholders. This enabled Orabank Group to categorize its stakeholders into homogeneous groups and sub-groups, allowing for a deeper understanding of their expectations and priorities.

After completing the stakeholder mapping, the results were presented to the Steering Committee, composed of the Communications Departments from the countries where Oragroup operates. A collaborative exercise followed to assess the criticality of each stakeholder group and to validate their prioritization. This process enabled Orabank Group to concentrate its efforts on the most influential and relevant stakeholders for its sustainability initiatives.

Recognizing its role as a significant economic player, Orabank Group is committed to a proactive corporate social responsibility approach. This strategy not only helps Orabank Group contribute to the sustainable economic development of the countries where it operates but also supports the overall performance of the Group. Orabank Group incorporates the key interests of its stakeholders while adopting a pragmatic and realistic perspective on the specific challenges faced in each region and business sector.

Ultimately, the quality of service provided by Oragroup depends on several factors: the dedication of its employees, collaboration with its suppliers and partners, and the trust Orabank Group establishes with its customers, investors, and other stakeholders. Orabank Group’s business model is built on these strong relationships, which ensure the sustainability of its activities and satisfy the expectations of its stakeholders.

How does Orabank Group promote a culture of responsible banking among its employees?

In its 2024 PRB Reporting and Self-Assessment Template Orabank Group reports that it took the following actions to promote a culture of responsible banking among its employees:

Orabank Group has undertaken various initiatives to foster a culture of responsible banking among its staff. Since 2014, the Group has launched an online Corporate Social Responsibility (CSR) training program designed to raise employees’ awareness of sustainable development issues and help them integrate these principles into daily operations. This training is accessible to all staff members, with special modules tailored for customer-facing employees, focusing on incorporating ESG (Environmental, Social, and Governance) criteria into their roles. By June 2023, over 1,700 employees had completed the program, strengthening Oragroup’s collective commitment to responsible banking practices.

Meanwhile, Orabank Group has actively involved its management and leaders in promoting the CSR vision by organizing seminars and workshops aimed at clarifying strategic goals and spreading the bank’s core values. Communicating sustainability issues is a fundamental aspect of the internal management approach, helping to strengthen the teams’ dedication to the Group’s principles.

Finally, CSR is incorporated into employee performance management at Oragroup. The Group ties certain performance metrics to sustainability objectives, motivating employees to embed these principles into their everyday activities. While the specifics of compensation structures are not explicitly outlined, it is evident that integrating CSR into performance goals fosters a culture of responsible banking. Collectively, these efforts contribute to establishing Orabank Group as a proactive institution dedicated to promoting more inclusive and sustainable finance across Africa.

 

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.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

 

References:

This case study is based on published information by Orabank Group, 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.orabank-reporting.fr/wp-content/uploads/2025/05/PRB-Reporting-and-Self-Assessment-ORAGROUP-ENG.pdf

Note to Orabank Group: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

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.

Shiga Bank’s Management Principles affirm the bank’s commitment to fostering mutual prosperity with regional communities, its employees, and the environment, highlighting the importance of co-creation with all the bank’s stakeholders.

Shiga Bank’s long-term strategy is shaped not only by internal perspectives, but also by insights from various external experts, gathered through stakeholder dialogues.

How does Shiga Bank promote a culture of responsible banking among its employees?

In its 2025 PRB Reporting and Self-Assessment Template Shiga Bank reports that it took the following actions to promote a culture of responsible banking among its employees:

To cultivate a corporate culture of responsibility, Shiga Bank has offered opportunities for employees to learn about sustainability through job rank-based seminars, conducted environmental seminars based on ISO14001 standards, and held semi-annual seminars focused on raising awareness of human rights for all Group employees. Additionally, to promote self-education, Shiga Bank encourages employees to participate in courses on ESG finance and to take relevant examinations.

Shiga Bank has also established the Diversity Promotion Committee, to foster a workplace where diverse opinions are respected and valued and individuals can fully unleash their abilities. Furthermore, Shiga Bank is transforming its performance evaluation system into one that assesses efforts made from a long-term perspective to address social issues within regional communities.

 

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.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

 

References:

This case study is based on published information by Shiga Bank, 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.shigagin.com/pdf/ESG_PRB_KPI_Sep2025_en.pdf

Note to Shiga Bank: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

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.

Understanding the priorities and expectations of Yapı Kredi’s stakeholders helps the bank better manage risks and seize opportunities. Yapı Kredi values effective, two-way communication with its stakeholders, which include shareholders and investors, employees, customers, regulatory and supervisory authorities, financial institutions and creditors, international companies, chambers of commerce and unions, suppliers, NGOs, universities and research institutions, and the media.

Customers are at the core of Yapı Kredi’s business model and represent one of the most crucial stakeholder groups. The bank actively considers customer feedback to continually enhance the customer experience and improve the value it provides. Human capital is the most vital asset supporting Yapı Kredi’s sustainability. To meet employee expectations and prepare for the future of business, the bank regularly updates its work models, employee training and development programs, and fringe benefits. Regarding shareholder relations, the Investor Relations department organizes analyst days, teleconferences, conferences, and roadshows to engage with current and potential investors, while also keeping shareholders informed about ongoing developments.

Yapı Kredi believes that the achievement of Sustainable Development Goals (SDGs) can only be realized through collaboration among multiple stakeholders. Recognizing this, the bank regularly conducts stakeholder analyses as part of its strategic planning process to understand the expectations of both its internal and external stakeholders. The insights gained from these analyses are integrated into its materiality assessment. The stakeholder analysis involves the participation of over a hundred stakeholders, including shareholders and investors, customers, supervisory and regulatory authorities, financial institutions and creditors, chambers of commerce and unions, suppliers, NGOs, universities, and research institutions. Additionally, the bank gathers feedback from its external stakeholders and employees through online surveys.

Yapı Kredi actively participates in sectoral initiatives and collaborates with non-governmental organizations, emphasizing the importance of multi-stakeholder dialogue and cooperation. The bank aims to join and contribute to international sustainability standards and initiatives. It collaborates with numerous organizations, including UNEP FI, UN Principles for Responsible Banking (UN PRB), Turkish Industry and Business Association (TÜSİAD), Global Compact Network Turkey, Women’s Empowerment Principles (WEPs), Women Entrepreneurs Association of Turkey (KAGİDER), WWF Turkey, Finance for Biodiversity Foundation, the Integrated Reporting Turkey Network (ERTA), and the Business Council for Sustainable Development Turkey (bscdTurkey). Additionally, Yapı Kredi is an active member of the Banks Association of Turkey (BAT), participating in all its activities. The bank is also a member of BAT’s “Sustainability Working Group” and contributes to its studies, particularly those focusing on the Green Asset Ratio (GAR) and climate-related risks.

How does Yapı Kredi promote a culture of responsible banking among its employees?

In its 2024 Integrated Annual Report Yapı Kredi reports that it took the following actions to promote a culture of responsible banking among its employees:

Yapı Kredi provides sustainability training and internal communication newsletters for employees at all levels to foster a culture of sustainability within the bank. Employees can access online ESG training modules through Yapı Kredi’s training portal, along with specialized certificate programs for staff working in ESG-related areas.

The bank also organizes workshops and training sessions to enhance knowledge on specific topics, such as incorporating climate change risks and opportunities into lending processes. Additionally, non-financial KPIs related to Yapı Kredi’s sustainability strategy and targets are incorporated into the remuneration packages of all relevant staff, including top management.

 

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.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

 

References:

This case study is based on published information by Yapı Kredi, 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.yapikrediinvestorrelations.com/en/images/pdf/annual-reports/2024/ykb_2024_integrated_annual_report.pdf?v4

Note to Yapı Kredi: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

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.

Zenus Bank proactively consults, engages, and collaborates with key stakeholders to support broader societal objectives. These stakeholders include regulators, investors, clients, strategic partners such as Visa and J.P. Morgan, and the bank’s executive team—all of whom play vital roles in shaping strategy, maintaining compliance, and aligning efforts with long-term sustainability goals.

As the bank expands its services through B2B and B2B2C models, Zenus actively partners with organizations committed to the United Nations Sustainable Development Goals (SDGs). Collaborations with industry leaders like Visa and J.P. Morgan enhance the bank’s ability to deliver secure, globally compliant, and inclusive financial infrastructure, helping partners reach underserved populations worldwide.

Through ongoing dialogue—such as regulatory consultations, investor briefings, client feedback, and industry engagement—Zenus incorporates diverse perspectives that bolster decision-making. This collaborative approach allows the bank to refine its strategies, adapt to emerging challenges, and maximize its positive impact in key areas like financial inclusion, gender equality, and financial health.

By cultivating strong relationships and partnerships, Zenus Bank ensures its growth remains responsible, sustainable, and aligned with society’s evolving needs.

How does Zenus Bank promote a culture of responsible banking among its employees?

In its 2025 PRB Impact Report Zenus Bank reports that it took the following actions to promote a culture of responsible banking among its employees:

Zenus Bank understands that responsible banking starts with people. A culture rooted in integrity, accountability, and sustainability is cultivated at all levels of the organization through clear policies, ongoing training, and transparent communication.

• Values and Conduct: The Zenus Code of Ethics and responsible business policies guide employees in maintaining the highest standards of environmental and social responsibility.
• Capacity Building: Employees in client-facing roles regularly receive training on compliance, ethics, and sustainable finance principles, empowering them to incorporate responsible practices into daily operations.
• Governance and Leadership: The bank’s leadership sets the tone by integrating sustainability into strategic decisions and communicating commitments organization-wide.
• Transparency and Engagement: Zenus Bank openly shares its sustainability commitments via its website and social channels, ensuring employees, clients, and stakeholders understand its priorities. In 2025, the focus areas included gender equality, financial health, and financial inclusion.
• Accountability: Performance frameworks and risk policies support responsible decision-making, ensuring every employee contributes to Zenus Bank’s long-term vision of inclusive and sustainable growth.

Through these initiatives, Zenus Bank fosters a workplace culture where responsibility and sustainability are not isolated efforts but core elements of how the bank operates and serves its clients.

 

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.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

 

References:

This case study is based on published information by Zenus Bank, 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://zenus.com/media/p31djt54/zenus-unep-fi-2025-report_compressed.pdf

Note to Zenus Bank: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

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.

As a signatory to the Principles for Responsible Banking (PRB), AUB is presenting its fourth impact analysis utilizing the UNEP-FI Portfolio Impact Analysis Tool (Version 3) to evaluate the environmental, economic, and social effects linked to the Group’s financing and investment activities. This impact assessment focuses on AUB Group by aggregating the financing and investment portfolios from all its subsidiaries. The Group has assessed the impact of its Retail Banking, Corporate Banking, SMEs (Business) Banking, and Treasury and Investment portfolios across various economic, social, and environmental impact areas.

The composition of AUB’s portfolio is as follows: Corporate Banking (41%), Treasury and Investment Banking (49%), Retail Banking (9%), and SMEs Banking (2%). AUB’s assessment primarily focuses on Bahrain, which serves as the headquarters’ main geographic location.

Geographically, AUB Kuwait has been excluded from the reporting year’s portfolio due to its merger with KFH through amalgamation. All other pertinent AUB regions and business segments have been included in the analysis. AUB conducted a new round of the PRB impact analysis tool, with no significant changes reported as a result.

The impact assessment encompasses 100% of the Group’s Treasury and Investment Banking, SMEs Banking, and Corporate Banking portfolios, which have been segmented according to the International Standard Industrial Classification (ISIC). AUB carefully tracks its portfolio composition internally and provides the data in this report as of March 31, 2024. Portfolio percentages have been calculated based on the financing amounts in USD. AUB focuses on identifying the most critical and key negative sectors financed across each business function and presents the main sectors financed under Treasury and Investment Banking, Corporate Banking, and Business (SMEs) Banking.

For the Retail Banking Portfolio, the segmentation process involved categorizing customers based on age, income, and gender. AUB can now leverage data related to current and savings accounts in Bahrain, Egypt, Iraq, and the UK. This marks a significant improvement, addressing a limitation noted in the previous year’s report.

Manufacturing now constitutes a larger share of the corporate portfolio compared to the previous year’s report, largely due to an expansion in the types of manufacturing being considered, including chemicals and basic metals.

In its analysis, AUB took into account its consolidated operations based at its headquarters in Bahrain. Due to the unavailability of context-specific data for Bahrain in the latest version of the tool, AUB employed additional resources and consulted with relevant stakeholders to assess the needs for each impact area. The key needs identified for Bahrain include Integrity, Security of Person, Health and Safety, Availability, Accessibility, Affordability, Quality of resources and services, Equality and Justice, Strong Institutions, Peace and Stability, Healthy Economies, Socio-Economic Convergence, Climate Stability, Circularity, Biodiversity, and Healthy Ecosystems.

AUB Group has identified Livelihood, Availability, Accessibility, Affordability, Quality of Resources & Services (Finance/Financial Inclusion), and Healthy Economies as its key areas of positive impact. In contrast, Climate Stability, Circularity, and Health and Safety have been recognized as its key areas of negative impact. AUB has chosen Climate Stability and Financial Inclusion (Finance) as the two most important impact areas for which to set targets in the coming years. The Bank is currently working on defining SMART targets and monitoring progress in implementing these goals, aiming to enhance its positive outcomes while mitigating the negative effects of its operations.

In 2024, AUB improved its methodology for tracking climate metrics and targets, including financed emissions. AUB is actively contributing to global initiatives aimed at reducing emissions from high-impact sectors. This strategy aligns with industry best practices, such as adopting climate risk management frameworks and incorporating sustainability principles into core business operations. These targets are consistent with the IEA’s Net Zero 2050 decarbonization scenario, which sets the stage for substantial reductions in AUB’s environmental footprint and supports global climate goals.

In 2023, AUB established its target related to Financial Inclusion, and in 2024, its Climate Stability target.

In 2023, the Bank identified key sectors within corporate banking that are linked to Climate Stability, including the construction of buildings, real estate activities, crude petroleum extraction, and wholesale and retail trade. The heat map presented in AUB’s PRB progress report for 2024 details other sectors that both positively and negatively influence Climate Stability. AUB has conducted an analysis of the primary sectors financed in its corporate banking portfolio.

In 2020, AUB became a signatory of the Partnership for Carbon Accounting Financials (PCAF) to measure scope 3 financed emissions associated with its corporate banking portfolio. Alongside measuring these emissions, AUB selected engagement and financial indicators to establish targets for both financial performance and client engagement, in addition to the impact targets.

AUB’s report presents a thorough analysis of the Bank’s portfolio, with particular attention to the corporate finance segment, based on portfolio data collected and reviewed as of March 31, 2024. The decision to highlight the corporate finance portfolio in this report stems from its substantial contribution to the Bank’s overall financial exposure, demonstrating the institution’s commitment to responsible and sustainable financing practices. AUB’s analysis will focus on corporate finance extended to various sectors, with particular emphasis on five key sectors:

• Construction of buildings (7.7% of corporate portfolio)
• Extraction of crude petroleum and natural gas (14.5%)
• Real estate activities (17.8%)
• Wholesale and retail trade, including motor vehicle and motorcycle repair (11.7%)

After reviewing the portfolio in 2024, AUB also identified Manufacturing as an additional significant sector (16.0%).

Regarding financial inclusion, 41.6% of AUB’s finance facilities are allocated to low-income clients, while 14.7% support female customers and 8.1% aid youth aged 18 to 30 years. Consequently, AUB set a target to improve access to credit and increase finance allocations to youth and women by US$ 5 million, a target that was successfully achieved by March 2024 across all retail categories (age, income, and gender).

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).

AUB has identified Climate Stability and Financial Inclusion (Finance) as its two most significant impact areas, establishing targets that align with the United Nations Sustainable Development Goals (UN SDGs), Bahrain’s Vision 2030, and Bahrain’s Nationally Determined Contributions (NDCs).

The Bank has established SMART targets and will provide updates on their implementation, aiming to enhance its positive impacts while minimizing the negative effects of its activities. In 2023, AUB defined its target concerning Financial Inclusion, and in 2024, set its Climate Stability target.

a) Financial Inclusion (Finance)

1. Understanding Bahrain’s Context and Alignment with UN SDGs

According to the World Development Indicators, in 2021 youth (aged 20-34) made up around 28% of Bahrain’s total population, and women represented 38%. The MENA Financial Inclusion Report 2020 ranks Bahrain second among eight countries in the region, with a financial inclusion rate of 39%. This success is attributed to a strong focus on financial literacy, targeted outreach to underserved populations, microfinancing for SMEs, and a robust push for digitalization. The report is based on four pillars: access to financial accounts (banking), savings, credit, and digital payments. The World Bank Global Findex Database indicates that 83% of Bahrain’s residents have financial accounts, yet credit access is only 30%. The Global Findex also shows that among credit card holders, those from low-income backgrounds, women, and youth represent 23%, 21%, and 21%, respectively. Moreover, the approach to financial inclusion directly supports UN SDGs, specifically Goals 1 (No Poverty) and 10 (Reduced Inequalities).

2. Setting Baselines and Priorities

Among AUB’s credit customers, 41.6% of its financing allocation targets low-income individuals, while 14.7% is designated for women, and 8.1% supports youth aged 18 to 30. Accordingly, AUB set a target to increase access to credit and allocate an additional $5 million in financing to youth and women. This goal was successfully achieved by March 2024 across all retail categories (age, income, and gender).

To help reduce indebtedness, AUB implements a maximum Debt Service Ratio (DSR) of 50% of monthly income, ensuring that customers’ disposable income, after accounting for finance repayments and other financial obligations, is sufficient to support themselves and their dependents. AUB maintains a minimum disposable income of BD150.

The Bank has collaborated with relevant internal and external stakeholders to formulate a plan for reaching its targets. This plan includes the following measures and actions:

• Better targeting for social housing through enhancing access to home and/or mortgage finance for the females and youth.
• Expanding digital banking services for young people and women.
• Improving credit and risk policies to prevent over-indebtedness, such as developing risk models to screen early signs of over-indebtedness, behaviour and income assumptions, appetite risk by vulnerable groups.

The Bank has established core indicators to measure its performance in achieving financial inclusion.

b) Climate Stability

In 2022, the Bank became a signatory of the Partnership for Carbon Accounting Financials (PCAF) to measure scope 3 financed emissions associated with its corporate banking portfolio. AUB has reported its direct (scope 1) and indirect (scope 2) greenhouse gas (GHG) emissions resulting from its operations, along with other indirect emissions (scope 3, category 15: investments) in accordance with the GHG Protocol. The Bank publicly discloses its financed emissions in its PRB report. In 2023, AUB broadened its reporting scope for financed emissions to include three additional asset classes relevant to its portfolio: ‘Commercial Real Estate,’ ‘Ijara Financing,’ and ‘Auto Murabaha.’ This builds upon the asset classes reported in the previous year, which included ‘Listed Equity and Sukuks’ and ‘Business Financing Facilities and unlisted equity.’ The methodology used to calculate financed emissions has improved its Data Quality score compared to the previous year, providing a more precise estimation of these emissions.

The International Energy Agency’s (IEA) Net Zero Emissions (NZE) scenario* underscores the vital role of the oil and gas sector in meeting global climate objectives and outlines a pathway for reducing emissions within this sector as part of the overall transition to clean energy. In alignment with these global trends, AUB is taking proactive measures to support international efforts aimed at reducing emissions from high-impact sectors. This approach is consistent with industry best practices, which include adopting climate risk management frameworks and incorporating sustainability principles into core business operations.

As part of its commitment to climate stability, AUB is utilizing its role as a financier to advance broader decarbonization objectives. The Bank actively engages in green financing by investing in various areas, including renewable energy, energy efficiency, water desalination, wastewater treatment, and green sukuks. AUB has not only met but surpassed its green financing target of $133.1 million established for 2024. The projected green financing target for 2025 is $163 million. The Bank ensures that its PRB report aligns with international climate risk frameworks such as IFRS S2 and TCFD.

In addition to measuring financed emissions, AUB has selected engagement and financial indicators to set to set financial and client engagement targets, alongside impact targets.

AUB has created an implementation plan and monitoring procedures to ensure that targets are achieved. Once the targets are set, progress on their implementation will be included in the quarterly reports submitted to the Group Management Risk Committee, Board Risk Committee, and Board of Directors.

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.

In 2023, AUB actively engaged with its clients and customers to encourage sustainable practices and enable sustainable economic activities.

AUB’s leading clients from various sectors have been engaged on two areas:
• Gathering high-quality client data to support AUB’s measurement of scope 3 GHG emissions
• Identifying ways in which AUB can assist clients with their ESG financing strategies

AUB intends to implement its engagement plan gradually, which will also encompass awareness sessions, training programs, sustainable and green finance initiatives, as well as advisory services.

The AUB Group’s Social and Environmental Management System (SEMS) policy exemplifies its proactive strategy to integrate climate risks within its risk framework and management practices. This reflects the Group’s commitment to identifying, assessing, and managing environmental and social risks, including those associated with climate change, in its financial operations.

AUB Group demonstrates its dedication to environmental and social responsibility by meticulously screening and evaluating all funded projects against rigorous global social and environmental standards, such as the IFC Performance Standards and the World Bank Group’s Environmental, Health, and Safety (EHS) guidelines. The Group’s practice of excluding any project that does not comply with these standards or national environmental laws further illustrates its ethical and principled approach to finance.

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.

The Group’s governance structure consists of experienced board members tasked with planning and implementing effective processes and procedures to ensure compliance with all national and international commitments and requirements. Following the acquisition from Kuwait Finance House (KFH), AUB and its subsidiaries in Bahrain, UAE, Egypt, the UK, and Iraq have aligned themselves with KFH’s sustainability strategy.

The Board plays a critical role in establishing rules and governance provisions effectively, while promoting awareness of ethical standards and professional conduct guidelines. The Board’s strategy is articulated through a series of coherent policies that encompass the Group’s key activities and functions, including Credit, Risk Management, Anti-Money Laundering, Audit, Legal Affairs, Banking Integrity, and Human Resources, among others.

AUB’s commitment to leadership is demonstrated through its independent compliance function, which reports to the Audit and Compliance Committee. This committee oversees Risk Management, which currently includes Sustainability and ESG frameworks and standards, such as the Principles for Responsible Banking (PRB).

Furthermore, the Group Management Risk Committee and the Board Risk Committee review ESG-related reports on a quarterly basis and provide appropriate recommendations to the Board.

AUB has implemented a Corporate Governance Policy that outlines principles for effective governance throughout the Bank and its subsidiaries, in alignment with international best practices and regulatory standards established by the Basel Committee for Banking Supervision, Bahrain’s Corporate Governance Code, and the Central Bank of Bahrain (CBB). This policy thoroughly addresses the roles of the board and management, compliance, risk management, ethical conduct, and other essential topics to ensure efficient and transparent operations.

To better support the Executive Committee in executing AUB’s ESG strategy, a management-level ESG Working Group is being established. This group will be responsible for monitoring progress against sustainability targets, assessing key ESG risks and opportunities, and ensuring that ESG considerations are woven into all bank operations. Additionally, the Working Group will be instrumental in providing strategic ESG guidance and raising sustainability awareness across the organization.

An ESG Policy is also in development to articulate AUB’s commitments to environmental sustainability, social responsibility, and robust governance practices, emphasizing ethical business conduct throughout its operations and services. This policy will outline the Bank’s primary ESG commitments and serve as a guiding framework for incorporating ESG considerations into all business decisions and activities across the institution.

Lastly, AUB is aligning its remuneration practices with sustainability targets, ensuring that performance related to these goals directly impacts compensation.

 

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.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

 

References:

This case study is based on published information by AUB, 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.ahliunited.com/wp-content/uploads/2024/11/Sustainability-Fourth-Report-2024.pdf

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.

SAB has utilized the portfolio impact analysis tools from the UNEPFI’s Context module, Consumer Banking Identification module, and Institutional Banking Identification module to analyze its activity portfolio, which includes Wealth and Personal Banking (WPB), representing Consumer Banking, and Corporate and Institutional Banking (CIB), representing Corporate Banking. The primary region of operation for SAB is the Kingdom of Saudi Arabia.

The impact analysis focused on the CIB lending portfolio, which comprises 75% of the total, while WPB accounts for the remaining 24%. Capital Market activities and subsidiaries have been excluded from this analysis, since they represent less than 3% of SAB’s 2023 revenue. To align with the PRB framework recommendations, SAB will primarily target its CIB portfolio for impact analysis and target-setting.

SAB included the entire lending portfolio as of December 31, 2023 in the Portfolio Impact Analysis Tools, with 24% allocated to WPB lending and 75% to CIB lending, predominantly in the Kingdom of Saudi Arabia. A comprehensive breakdown of SAB’s lending portfolio at the end of 2023 is provided, showing exposures for both WPB and CIB. A more detailed breakdown was employed for the Portfolio Impact Assessment tool.

For more information on its corporate portfolio, SAB has released a Sector Portfolio Review, available on its ESG website.

In 2022, SAB conducted a sustainability materiality assessment as part of its ESG strategy development, taking into account consultations with relevant stakeholders, as detailed in other sections of its report. Further information on the materiality assessment is available in SAB’s 2022 ESG Report. Additionally, SAB has enhanced prior assessments with tools and principles established under the UN PRB.

SAB also aligns with the impacts, targets, and strategic goals of the sustainable development objectives of the Kingdom of Saudi Arabia by collaborating with regulatory stakeholders such as the ESG Saudi Banks Advisory Committee (EBAC), established by the Saudi Central Bank (SAMA), and the Corporate Sustainability Policy Development Working Group initiated by the Ministry of Economy and Planning (MEP). SAB has also been recognized by the MEP as a Sustainability Champion.

From the combined findings of external engagements, the materiality assessment, and the Portfolio Impact Analysis Tools for Banks, SAB has identified the most critical impact areas for sustainable development in Saudi Arabia as follows: 1) Availability, Accessibility, Affordability, Quality of Resources & Services; 2) Climate Stability; 3) Circularity; and 4) Infrastructure.

SAB has pinpointed Availability, Accessibility, Affordability, Quality of Resources & Services as a significant impact area with the greatest positive influence, specifically addressing water, energy, housing, education, food, health and safety, information, mobility, and healthcare & sanitation.

Climate stability is recognized as the second impact area with notable negative implications. SAB has initiated various measures to manage and mitigate this risk, as described in its 2023 ESG Report.

The process for prioritizing impact areas has met internal governance standards, involving cross-functional stakeholder engagement from the ESG Office, Business, and Risk divisions. The ESG Steering Committee later endorsed the results.

Current objectives and achievements related to ongoing sustainability targets include:

• SAB aims to allocate SAR 34 billion towards sustainable financing and investments by 2025, having already deployed SAR 12.6 billion by year-end 2023. For instance, SAB financed the Marafiq Red Sea project, which supplies utilities for the Red Sea Company, including water systems, a wastewater treatment facility, solar-powered energy, and a district cooling system. Additionally, SAB is financing the largest green hydrogen project in the world at NEOM and supporting numerous renewable energy initiatives under KSA’s National Renewable Energy Programs.
• SAB is dedicated to fostering the growth of the SME sector in alignment with the Saudi 2030 Vision.
  • The bank has supported MSMEs by engaging with the Real Estate Development Fund (REDF), Tourism Development Fund (TDF), and the National Technology Development Programme (NTDP).
  • Through the Kafalah program, SAB facilitates financing for MSMEs in collaboration with the Saudi Industrial Development Fund (SIDF), allowing for funding of up to SAR 15 million to eligible clients, with a focus on Shariah-compliant solutions.
  • SAB also partners with Monsha’at, the General Authority for Small and Medium Enterprises, to co-finance banks’ customers along with the SME Bank of Saudi Arabia.
• SAB is committed to achieving Net Zero in its operations (scope 1 and 2, as well as operational scope 3 emissions) by 2035.
• SAB aims for Net Zero in its value chain, especially for financed emissions (scope 3), by 2060 or sooner.
• SAB has transitioned to a LEED gold-certified smart building to reduce operational emissions.
• SAB is collaborating with the National Centre for Vegetation Development (NCVC) to contribute to the 10 Billion Trees initiative, targeting the planting of 1 million trees by 2030, and is supporting the establishment of a local seed propagation centre for seedlings suited to the native 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).

As part of its ESG Strategy established in 2022, SAB has committed to directing financing toward a just and sustainable economy by:
• Assisting its customers in transitioning to a more sustainable and diversified economy through its products and services;
• Increasing sustainable financing and investments to SAR 34 billion by 2025, thereby supporting the Kingdom’s Vision 2030;
• Measuring the carbon footprint of its portfolio and striving for Net Zero by 2060 or earlier, with a strong emphasis on a fair transition;
• Aligning its operations and supply chain with ambitious science-based targets and achieving key milestones by 2030, with the goal of reaching Net Zero in its operations by 2035;
• Planting 1 million trees to offset 0.9 million tons of CO2.

The process of setting targets and establishing baselines for SAB’s selected impact areas and their connections to existing targets is work-in-progress and will be communicated in the forthcoming PRB disclosures as recommended by the PRB timelines.

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.

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.

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.

ESG governance is fundamental to SAB’s business operations, influencing every aspect as the bank pursues its strategy for profitable and equitable growth alongside its commitment to achieving Net Zero by 2060. This is why ESG responsibilities are incorporated into the Balanced Scorecards, ensuring they are integrated into all functions of the bank, including those of the Managing Director & CEO and their direct reports.

SAB’s robust ESG governance framework, processes, and structures form the basis of its comprehensive ESG strategy. The integration of ESG considerations is an organization-wide effort that impacts all functions. Nevertheless, distinct roles, responsibilities, and oversight mechanisms at the board, committee, and management levels ensure effective supervision of ESG and climate-related risks.

• The Board of Directors
  The Board of Directors plays a key role in promoting SAB’s long-term sustainable performance and growth. It retains overall responsibility for ESG matters, including climate issues. Both the Board and senior leadership are involved in developing and overseeing the ESG strategy and receive ESG training. The Board approves the ESG risk appetite and prioritizes the creation of sustainable shareholder value. Additionally, it offers feedback on targets, endorses the ESG report, and regularly receives updates on ESG performance and sustainable finance, relying on information from the ESG Steering Committee and other relevant ESG forums. SAB’s Board of Directors has established several Board and Management Committees focused on advancing ESG goals and implementing the strategy. However, ultimate accountability remains with the Board, ensuring robust ESG governance. The Board and senior leadership actively participate in shaping the ESG strategy and are provided with an ESG orientation.
  • The Board of Directors delegates specific responsibilities, including those related to ESG, to designated Board Committees:
    • The Executive Committee (EXCOM)
    • The Audit Committee (AUCOM)
    • The Nomination and Remuneration Committee (NRC)
    • The Board Risk Committee (BRC)

• ESG Steering Committee
  The ESG Steering Committee serves as a key support mechanism for executives in the development and delivery of SAB’s ESG strategy. As a direct subcommittee of the Executive Committee (EXCOM), the ESG Steering Committee plays a crucial role in facilitating comprehensive governance, oversight, management, and coordination of all SAB’s ESG-related endeavours. By leveraging the authority delegated to it by the EXCOM, the Committee exercises holistic governance and ensures that all commitments outlined in the approved ESG strategy are effectively implemented within the bank’s risk appetite and corporate governance framework. The selection of committee members is a collaborative effort led by the Managing Director and the Company Secretary, aiming to ensure diverse and inclusive representation. The current ESG Steering Committee members include:
  • Managing Director (Chair)
  • Chief Financial Officer
  • Chief Risk Officer
  • Chief Operating Officer
  • Chief Corporate and Institutional Banking Officer
  • Chief Retail Banking and Wealth Management Officer
  • Chief Treasury Officer
  • Company Secretary
  • Chief Human Resource Officer

The Committee also includes permanent invitees, such as:

• • Chief Strategy Officer
  • Head of Corporate Communication

In 2023, the ESG Steering Committee convened seven times, addressing key topics that included:

• • ESG strategy implementation progress
  • Sustainable financing
  • Financed emissions
  • ESG disclosures
  • External collaborations on ESG topics domestically

These discussions are essential in advancing SAB’s ESG strategy and informing ongoing ESG performance tracking, the bank’s sustainability outlook, and planned ESG initiatives.

• ESG Office
  The ESG Steering Committee is supported by the ESG Office, which handles the daily operations related to the execution of the ESG Strategy in collaboration with all functions throughout the bank. This includes ESG reporting and disclosures, managing ESG expenditures and cost control, governing ESG activities, and monitoring and tracking ESG metrics. The ESG Office is tasked with developing and recommending suitable governance for ESG initiatives in partnership with relevant departments across the bank. Recognizing that sustainability is vital to all business functions, the ESG Office assists Human Resources in enhancing sustainability knowledge and skills through upskilling and capability-building initiatives.

Sustainable Finance:
Sustainable finance is primarily initiated within the bank’s business divisions, including Corporate and Institutional Banking (CIB), Wealth and Personal Banking (WPB), and Treasury. This process is integrated into a broader sustainable finance governance structure comprising three levels:

• The foundational layer consists of “Transaction Review Forums.” Organized by division, these forums assess, track, and resolve sustainable finance matters at the transaction or customer level. For instance, the CIB Sustainable Finance Forum ensures compliance within corporate portfolios and client transactions by involving representatives from business units, risk management, and compliance.
• The intermediate layer focuses on “Review, Definition Setting, and Monitoring.” Sustainable finance issues are documented, tracked, and aggregated by the Finance department, guided by the Sustainable Finance Data Dictionary, which directly links to SAB’s Product Governance. This governance delineates which products can be developed by the business divisions. The ESG Office facilitates the connection between the Data Dictionary and Product Governance.
• The top layer is responsible for “Review and Oversight” of sustainable finance initiatives. The Finance department reports on sustainable finance to the ESG Steering Committee, along with the Data Dictionary. This information is then communicated to the Board Executive Committee and ultimately to the Board of Directors. These bodies provide strategic direction, conduct performance assessments, and address elevated issues according to established protocols and procedures.

At the core of SAB’s approach to sustainable finance is the Sustainable Finance Data Dictionary. This comprehensive resource outlines the principles that guide ESG-focused products and their alignment with international standards. Products must undergo a rigorous due diligence process before being included in the Data Dictionary to mitigate risks and ensure adherence to the highest standards. For further details about the Sustainable Finance Data Dictionary, please visit SAB’s ESG page.

 

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.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

 

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

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.

 

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.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

 

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

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.

 

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.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), ISEP Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

 

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