Kuwait Finance House “KFH” launched a project to develop a sustainability strategy to integrate with the bank’s business strategy. In this project, KFH will work on continuing the development of human resources, as well as enhancing transparency and credit rating by preparing the seventh sustainability report in accordance with the latest international principles, standards, and frameworks by partnering with a global consulting firm, PricewaterhouseCoopers (PwC)
This project derives from KFH's vision towards leading the global development of financial services in compliance with the provisions of Islamic Sharia and elevating it to the level of the most profitable, sustainable, and most trusted Islamic bank in the world. It also comes as an activation of KFH's mission to achieve the highest levels of innovation and excellence in customer service while protecting and developing the common interest of all parties involved with the institution.
The Executive Manager of Corporate Governance at KFH, Mohammed Al-Arbeed, said that the development of KFH’s integrated sustainability strategy aims at analyzing and measuring the economic, social, and environmental impacts, whether at the operational level or the level of business continuity, as well as identifying and managing environmental and social risks and opportunities, in a manner that creates value for all stakeholders and development partners.
Al-Arbeed pointed out that the project kicked off with an interactive workshop in which representatives from various concerned departments within the Bank participated, adopting in this way a participatory approach based on the capacity building and skills development of KFH’s human resources, with the participation of highly qualified international and local experts to transfer and localize the knowhow at KFH group, based on the Bank's values of partnership and responsibility.
Al-Arbeed added: "The importance of the project comes from multiple global, national and sectoral institutions and levels; i) after the United Nations launched the seventeen Sustainable Development Goals promoting prosperity while taking into account the protection of the people and the planet, and ii) the adoption of the Framework Convention on Climate Change, the "Paris Agreement" in 2015, which aims to reduce global warming and GHG emissions, adopted by the State of Kuwait, as well as all the countries in which KFH operates, whilst iii) the state of Kuwait developed the Kuwait Vision 2035aiming to transform Kuwait into a global financial and commercial center that attracts investment.
Accordingly, KFH’s integrated sustainability strategy will complement the efforts of the state of Kuwait in financing government and development projects, as well as identifying ways to strengthen its role in order to contribute effectively to achieving comprehensive development and the goals of Kuwait Vision 2035”.
Al-Arbeed also explained that the topic is gaining importance in particular in the financial sector which is witnessing rapid developments, especially after the Coronavirus crisis, in terms of greater attention to the governance of economic, social, and environmental risks and impacts of the operational processes of financial institutions on the one hand, and the development of banking services with developmental Economic, social and environmental Impacts on the other hand, as well as attention to the efficiency of social and environmental risk management systems and the extent of their comprehensiveness and proactiveness in facing crises and emergencies timely .
He stated that the global financial sector is witnessing a remarkable development in the volume of responsible investments and sustainable financing and the development of financing products with positive social and environmental impacts. These developments represent an opportunity for financial institutions committed to the principles of sustainability, as the volume of investments in sustainable assets, according to the latest reports of the Global Alliance for Sustainable Investment, amounted to more than 30 trillion US dollars, with an increase of 34% in two years, noting the development of many financial products and the increase in demand for them, such as green, social and sustainable instruments, green finance and mortgages, carbon reduction funds and others.
Al-Arbeed pointed out that the Global Risks report showed that environmental and social risks, in conjunction with risks related to information security and information infrastructure will be at the top of the global risks, adding that the report indicated that the economic impacts resulting from natural disasters around the world in 2018 amounted to 165 billion US dollars, where 50% of this total is not insured.
He also stated that : "In order to keep pace with these rapid developments, a set of global public initiatives were developed, such as the United Nations Global Compact to encourage companies around the world to adopt sustainability and social responsibility principles and business practices, the United Nations Initiative for Sustainable Stock Exchanges (SSE) with the membership of the Kuwait Stock Exchange, in addition to the Principles of Responsible Investment (PRI). ), the United Nations Environment Program Financing Initiative (UNEP-FI), and the United Nations Conference on Trade and Development (UNCTAD). A set of frameworks for the governance of social and environmental risks for financing operations (equator-principles) have also been developed. Furthermore, a set of disclosure recommendations for measuring and reporting the risks of climate change on financing portfolios is developed by the Task Force on Climate-related Financial Disclosures (TCFD). The Global Reporting Initiative has also developed global reporting standards for disclosures on social and environmental impacts, risks, and opportunities, as well as ways of their governance. It is worth noting that the International Accounting Standards Authority Foundation is currently working on including sustainability disclosures, and the Basel Committee is currently working on studying disclosures on the risks of climate change.
In conclusion, Al-Arbeed affirmed KFH’s keenness to enhance the sustainability strategy based on the pioneering cycle aligning with the latest global developments, as well as a cycle in maximizing the gains of all stakeholders, enabling the bank’s business strategy to achieve its objectives, and continuing to achieve its leading development role.