Commercial International Bank (CIB), Egypt’s leading private sector bank, is celebrating a new milestone in its ESG reporting journey, as part of its accountability and pioneering efforts in Sustainable Finance: the comprehensive “Principles for Responsible Banking (PRB) Progress Report”, released in March 2022.
The report enables the CIB to understand the impact of its funding on the environment and society and where its lending decisions have the greatest positive and negative impacts. This illuminating process helps the Bank set its strategic targets, which help contribute to Egypt’s sustainable development progress, and at the same time, ensure the quality of the Bank’s portfolio.
The CIB–PRB journey started in 2019, when the CIB became a core founding signatory of the United Nations Environment Program – Finance Initiative’s (UNEP-FI) “Principles for Responsible Banking,” amongst 130 international banks. Celebrating the PRB’s first anniversary, Hussein Abaza, the CEO and Managing Director of the CIB, joined 130 CEOs, representing banks from over 49 countries and over $64trn in assets, in signing the United Nations Environment Program – Finance Initiative’s (UNEP-FI) “Principles for Responsible Banking.” These principles encompass the social, environmental, and governance practices of the banking sector. Said principles can be attained through forming international partnerships that address responsible banking, the empowerment of small businesses, financial literacy, and corporate commitment to climate action.
“The Principles of Responsible Banking” define the framework through which banks can ensure their sustainability strategies are aligned with Sustainable Development Goals (SDGs) and the 2015 Paris Climate Agreement. By becoming signatories, banks commit to analyzing the current impact of their portfolios on the economy, society, and environment; set targets for the most significant impact areas; and publicly report on their progress toward the implementation of the six Principles for Responsible Banking.
Since signing, the CIB has worked on all six principles with a special focus on Principle 1: Alignment, Principle 2: Impact and Target Setting, and Principle 5: Governance and Culture.
Focusing on the impact front, and in alignment with Principle 2: Impact and Target Setting, the CIB has followed a staged approach to perform an impact assessment on the Bank’s portfolio using the UNEP-FI portfolio impact analysis tool. During March 2021, the CIB performed and published the impact assessment of its Business Banking portfolio as a pilot, and then extended its assessment to two more business lines, namely Corporate & Consumer Banking. The full comprehensive report was published in March 2022.
“The PRB published report is the result of previous experiences and development in ESG data management, and asses the CIB’s loan portfolio to ensure that said portfolio advances Egypt’s 2030 vision through aligning the Bank’s targets with that of our national strategy and with Sustainable Development Goals. The results of the assessment have been reported in the most transparent manner possible, highlighting the CIB’s impact on the environment and society using internationally recognized standards and methodologies,” said Dalia Abdel Kader, the CIB’s Chief Sustainability Officer.
The impact assessment exercise has enabled the CIB’s lines of business to identify their most significant positive and negative impact areas thereby capitalizing on positive areas and mitigating the negative ones. Following its impact analysis exercise, the CIB addressed target setting, in order to ensure that its credit portfolio advances Egypt’s 2030 vision by aligning the Bank’s targets with that of the country’s.
The CIB has always been committed to transferring knowledge as well as sharing challenges with all the Bank’s peers in the MENA region, in order to drive the implementation of the PRB across the entire region. For this reason, the CIB participated in a workshop held by the UNEP-FI (United Nations Environmental Program – Finance Initiative)—attended by 22 Banks from Africa and the MENA region—titled “In-depth Impact Analysis for Banks.” The Bank shared its experience by presenting a case study on how loan portfolio impact analysis was implemented on the ground and discussed the various challenges and opportunities that arose during the reporting journey, starting all the way from data collection, impact analysis, and target setting to implementation. The Bank also discussed transparency and accountability.
The CIB believes that the Principles for Responsible Banking provide it with an effective framework to systematically identify and seize new business opportunities created by the emerging sustainable development economy. It also allows the Bank to effectively identify and address related risks.