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CIB at the forefront of MENA’s sustainability drive

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CIB CEO Hussein Abaza

Environmental, social and governance considerations have been a strategic focus for CIB for quite a few years, pushing the Egyptian lender to the forefront of the regional banking industry's embrace of ESG issues. In an interview, CIB CEO Hussein Abaza, explains the importance of these issues to the bank and how this is reflected across its operations and businesses.

Q: ESG issues are rightly receiving a lot of focus and attention in the global banking, finance and investment industry. How important are these issues to CIB, and how is the bank demonstrating this importance in its operations and business activities?

We are strongly committed to integrating sustainability practices and ESG principles across CIB’s lines of business, policies, procedures, and culture. In 2020, CIB issued its fifth sustainability report and launched its sustainable finance division to implement, monitor, and evaluate sustainability targets. We have been making great strides on the sustainability front since becoming a founding signatory of the United Nations Environment Program – Finance Initiative (UNEP-FI) Principles for Responsible Banking in 2019, with hopes of more financial institutions following suit. Since signing the principles, we have taken the lead in Egypt in forming international partnerships that address responsible banking, the empowerment of small businesses, financial literacy, and corporate commitment to climate action.

On the environmental front, CIB undertook an annual carbon footprint assessment and set a 10% carbon emission reduction target by 2025, which we already achieved in 2020 compared to the baseline year 2018. In addition, CIB is the only Egyptian bank that is included in the Carbon Disclosure Project and the first bank in Egypt to perform a Life Cycle Assessment for its card payment system. Our sustainability efforts extend to gender equality issues aimed at increasing women’s representation in the workplace and empowering women from different communities.

Q: CIB has been focusing on ESG for quite a few years. How, if at all, has your ESG strategy changed during this time, and what will the bank be focusing on in the future? Are there areas, for instance, that you will be focusing on more?

As a leader in sustainable finance, CIB places great importance on demonstrating action to protect the planet and incorporating sustainable practices into the bank’s core business operations. In this regard, CIB formally established a new innovative sustainability governance framework in 2020 and was the first institution in Egypt to appoint a chief sustainability officer.

CIB took the initiative to be the first bank in Egypt to join the Task Force on Climate-Related Financial Disclosures (TFCD), as well as the first in the region to join the UN-convened Net Zero Banking Alliance (NZBA) as one of the 43 founding members and is representing Africa on its steering group. Over the next few years, CIB aims to focus on expanding its green product portfolio as well as align with the global direction of net zero emissions and climate disclosures.

Following the bank’s carbon footprint assessment, which set seven carbon emission reduction targets and a total target of 10% greenhouse gas reduction by 2025, CIB is in the process of producing an ecological footprint report to widen its scope of reporting.

Q: Focusing specifically on the environmental side of ESG, can you highlight what the bank is doing to make its operations greener and more sustainable, and also what it is doing in this area in its business activities?

Building on our distinct approach to the integration of sustainability, CIB aims to contribute to the development of the green bond market by issuing Egypt’s first corporate green bond, to be finalised this year. Additionally, CIB’s Direct Investment Group is currently working on the green investment initiative that will target investments in companies that adopt and implement ESG standards or those planning to expand into green projects.

We are strongly committed to integrating sustainability practices and ESG principles across CIB’s lines of business, policies, procedures, and culture.
Hussein Abaza, CEO of CIB.

As part of our responsibility to raise awareness about the risks and opportunities of climate change and support customers wishing to go green, we are pleased to take part in the Central Bank of Egypt’s car replacement initiative that will convert old vehicles running on traditional fossil fuels with modern ones running on clean energy.

CIB is also the first bank in Egypt to join the TFCD and the NZBA, which goes hand in hand with Egypt’s goal to transform into a green economy, aligning with Egypt Vision 2030, the Paris Climate Agreement, and the UN’s SDGs. We believe disclosing information on financial risks and opportunities related to climate change ensures transparency and builds trust among our stakeholders, investors, and customers.

CIB had a robust environmental and social management system in place since 2016, which supports our efforts in sustainable finance in the country and the broader region. CIB provides its clients with the necessary tools and products to aid their transition to a more responsibly profitable economic model.

Q: Similarly, can you highlight what the bank is doing on the social side in its operations and in its business activities?

CIB recently received the Egyptian Gender Equity Seal Certification (EGES), guided by the World Bank’s Gender Equity model, making it the only bank in the MENA region to receive this certification. It comes in line with our efforts to create a culture of equity in the private sector and highlights our commitment to the EGES’ areas of focus: career development, family-work balance, and sexual harassment policies.

As part of its gender empowerment strategy, CIB is co-chairing ‘Egypt Closing the Gender Gap Accelerator’, a project by Egypt’s Ministry of International Cooperation along with the National Council for Women and the World Economic Forum. CIB was listed on the 2021 Bloomberg Gender Equality Index for the third consecutive year.

Addressing gender empowerment, we launched the ‘Helmik Yehemna’ (You Make a Difference) initiative aimed at supporting underrepresented women to join the workforce and sponsored events such as She Can and She’s Next. We also rolled out the new Women in Business lending programme and the Business Solutions programme that provide exclusive benefits and non-financial services to women-led businesses and SMEs.

Q: To what extent has CIB captured financial benefits from incorporating ESG factors into the bank’s strategy?

ESG criteria are becoming increasingly critical for large financiers to assess their borrowers because it can help them filter out companies that may not be sustainable and may pose a financial risk due to their practices.

We strongly believe that integrating ESG factors is critical for a cleaner portfolio, better financial outcomes and increased investor appetite. Good governance, strong institutions and low levels of corruption have been long identified as drivers of economic growth and lower financing costs.

CIB’s sustainable finance policy aligns with and implements relevant ESG principles, standards, frameworks and best practices while adhering to applicable national laws and regulations. Furthermore, the policy ensures that relevant ESG indicators are well measured, monitored, controlled and reported consistently and comparably to enhance proper enforcement, accountability and transparency. With the upscaling of sustainable finance and ESG products, the financial benefits will increase proportionally.

Q: What are some of the challenges the bank sees in the area of ESG?

One of the many challenges in emerging economies and low-income populations is their inability or unwillingness to go through the burden of opening bank accounts. To reach out to this unbanked segment and enhance financial inclusion, we offer products enabling easy access to essential banking services, including the national ‘Meeza’ prepaid and debit cards, which customers can use for cash withdrawals, local purchases, and online shopping.

CIB is also constantly developing digital payment solutions that serve both banked and unbanked segments of the population. These services can be accessed through CIB’s online banking services and CIB Smart Wallet, allowing customers to pay bills, buy from merchants using QR codes, and send money to other accounts in Egypt with relatively lower fees. By making it easy to perform banking transactions, individuals are gradually realizing the importance and convenience of having bank accounts.

Another challenge facing sustainable finance and ESG integration is data digitization, which is necessary to streamline ESG within banks’ portfolio, operations and functions. We are taking serious steps in this dimension that will further enhance sustainable finance within CIB.

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