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Qatar’s banks team up with GORD to promote their ESG credentials

Qatari banks are eager to demonstrate their commitment to sustainable banking amid growing public scrutiny of the environmental cost of hosting the World Cup.

Stadium 974 – so-called as it is built with that number of shipping containers. Photo: Reuters

Qatar has spent more than a decade preparing to host the 2022 World Cup football tournament. It is perhaps not surprising, then, that its government has been focused on the environmental impact of the built environment in the run up to the competition.

The Qatar World Cup organisers – Fifa, the Fifa World Cup Qatar 2022 LLC and the Supreme Committee for Delivery and Legacy – promised the world a carbon-neutral tournament.

Third-party verification of the sustainability of the associated infrastructure has been kept close to home: under the purview of the Gulf Organisation for Research & Development (GORD) and its Global Sustainability Assessment System (GSAS).

GORD is a non-profit government organization founded by Qatari Diar, a Qatar Investment Authority-owned real-estate company.

We will be allowing a three-year grace period, 20 years repayment with discounted interest rates if borrowers meet sustainability targets
Jassem Ibrahim Al Mohammadi, QDB

Of the eight stadia built for the tournament, Lusail, Stadium 974 and Al Thumama have each received either five-star or gold-standard ratings by the organization.

GORD is also behind the Global Carbon Council, the voluntary programme that is set to provide the majority of credits to offset the tournament's emissions and bring it to carbon neutrality.

The claims of sustainability for this World Cup have long been controversial. In May this year, global sustainability watchdog Carbon Market Watch (CMW) published a report questioning them and the choice of accounting approach to measure the real emissions.

“In our estimation, the total footprint of the permanent stadiums constructed for the World Cup might be underestimated by a factor of eight, amounting to 1.6MtCO2e [million tonnes of carbon dioxide], rather than the reported 0.2MtCO2e,” it stated.

The report also mentions that, at time of writing, the Global Carbon Council had only issued 130,000 carbon credits of the predicted 1.8 million necessary to offset the tournament.

Green agenda

The GORD has, however, been instrumental in pushing a green agenda beyond the immediate requirements of the World Cup.

Dukhan Bank, Qatar’s second-largest retail bank, signed a memorandum of understanding with the GORD to launch a Shariah-compliant green and sustainable real-estate finance programme for project owners and developers at the recent COP27 conference in Egypt.

Participants will be able to access loans at a lower interest rate if they integrate GORD’s global sustainability assessment into their project designs.

The GORD has also signed a similar partnership with Doha Bank to facilitate “the bank’s green initiatives and develop framework for a robust sustainability strategy and ESG [environmental, social and governance] compliance,” it says.

It has also signed an MoU with Qatar National Bank subsidiary QNB AlAhli, the second-largest private bank in Egypt, to provide green mortgages to real-estate projects if they get building certification under the GSAS framework.

Banks are proactively sharing ESG initiatives with international investors, customers, and stakeholders

Qatar Development Bank has signed its own MoU with the GORD. The state-owned bank will provide green loans for project developers in clean tech, recycling plants and renewable energy assets, with discounted rates tied to sustainability targets.

“We will be allowing a three-year grace period, 20 years repayment with discounted interest rates if borrowers meet sustainability targets,” QDB’s acting head of industrial financing Jassem Ibrahim Al Mohammadi told Euromoney at COP27.

QDB will cover up to 85% of the total project coast.

“We guarantee the loans to small and medium-sized enterprises and retail clients of other Qatari banks,” confirms Al Mohammadi.

QDB’s mandate is largely focused on domestic borrowers.

“We have established an investment department to work with private-sector investors, including private equity investors,” Al Mohammadi explains.

It helps that the Qatari government recently enacted legislative reform to promote economic diversification. The country’s new foreign investment law now allows for 100% foreign-owned companies to be established in Qatar.

The central bank has yet to establish an official ESG regulatory framework, but the banking sector has demonstrated an eagerness to comply with international standards.

“Banks are proactively sharing ESG initiatives with international investors, customers, and stakeholders,” PwC observes in its 2022 Qatar Banking Sector Report.

Some still have some way to go, however.

Doha Bank has a high ESG risk rating at 36.7, according to ESG ratings agency Sustainalytics, ranked 904 of 1,001 banks analysed. QNB has a medium risk rating at 22.6, while Dukhan Bank is not graded.