LOCAL BANKS RECEIVE DIRECTIVES FROM CBK REGARDING SUSTAINABLE FINANCING STANDARDS

  • 21/11/2022

Kuwait City: The Central Bank of Kuwait issued its directives to local banks on guidelines for sustainable financing in response to the growing interest in sustainable financing and within the framework of the Central Bank of Kuwait's direction to support the idea of sustainable development and to take steps to promote and implement sustainable financing in the banking sector in light of the New Kuwait 2035 vision for achieving sustainable development. Definitions of the three sustainability criteria—environmental, social, and governance standards—as well as the significance of sustainable financing were included in the directives, which also included a list of the fundamental guidelines that banks should follow when considering sustainable financing and sustainability factors. 


Important principles
The most important principles and basic directives that local banks should take into account with regard to sustainable financing and sustainability factors focus on the following: 

■ Incorporate environmental, social, and corporate governance (ESG) considerations into the bank's governance and risk management strategy so that it incorporates elements of sustainable financing and takes into account the establishment of specific goals for the bank under the heading of sustainable financing.

■ Incorporate sustainability-related elements into tools and products that can be deemed sustainable in accordance with published or published from approved standards that can be used to determine the character of sustainability.

 ■Paying attention to the release of financing tools and products that are compatible with green financing initiatives and other projects that benefit the environment and the climate.

■ Improving the bank's environmental, social, and corporate governance performance through the provision of new and innovative financial solutions and banking products, as well as by promoting sustainability in all of the bank's activities.

■ Defining the risks of climate change and encouraging the financing of projects that contribute to positive participation in issues related to aspects of climate change.

■ Raising awareness of, and developing the capabilities of, Bank employees, as well as training them in the methods of applying sustainable financing.

■ Applying the sustainability principle to the bank's operations and internal activities by measuring the carbon footprint of buildings and branches, improving waste management, implementing water and energy efficiency standards, and constructing environmentally friendly buildings that use less electricity.

■ Banks take into account the necessary considerations when studying and analysing these cases and making appropriate decisions in cases where lending and investment decisions have a significant impact on environmental, social, and corporate governance.

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