Redefining A Sustainable Future - Principles for Responsible Banking - Ahli United Bank
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Redefining
A Sustainable Future
Principles for Responsible Banking
Principles for Responsible Banking 1
About Table Of
This Report Contents
This report marks the first report for Ahli United Bank Group (AUB) on its implementation of
10
the Principles of Responsible Banking (PRB). AUB signed the UN Principles of Responsible
Banking, together with 235 other international banks. The signatories, representing one-third
of the total assets of all banks worldwide, agreed that they will align their business strategies
with the UN Sustainable Development Goals and with the Paris Climate Agreement. This report Chairman’s Message to Our Stakeholders
spotlights the initiatives and measures taken by AUB Group to progress towards implementing
the Principles and create value for all of its stakeholders. In accordance with the UNEP-FI AUB Group At A Glance
guidelines, the progress toward the PRB shall be integrated into our group’s annual reporting/
annual sustainability report. Our ESG Highlights Principle One:
AUB applied the Portfolio Impact Analysis Tool (Version 2), which was developed by the Positive Alignment
Impact Initiative, the signatories of the Principles for Responsible Banking, and the United
Nations Environment Programme Finance Initiative (UNEP-FI). In our analysis, we utilized the
most recent version of the tool and followed the best practices and recommendations of the
UNEP-FI workshops, the most recent of which was conducted on 21st June 2021.
18 28 36
In this report, “AUB, “the Group”, “the Bank”, “our” or “we” refer to Ahli United Bank B.S.C. (AUB
Group), is a regional bank, based in Manama, Bahrain, and listed on the Bahrain Stock Exchange,
since August 2000 and on the Boursa Kuwait, as well.
Disclaimer
All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in Principle Two: Principle Three: Principle Four:
any form or by any means, without the prior written permission of the publisher, except in the Impact and Target Clients & Customers Stakeholders
case of brief quotations and certain other non-commercial uses permitted by copyright law. Setting
Editorial Policy
Driven by our leading position in the nation and the region, and as a founding signatory of
the Principles for Responsible Banking, this report reflects the steps we have taken towards
the implementation of the Principles of Responsible Banking, showcasing our efforts taken
42 48 52
to enhance all aspects of our sustainability performance and governance, while taking into
account both national and regional challenges and needs.
Forward-Looking Statements
This report contains forward-looking statements on various future estimations. While the
management of AUB Group believes that the forward-looking statements included in this report
are reasonable, there can be no assurance that forward-looking statements will prove to be
accurate, since actual results and future events could differ materially from those anticipated Principle Five: Principle Six: Appendix (PRB self-
in such statements. Governance & Culture Transparency & assessment template)
Mistakes and Typographical Errors Accountability
Any errors discovered following the publication of the report will be corrected and displayed on
our website. In consideration of the environment, our reports are published as a downloadable
PDF file on our website.
Chairman’s Message
implementing a robust digital transformation performance excellence in every aspect of our
strategy that utilizes data analysis to meet our customers’ journey.
changing client needs efficiently, minimizing the
At AUB, we are proud of our approach, delivering
use of cash and physical interactions. As a matter
to our stakeholders
profit with purpose and sustaining our track record
of fact, AUB was able to seamlessly provide its
as a socially responsible bank. Subscribing to the
customers all services through the use of a hybrid
UN’s Principles of Responsible Banking is a natural
approach of utilizing the Bank’s digital channels,
next step for AUB, giving us the opportunity to
e-platforms and operating certain branches under
reinforce our responsible banking practices, deliver
restrictive and preventive health measures. This was
our commitment and create a positive impact on our
to ensure the health and safety of our employees
stakeholders, shareholders and the region in which
and customers during the COVID-19 crisis
we operate. AUB will continue with its “Redefining a
the voluntary, yet globally recognized framework Sustainable Future” by leveraging its expertise and
for banks to determine, assess and manage social In addition, we continued to empower SMEs by capabilities at the service of the economy, society,
and environmental risks in project financing. Our providing them with customized banking services and the environment.
Group-wide Social and Environmental Management and increasing the SMEs’ share in our lending
3227
System marked the first step towards the inclusion portfolio. Moreover, we have launched several
of non-financial screening criteria in our corporate sustainable products and services and engaged in
banking practices. We believe that the Principles of valuable partnerships, to create value for all of our
Responsible Banking is the roadmap that paves the stakeholders. Meshal AbdulAziz Alothman
way to a sustainable future. With a customer-centric and innovative banking Chairman of the Board and the
Committed On the following pages of this report, we aim to
approach, the Group is committed to providing Executive Committee
Employees
share with our stakeholders how our services are
continuing to finance individuals and businesses
through a model of value creation that is more
equitable and sustainable. We support our
customers and help them to achieve their financial
aspirations and grow their businesses. We work
with small-, medium- and large-scale projects to
establish true value creation that can transform
lives. AUB seeks to finance sectors and establish
On behalf of the Board of partnerships to help build a more inclusive economy
and sustainable society.
Directors, it gives me great Despite unprecedented times due to COVID-19,
pleasure to present Ahli globally, AUB Group exerted all efforts to fulfill its
commitment to maintain customer excellence,
United Bank Group’s first address community needs, and deliver value to all
of its stakeholders and shareholders. The past 18
report on its implementation months shaped our transition towards digitalization
as COVID-19 accelerated the shift to digital banking.
of the Principles for Hence, we doubled our focus on implementing a
robust digital transformation strategy that utilizes
Responsible Banking (PRB). data analysis to meet our changing client needs
efficiently, minimizing the use of cash and physical
interactions. Despite unprecedented times due to
Ahli United Bank Group has embedded sustainability COVID-19, globally, AUB Group exerted all efforts
in the core of its mission and business model. Since to fulfill its commitment to maintain customer
establishment, we are committed to responsible excellence, address community needs, and deliver
banking and have always been a pioneer in the region value to all of its stakeholders and shareholders.
when it comes to socially responsible lending. In The past 18 months shaped our transition towards
2011, Ahli United Bank was one of the first banks digitalization as COVID-19 accelerated the shift to
in the Middle East to adopt the Equator Principles, digital banking. Hence, we doubled our focus on
4 Principles for Responsible Banking Principles for Responsible Banking 5
AUB Group What We Do
at a Glance
Our Group creates value to the clients through offering a diversified financial services group model,
which includes:
Corporate Banking
About US Which satisfies the financial needs of corporate and institutional customers through
offering corporate and trade finance, commercial property finance, residential and
property finance, acquisition and structured finance.
Ahli United Bank B.S.C. (AUB Group) is a leading regional
bank based in Bahrain and operates in 8 countries. It is an
award-winning institution dedicated to creating outstanding
shareholder value and providing superior customer services
675,000
to a broad range of clients. The Group’s business model is Clients Retail Banking
centered on corporate banking, retail banking, private banking,
and treasury and investments, including an enhanced Sharia- Which serves individual customers through deposits and offering loans, overdrafts,
compliant contribution. The Bank serves an expansive network of credit cards, and residential mortgages.
675,000 retail customers, high net-worth individuals, corporate,
business and institutional clients through a diversified financial
group model. With a widespread network of 151 branches,
and a workforce comprising of 3300 employees, AUB provides
151 Private Banking and Wealth Management
tailored and client-centric services to deliver value to its clients.
Which provides wealth management services to both individuals and institutions, such
Branches as Private Banking and Asset Management, Real Estate Fund Management, investment
Our Multi- products, funds, trusts, and credit facilities.
Country Network
3300
Treasury and Investments
AUB was established in Bahrain in 2000, following a merger
between the United Bank of Kuwait PLC (“UBK”) and Al-Ahli Which principally cover money market, trading & treasury services as well as manage-
Commercial Bank B.S.C. (“ACB”) pursuant to which UBK
and ACB each became wholly-owned subsidiaries of AUB. Committed ment of the Group’s investments & funding.
AUB wholly owns operations of AUB (Bahrain), AUB (United Employees
Kingdom), and operates a branch in Dubai (DIFC, UAE). The
Bank operates under a retail banking license issued by the
Central Bank of Bahrain (“CBB”). In addition, AUB has a 95.7%
stake in Ahli United Bank (Egypt) S.A.E , more than 80% of Islamic Banking
Commercial Bank of Iraq (PSC), 74.9% of AUB Kuwait (K.S.CP),
08
40% of United Bank for Commerce & Investment S.A.L (UBCI) Which offers Shari'ah-compliant banking activities & treasury products.
and 35% of Ahli Bank SAOG of Oman. We target to expand our
network of branches to Saudi Arabia, the United Arab Emirates
(UAE onshore), Switzerland, and Turkey. Countries
6 Principles for Responsible Banking Principles for Responsible Banking 7
Our ESG
Highlights
AUB United
Kingdom
100%
AUB was awarded the Best Digital Transformation Bank in Bahrain in 2020,
by MEA Finance.
AUB Iraq
Adopting the highest level of data security, AUB was the first bank to be
PCI-DSS certified in Bahrain in 2009 and maintained compliance with the 80.3% AUB Bahrain
PCI-DSS for the eleventh year in 2020.
100%
In 2020, AUB launched the Tamweel Plus scheme directed towards financ-
ing expansion plans of medium-to-large entities, in collaboration with the AUB Egypt AUB Kuwait AUB Oman
Tamkeen agency.
AUB Libya 95.7% 74.9% AUB
35%
2020 witnessed several partnerships, to create value for our stakeholders 40% (DIFC)UAE
and mobilize efforts towards achieving a positive social & environmental
impact. These partnerships include the Tamkeen partnership, Waste Man- 100%
agement Partnerships, Forbes Family Trust partnership, and Principal
Islamic Asset Management partnership.
At the beginning of 2021, the Bank provided syndicated loans, totaled USD
2975 million, directed to various mega projects in several sectors, with a
focus on projects in oil & gas, tourism, manufacturing, financial, and
telecommunication sectors.
In 2021, AUB started engaging with various organizations, such as the NYU
Stern Center for Sustainable Business, in the sustainability field, to quantify
and measure the impact we create through sustainable measures, and to
further monetize these measures.
Total Assets: Shareholders’ Equity: Net profit:
$40.0 billion $4.0 Billion $452.2 Million
8 Principles for Responsible Banking Principles for Responsible Banking 9
We will align our business strategy
to be consistent with and contribute
to individuals’ needs and society’s
Principle One
goals, as expressed in the Sustainable
Development Goals, the Paris Climate
Agreement and relevant national and
Alignment regional frameworks.
10 Principles for Responsible Banking Principles for Responsible Banking 11
Principle 1 Sphere of Impacts
1 Supporting Global & National
Alignment Sustainability Priorities
Sustainability
recognized framework for banks to determine,
assess and manage social and environmental
risks in project financing. Since then, the Bank has
Shapes our Purpose directed its focus towards financing projects and
activities that have a minimal impact on the society
and environment we operate in. Within this frame of
Since its founding twenty years ago, AUB Group has reference, the Group has put in place performance
always been committed to its role and mission as standards within its risk framework to assess and
a responsible bank, to serve the best interests of evaluate Social and Environmental (S&E) risks
our customers and shareholders, the communities associated with financing, known as the Social and
we serve, and the socio-economic advancement Environment Management System (SEMS). AUB has
of the countries where we operate. We, at AUB, been a pioneer in the region in socially- responsible
continuously aim to maximize shareholder value lending, guided by our SEMs policy. Our SEMS policy
through sustainable means, maintain the highest sets robust guidelines to identify and filter out
international standards of corporate governance projects that have a significant negative impact on
and regulatory compliance, and optimize staff the environment and society. Accordingly, AUB will
development through business-driven training and only finance projects that will operate in compliance
profit-related incentive. The Group is devoted to with national and regional laws. We will ensure that Ahli United Bank B.S.C contributes to the of the countries we operate in. As a result, our
treat its customers fairly, develop a cross-cultural any projects funded by the Bank are reviewed and achievement of the United Nations Sustainable mission and objectives align with SDGs goals 8, 9,
meritocratic management structure and ensure evaluated against the Social and Environmental Development Goals & Bahrain’s National Priorities. and 16 and contribute to Bahrain’s future aspiration
technological, digital, and data advancements requirements of IFC Performance Standards, and of achieving robust economic growth that benefits
across all functions. With sustainability engraved in World Bank Group Environmental, Health and Safety Our Value Creation Mapping highlights how our core the people.
our mission and business model, we are dedicated to (EHS) guidelines. financing activities and business operations create
align our business strategy and to keep it consistent value to the global and national sustainability agenda.
with our customers’ needs and society’s goals as Moreover, to foster the Bank’s responsible banking At the forefront of our strategic performance: Our Portfolio Alignment:
expressed in the UN Sustainable Development philosophy, Senior Management and Staff across digital transformation, supporting SMEs, financing AUB Group’s total lending portfolio reached a total of
Goals, the Paris Climate Agreement, and relevant the Group attended the Webinar on ESG and Building housing, real-estate and infrastructure investments, $22 billion in 2020, which includes retail, corporate
national and regional frameworks. a Sustainable Economy to remain cognizant of green finance, and empowering youth and women and private banking lending. The Bank lending
building a Sustainable Economy, and the associated are our key concerns. portfolio is extended to sectors that have minimal
challenges and opportunities. This was conducted negative social & environmental impact, guided by
A Responsible by the Bahrain Institute of Banking and Finance
(BIBF).
Strategic Alignment:
Sustainability is embedded in the core of our mission
our SEMS policy. The Group finances corporates
operating mainly in the trade & manufacturing
Banking Approach and business model. We aim to serve the interests
of our customers, optimize the development of
sector, and real estate & services, which receives
the largest portion of AUB’s corporate lending of
our staff and deliver value to our shareholders. 29%, 32% & 21%, respectively. AUB’s corporate
At AUB, we are proud of our approach of delivering In addition, we aim to embrace state-of-the-art lending activities support achieving SDGs Goals 1,
profit with purpose. From its inception, AUB technologies and escalate digital transformation, 8 & 10 through enhancing economic growth and
recognizes its role, as a financial institution, the providing performance excellence in every part of creating new job opportunities and income sources
impact we have on the welfare of our stakeholders, the customer journey. Moreover, AUB strives to for Bahraini residents, which will assist Bahrain to
shareholders and the community. In 2011, AUB was maintain the highest governance standards, develop achieve robust economic growth and a thriving, and
one of the first banks in the Middle East to adopt a cross-cultural meritocratic management structure equitable society. Our efforts are aligned with the
the Equator Principles, the voluntary yet globally and contribute to the socio-economic advancement future aspirations of Bahrain’s Vision 2030.
12 Principles for Responsible Banking Principles for Responsible Banking 13
Product/Service/Business practice Alignment:
Product/Service/Business Alignment with Product/Service/ Business Alignment with
Mapping with SDGs Mapping with SDGs
practice Description Bahrain Vision 2030 practice Description Bahrain Vision 2030
Mazaya Program
The Mazaya program supports Green Finance
A Social Housing Finance Scheme future aspiration 3 in Bahrain’s Our green finance initiatives will
offered, in cooperation with the Ministry Vision 2030 of achieving a just Our Group advocates green finance enable Bahrain to achieve its
of Housing, that will allow the customer and thriving society, through through actively participating in and future aspiration of achieving a
to buy the house of his choice by financ- targeting housing support and providing bilateral financing for the just and thriving society through
ing up to 120% of property value. subsidies to the most in need. production of desalination of water, ensuring that Bahraini residents
wastewater treatment, renewable enjoy a sustainable & attractive
energy & enhancing energy efficiency. living environment and conserv-
ing the natural environment for
future generations.
Real Estate & Project Financing
AUB offers a competitive range of
Real estate and project financ-
mortgage products and structured
ing also contribute to achiev-
solutions for all types of commercial &
ing future aspiration 3 in
residential properties across different Digitalization AUB’s digitalization efforts
Bahrain’s Vision 2030 of
sectors. This support includes services In an immediate response to the corona- align with Bahrain’s future
achieving a thriving & just
such as arranging payment of house- virus pandemic, AUB redoubled its focus aspiration 1 in Vision 2030 of
society by targeting housing
hold expenses. Also, AUB provides on implementing its digital transforma- achieving a robust economic
support.
long-term lending for large-scale tion strategy, with an emphasis on growth through diversifying the
infrastructure & industrial projects with engaging customers virtually. In 2020, economy by capturing emerg-
tailored project Finance Solutions. AUB launched several initiatives to ing opportunities. The Bahrain
deliver immediate empowerment for its economy targets to capture
corporate, retail, business, and institu- emerging opportunities by
tional clients through digital products transforming into a knowl-
Al-Tajer and services. edge-based economy.
Focusing on the banking needs of the
SMEs segment, Al-Tajer is a one-stop This creates value to future aspira-
solution, which goes far beyond conven- tion 1 of Bahrain’s Vision 2030 of
tional banking services, empowering achieving a robust economic
local SMEs with the means to transform growth that benefits the people Youth Empowerment This supports both future aspira-
and embrace the digital world and grow through enhancing productivity tions 1 and 3, through enhancing
In collaboration with CFA society
their sales. and skills. productivity and skills and provid-
Bahrain, the Bank sponsored Qodwa,
CFA Society Bahrain’s Mentorship ing quality training to people.
Program, along with Mutamahin
Program, a training program dedicated
Tamweel Plus Scheme to equipping university graduates with
The Tamweel Plus Scheme employability skills to bridge the employ-
In collaboration with Tamkeen, which supports future aspiration 1 in
is Bahrain's Government agency for ability gap between employers and job
Bahrain’s Vision 2030 of achieving seekers. Furthermore, AUB actively
developing the private sector, AUB a robust economic growth through
launched the Tamweel Plus scheme. participated in the CBE’s Youth and
enhancing productivity and diversi- Savings initiative with several events
This scheme is directed towards fying the economy by focusing on
financing expansion plans of across the country promoting financial
existing high-potential sectors. literacy.
medium-to-large entities with no cap
on the size of the entity.
14 Principles for Responsible Banking Principles for Responsible Banking 15
Product/Service/Business Alignment with Product/Service/Business Alignment with
Mapping with SDGs Mapping with SDGs
practice Description Bahrain Vision 2030 practice Description Bahrain Vision 2030
Women Empowerment Community Investment
Women empowerment supports
Female employees represent 36% of our future aspiration 3 of achieving a In the wake of the pandemic, the AUB Our sponsorships and donations
workforce and are involved in Boards just and thriving society through Group made a total donations amounting will support Bahrain’s future
and senior management. Women providing social assistance to to US$ 4.7 million in the region to support aspiration 3 of achieving a just
represent 20% of executive employees give all Bahrain an equal start. humanitarian and relief efforts. To and thriving society.
and 29% of mid to senior employees. contribute to the social and economic
Besides, AUB contributed to Bahraini development of our communities, we
Women’s Day, held by the Supreme sponsored and donated to several organi-
Council of Women as a Silver Sponsor to zations such as the Social Action Fund of
support the role of Bahraini women and Ministry of Planning, Royal Charity Organ-
their progress in the field of Higher ization - Feena Khair - Sh Nasser's
Education & Future Scenes. Initiative, Sh Ebrahim Bin Mohamed Al
Khalifa Center for Culture & Research,
Royal Charity Organization – Orphans,
Bahrain Basketball Association and
Royal Humanitarian Foundation.
Localization of Employees
Local participation in the workforce in
This supports the Bahrain
all markets in which AUB operates is a
economy to achieve a robust
key strategic and mandatory objective
for the Group. All AUB Group banks are
economic growth that 2 Aligning with the Conclusions 3 Supporting Central Bank
benefits all people through
compliant with mandated localization
creating job opportunities
of the Paris Agreement of Bahrain Direction
ratios in Bahrain, Kuwait, and Libya. No
(Future aspiration 1 in Vision AUB Group incorporated ESG into its risk management AUB has launched and developed a wide array of
set ratios exist for Egypt, UK, Dubai, and
2030 of Bahrain). framework by adopting the SEMS policy, which digital products and services, such as WhatsApp
Iraq to date.
enables AUB to align its financing activities with the banking, AUB Debit Cards Tokenization service,
conclusions of the Paris Agreement. Accordingly, Business to Business (B2B) Corporate portal, and
AUB will not finance any project that have significant Avalon, that align with the Central Bank of Bahrain
adverse environmental impact and violates the IFC (CBB) continuous initiatives towards financial digital
Health Care & World Bank environmental performance criteria or transformation in the Kingdom.
In response to coronavirus, major chang- national environmental laws and regulations.
es were implemented in the infrastruc- These health care initiatives align
with future aspiration 3 of In order to reduce its own carbon footprint, AUB Group
ture in all Group-wide offices and branch-
Bahrain's Vision 2030 through has launched digital transformation programmes
es to facilitate social distancing norms.
assisting Bahrain to ensure all and digital projects across multiple business lines
Precautionary personal protective
Bahraini residents have access to and customer engagement channels since 2019.
equipment and materials were provided,
quality health care. Moreover, AUB is exerting all of its efforts to reduce
as well as health support and advisory
the Bank’s energy use, water consumption and the
notices to customers and personnel
disposal of hazardous and non-hazardous waste
alike. Additionally, respective govern-
to fulfill its responsibility towards the environment.
mental guidelines and regulations were
Going forward, AUB is committed to support the
followed for the periodic disinfection of
Government of Bahrain in its social responsibility to
office and branch premises.
develop renewable energy resources and contribute
to the country’s advancement toward efficient energy
consumption in consultation with the Sustainable
Energy Authority (SEA).
16 Principles for Responsible Banking Principles for Responsible Banking 17
We will continuously increase our
positive impacts while reducing the
negative impacts on, and managing the
Principle Two
risks to, people and the environment
resulting from our activities, products
and services. To this end, we will set and
Impact and Target publish targets where we can have the
most significant impacts.
Setting
18 Principles for Responsible Banking Principles for Responsible Banking 19Principle 2 We took into account in our analysis AUB’s
consolidated operations across its headquarter
Impact and Target
in Bahrain and different subsidiaries. AUB has
assessed the level of country needs of different
Corporate Banking impact areas by tracking relevant indicators for the
various impact topics from the baseline resources
Setting
Real estate activities (32%), Extraction of crude
petroleum and natural gas (9.3%), Wholesale provided in the tool. With regard to the indicators
whose values were not available, we utilized
and retail trade and repair of motor vehicles
additional sources and consulted with relevant
and motorcycles (7.8%), Construction of stakeholders to capture sufficient amount of data to
buildings (7%), Manufacture of machinery and satisfy those indicators.
equipment (5.3%).
Impact Analysis Corporate and Treasury and Investments portfolios
are segmented based on the International Standard
Industrial Classification (ISIC). Corporate Banking,
Process including Business Banking portfolio, covers all
the Bank’s capital-intensive activities in risk asset
generation, and regional and international funding.
The banking sector contributes significantly to Treasury and Investments provides money market,
economic growth and development while also trading, and treasury services and is also responsible
having a major impact on the societies in which they for the management of the Group’s funding and
operate. Our most significant impact as financial investment portfolio. Retail banking manages the
intermediaries come from our financing, lending, individual customers’ deposits, loans, overdrafts,
and investing activities. credit cards, and residential mortgages.
In this regard, AUB have applied the Portfolio Impact The main sectors and activities financed throughout
Analysis Tool (Version 2), which was developed the Corporate and Treasury and Investments
by the Positive Impact Initiative, signatories of the business lines are as follows:
Principles for Responsible Banking, and the United
Nations Environment Programme Finance Initiative
(UNEP FI) to assess the environmental, economic,
and social impact associated with the bank’s
portfolio.
In our analysis, we utilized the most recent version
of the tool since it includes an additional dedicated
area to assist and record users’ preliminary scoping
Treasury and Investments
work, the addition of more industrial classification
codes (ANZIC, NACE, and NAICS), the new built- Public administration and defense; compulsory
in Indicator Library, and other useful features. In social security (32%), Financial service
addition, we adopted the leading practices and activities, except insurance and pension
the recommendations provided by the UNEP FI funding (23%), Extraction of crude petroleum
workshops; the most recent of which was conducted
and natural gas (13%), Electricity, gas, steam,
on 21st June 2021.
and air conditioning supply (9%), Activities
The bank’s Lending portfolio accounts for 70% of the auxiliary to financial service and insurance
total portfolio, while the Treasury and Investments activities (6%).
accounts for 30%. AUB assessed the impacts of
its Corporate, Treasury and Investments, and Retail
banking activities which respectively account for
about 48%, 43%, and 9% of the bank’s gross income
in 2020.
20 Principles for Responsible Banking Principles for Responsible Banking 21Impact have witnessed an accelerated loss of biodiversity
and a dramatic alteration of ecological patterns and
3 Resource's efficiency/ security 4 Inclusive, healthy economies
Bahrain took important steps
processes. Bahrain’s CO2 emissions per capita in Bahrain has one of the world's highest
Identification 2018 were 19.6 metric tonnes1 , making it one of
the world’s largest countries in terms of per capita
per capita energy consumption rates
(9.1 toe per capita) in 20185, putting
towards driving inclusive, healthy
economies by creating a business-
and Analysis CO2 emissions. Accordingly, Bahrain has taken this
issue into account by developing and mandating
a pressure on the environment, both
in terms of depleting resources and
friendly environment and ensuring
healthy competition. Bahrain was
one of the ten economies with the
Policy Making related to climate change on a variety polluting the ecosystem. According
of levels and parameters. In terms of multilateral to Bahrain's Economic Vision 2030, one of the most notable improvement in Doing Business 2020
We identified our significant impact areas, and international agreements, Bahrain is a signatory through implementing regulatory reforms, which
society's aspirations is "Bahraini nationals and
according to the established sectors’ associations to numerous international treaties, including the included making obtaining construction permits
residents enjoy a sustainable and attractive living
with relevant impact areas provided by the Portfolio UNFCCC, the Kyoto Protocol, the Paris Agreement, easier by further streamlining the application
environment," which states that "protecting our
Impact Analysis Tool (Version 2). Four Areas of the Montreal Protocol on ozone depletion, and the process through the new Benayat online platform
natural environment will include implementing
Significant Impact were Identified; 2013 Beijing Amendment to the Montreal Protocol. and delegating the application review process
energy-efficiency regulations (e.g., for buildings and
In terms of institutional development, Bahrain has electrical appliances); and directing investments to licensed engineering firms, making property
been active in the formation of new institutions that to technologies that reduce carbon emissions, registration easier, and strengthened access to
will be responsible for guiding the formulation of minimize pollution, and promote the sourcing of credit7. Moreover, Bahrain made it simpler to pay
policy in the areas of sustainability, the environment, taxes by instituting electronic contributions of social
01 02
more sustainable energy"6.
energy, and climate change2 . insurance payments. Concurrently, the measures of
Our portfolio has an impact on resources efficiency/ financial inclusion have been gradually increasing in
Sectors that have impact on climate are; Real security as a consequence of financing the following recent years. The overall number of bank branches
CLIMATE WASTE
estate activities, Extraction of crude petroleum and sectors/ activities: Real estate activities, Extraction serving people increased by 25.7 percent from 136
natural gas, wholesale and retail trade, and repair of crude petroleum and natural gas, wholesale in 2011 to 171 in 20178, while the proportion of
of motor vehicles and motorcycles, as well as the and retail trade, and repair of motor vehicles and Adults having an account increased by 18 percent
construction of buildings. motorcycles, Constructions of buildings, and from 65 to 83 percent9.
Manufacture of machinery and equipment.
Waste AUB aims to provide people with access to
03 04
2
affordable, effective, and safe financial services,
Waste is the second significant area which will contribute to the achievement of inclusive,
of impact. With respect to this issue, healthy economies thereby promoting Bahrain's
RESOURCE’S INCLUSIVE
Bahrain has encountered major development.
EFFICIENCY/ AND HEALTHY
challenges, and it is worth noting
SECURITY ECONOMIES
that sustainability is one of the
three guiding principles of Bahrain’s
Economic Vision 2030, which is focused on a variety
The four Impact Areas selected are recognized to be of issues including waste management among
of high importance, not only on global, and regional other environmental topics3. And the Kingdom has
levels, but also on Bahrain’s level, where AUB head adopted a national contingency plan for combating
office is located. oil spills, the management of hazardous waste and
healthcare waste, as well as adopting projects that
1 Climate address the need to recycle electronics (Recycling
IT), as a part of the country’s environment protection
The rapid growth of the human plan to control waste .
population and the phenomenal
industrial and technological The main sectors in our portfolio that have an
developments of human society over impact on waste are Real estate activities, Extraction
the past two centuries have placed of crude petroleum and natural gas, wholesale
unprecedented demands on Earth’s and retail trade, and repair of motor vehicles and
natural resources. As a result of these pressures, we motorcycles, and the construction of buildings4.
1 5
World Bank data. Available at: https://data.worldbank.org IEA Atlas of Energy. Available at: http://energyatlas.iea.org
2 6
Bahrain’s Third National Communication Under the United Nations Framework Convention on Climate,2020, E-Government Portals. Available at: https://www.bahrain.bh
Available at: https://www.sce.gov.bh 7
The World Bank, Doing Business 2020. Available at: https://www.doingbusiness.org
3
E-Government Portals. Available at: https://www.bahrain.bh/new/en/environment_en.html? 8
Oxford Business Group. Available at: https://oxfordbusinessgroup.com
4 9
E-Government Portals. Available at: https://www.bahrain.bh The World Bank, Global Findex data base 2017. Available at: https://globalfindex.worldbank.org/
22 Principles for Responsible Banking Principles for Responsible Banking 23AUB Group Approach to Reduce Categories Definitions Requirements
Manage its Impact; Social and Environ-
Business activities involving investments in FIs or Verification that the
mental Management System (SEMS) Category FI through delivery mechanisms involving financial
intermediation. The instances could be as below:
project sponsor is
capable of and commit-
ted to conducting an
We recognize that there are social and with national laws and regulations. AUB also strives • A: when an FI’s existing or proposed portfolio environmental review of
environmental risks associated with our activities to ensure that the projects it finances are designed, includes, or is expected to include, substantial projects and managing
that can create positive and negative impacts on operated, and maintained in a manner that avoids financial exposure to business activities with poten- relevant operations to
economies, communities, and environments in social and environmental negative impacts. tial significant adverse environmental or social risks ensure that financed
which we operate. By implementing the Social or impacts that are diverse, irreversible, or unprece- projects meet certain
and Environmental Management System (SEMS), dented. environmental require-
AUB ensures that the social and environmental The Bank categorizes all its financing proposals in ments is required.
performance of the projects it finances complies the following categories: • B: when an FI’s existing or proposed portfolio is
comprised of or is expected to be comprised of,
business activities that have potentially limited
adverse environmental or social risks or impacts that
Categories Definitions Requirements are few, generally site-specific, largely reversible, and
readily addressed through mitigation measures; or
includes a very limited number of business activities
Business activities with potential significant adverse A full Environmental with potential significant adverse environmental or
Category A environmental or social risks and/or impacts that are Impact Assessment social risks or impacts that are diverse, irreversible,
diverse, irreversible, or unprecedented. A potential (EIA) is required. or unprecedented.
impact is considered “sensitive” if it may be irreversi-
ble (e.g., lead to loss of a major natural habitat), • C: when an FI’s existing or proposed portfolio
affect vulnerable groups or ethnic minorities, involve includes financial exposure to business activities
involuntary displacement and resettlement, or affect that predominantly have minimal or no adverse
significant cultural heritage sites. environmental or social impacts.
Loan to individuals for personal purposes in form of
Business activities with potential limited adverse Environmental assess- Category housing/car loans, personal /consumer loans, credit
Category B environmental or social risks and/or impacts that are ment focusing on the Exempt cards, etc.
few in number, generally site-specific, largely reversi- anticipated impacts is
ble, and readily addressed through mitigation required.
measures. In most cases, mitigation measures are
predetermined Performance Standards, Guidelines, Furthermore, AUB acknowledges that green
or design criteria. Potential adverse environmental finance is critical in achieving a more favorable
impacts on human populations or environmentally environmental impact. As a result, the bank provided
important areas are less adverse than those of loans for environmentally friendly investments in
Category A projects. the energy, water, and clean technology sectors,
with a total value of approximately $100MM, and
this is expected to increase in the near future.
Business activities with minimal or no adverse No further environmental
Category C environmental or social risks and/or impacts. assessment is required.
24 Principles for Responsible Banking Principles for Responsible Banking 25Updating our SEMS policy and supplementing
it with additional sector-specific sustainabili-
ty screening criteria. In particular financing,
Real estate activities, Extraction of crude
petroleum and natural gas, wholesale and
retail trade, and repair of motor vehicles and
motorcycles, as well as the construction of
buildings.
Target setting Increasing green finance; the total green
financing transactions was approximately
A. AUB aims to establish a board-level
sustainability committee, with the
$100MM in 2020.
following responsibilities:
3 RESOURCE’S EFFICIENCY/
Detailing our sustainability strategic
narrative (policy and strategy/ Sustainability
SECURITY
Steering committee or Department) AUB has been dedicating its efforts to increase
resource efficiency through the provision of USD
100 million of financing to green projects in the
Updating and aligning policies and areas of Energy and Water. The Group aims to
procedures to relevant ESG frameworks expand its green financing in the future.
Establishing ESG data ecosystem
4 INCLUSIVE, HEALTHY
ECONOMIES
Reporting on progress transparently on AUB intends to expand its financing for SMEs,
regular basis to all stakeholders youth, and women by providing financial products
and services that address the needs of small and
medium-sized enterprises (SMEs), low-income
Supervising further integration and customers, and women in order to make economies
implementation of sustainability targets more dynamic, inclusive, and sustainable.
across all functions of the bank through
appropriate work-streams
Conducting further in-depth analysis for its
subsidiaries on country level, and for each
significant impact area in order to establish
more precise targets
B. AUB aims to set targets for the most
Significant Impact Areas:
1 CLIMATE AND 2 WASTE
Updating our SEMS policy and supplementing
it with additional sector-specific sustainabili-
ty screening criteria. In particular financing,
Real estate activities, Extraction of crude
petroleum and natural gas, wholesale and
retail trade, and repair of motor vehicles and
motorcycles, as well as the construction of
buildings.
Increasing green finance; the total green
financing transactions was approximately
$100MM in 2020.
26 Principles for Responsible Banking Principles for Responsible Banking 27We will work responsibly with our
clients and our customers to encourage
sustainable practices and enable
economic activities that create shared
Principle Three
prosperity for the current and future
generations.
Clients & Customers
28 Principles for Responsible Banking Principles for Responsible Banking 29Principle 3
regarding misconduct. In addition, the Bank has in Any complaints with a risk of fraud, financial loss, or
place a Corporate Communications Internal Policy loss of reputation are escalated at inception to the
that establishes the guidelines for the Corporate responsible DGCEO, Group Head Audit, Group CEO
Communications Department on the communication & MD.
Clients &
protocols with our stakeholders. The policy ensures
communication is conducted in an ethical, clear, and
transparent manner with our internal and external
Customer Privacy
Customers
stakeholders, including our customers. In addition,
& Data Security
the Group has a dedicated communication channels
whereby customers can securely raise and report
their concerns to an advisor at the Bank. Moreover,
the Bank continuously provides extensive advice To gain the trust and confidence of our customers,
and reminders on its website about keeping account AUB ensures protecting customer privacy and
details safe and not disclosing banking information securing personal information with the highest care
with any third party. To promote responsible
Creating Overall client acquisition and retention is our key goal and diligence, across all the Group’s entities. The
communication, AUB Kuwait raises its employees’ Bank has implemented various security and privacy
through maintaining and providing high customer
awareness on the fair treatment of its customers measures to safeguard its customers and facilitate
service standards, thereby contributing to the Bank’s
Shared Value goal of achieving sustainable profit growth. Hence,
the Group established a Quality Assurance Policy
through its Code of Ethics and Conduct and provides
periodic training to the employees who communicate
transactions across different platforms: online,
mobile, and ATMs. In addition, the Bank’s staff are
with and work directly with customers. provided with privacy awareness training. Periodic
(QAP), which is reviewed, updated, and approved
In an endeavor to achieve our strategic objectives, audits are conducted on information security during
by the Board of Directors on an annual basis, which
we aim to maintain a strong, long-term, and the year, while an external independent audit is
seeks to attain excellence in customer protection,
responsible relationship with our customers. With
customer satisfaction being a top priority for the
in line with regional benchmarks and applicable
regulatory frameworks. The policy sets standards
Effective Complaint performed annually.
Group, AUB utilizes and directs its efforts towards AUB was the first bank to be PCI-DSS certified in
empowering the Bank’s clients to help them realize
their ambitions and provide them with personalized
for ensuring customer protection by maintaining
the quality of its customer service and measuring
the delivery of service against these standards.
Management Bahrain in 2009 and has maintained its compliance
with the PCI-DSS for the eleventh year in 2020,
customer experience to sustain our brand loyalty. demonstrating its commitment to the security of
Moreover, we have a Group New Product Committee
AUB’s philosophy and mission is built on key Ahli United Bank’s (“AUB”) policy is to ensure that card payments in the communities to which the Bank
(GNPC) which sets the guidelines for reviewing and
pillars that focus on treating our clients equitably all complaints are treated fairly, promptly, and belongs. Being ISO 27001 certified for more than
approving new products, processes, and services for
and becoming their preferred banking partner. Our sympathetically. Effective complaints management 10 years, AUB adhered to the highest international
retail banking, treasury, commercial banking, private
approach is marked by being customer-centric, is fundamental to providing high quality customer security practices in maintaining its customer data
banking, wealth management, and other areas within
where the customers (individuals and businesses) service and to establishing a mechanism for confidentiality and system security across all of its
the Group, in order to meet the dynamic market
are the focus of all our operations, strengthened obtaining continuous feedback from customers and banking services.
needs and maintain our market position. In addition,
by the acceleration of digital transformation in resolving their disputes. All complaints are registered
the GNPC assesses reputational, operational, credit,
equilibrium with network expansion and promotion and monitored to ensure that the customer is kept
liquidity and market risk, IT, legal, AML, compliance,
of our global presence. This allows us to create
shared value for both our individual and business
control, staffing, and capital/profit allocation issues
related to approving new products.
informed on a regular basis and that a final response
is sent promptly. Hence, the Bank's policy mandates Compliance with
customers. that all customer complaints are:
• Recorded in the Complaint Management System Regulations
(“CMS”)
Customer Satisfac- Responsible • Resolved to the customers’ satisfaction and
AUB Group is committed to complying with all
applicable laws for preventing anti-money laundering
tion… At Forefront
according to specified timelines and criminal & terrorist financing activities. The
Communication • Managed in compliance with the Central Bank of
Bahrain (“CBB”) Code of Best Practice (CBB Code)
Bank has an AML Unit within its compliance
function dedicated to implementing appropriate
By putting the customer at the heart of the Group’s and Customer Complaints Procedure under systems, processes, and controls to combat Anti-
strategic growth, AUB geared its activities with a As a Group, we work diligently to ensure responsible chapter BC-9 of Business Conduct Module of CBB money laundering and terrorist financing activities.
focus on quality to offer our clients and customers customer relationships in line with our Code of The Group is also committed to ensure preventive
Rulebook Volume
a distinguished and excellent experience, along with Ethics. AUB Group developed the Banking Integrity controls against anti-bribery and corruption
developing products and services that satisfy our policy, which the guidelines on whistleblowing, that Complaints are also treated as an opportunity for the practices are in place and appropriate and prompt
customers’ needs and ambitions. is specifically designed to facilitate concerns raised Bank to improve the services provided to customers. disclosure guidelines are adhered by.
30 Principles for Responsible Banking Principles for Responsible Banking 31Encouraging Takaful Services:
AUB offers family Takaful Insurance that includes a
Tamweel Plus Scheme:
In collaboration with Tamkeen, which is Bahrain’s
Sustainable
offering corporate current accounts, Wakala based range of Savings & Protection plans that would help Government agency for developing the private
investment and deposit accounts, other superior the clients protect their family’s financial future. This sector, AUB launched the Tamweel Plus scheme.
cash management products & services, online guarantees Bahraini’s future generations a better This scheme is directed towards financing expansion
Practices platform (B2B), and foreign exchange services. quality of life and a sustainable living standard. Also,
AUB offers Corporate Takaful Insurance Solutions
plans of medium-to-large entities with no cap on the
size of the entity. Under the Tamweel Plus Initiative,
Mazaya Scheme: that assist corporates to hedge against any expected Tamkeen and Ahli United Bank have agreed to
AUB Group strives to integrate sustainability into To support Bahrain’s Vision 2030 of targeting risks and sustain their business. commit BD 40 million to provide subsidized financing
our core business operations and to support our housing support to people in need in its efforts to eligible medium and large-sized enterprises in
clients’ transition towards sustainability. We believe to create an equitable and thriving society, AUB Empowering SMEs: Bahrain. The scheme is Shari’ah-compliant and
that our commitment to responsible banking and collaborated with the Ministry of Housing and Supporting SMEs, especially those established allows offering of Islamic financing products within
sustainable finance will be the key driver towards launched the Mazaya program. Mazaya program is in vulnerable areas and or led by members of a a range of BD 1 million to a maximum of BD 2.5
embedding sustainability into our day-to-day a Social Housing Finance Scheme that is offered to vulnerable demographic, is thus a matter of critical million, whereby Tamkeen will subsidize 70% of the
operations and encouraging our clients to adopt allow the customer to buy the house of his choice by priority for all actors in the region. At Ahli United annual profit rate, capped at 8%, with a repayment
sustainable practices. AUB has been a pioneer in financing up to 120% of property value. The scheme Bank, we understand how diverse SMEs can be and period. This Scheme supports future aspiration
the region when it comes to socially- responsible will guarantee Bahraini Citizens a decent living hence, their diverse needs. From Fintech startups 1 of Bahrain’s Vision 2030 of achieving a robust
lending and has been encouraging sustainable standard and will contribute to the achievement of to established family businesses, SMEs can vary economic growth through enhancing productivity
practices from its clients and customers through UN Sustainable Development Goal 11 of achieving broadly and so will their interests, needs, and and diversifying the economy by focusing on existing
various and complementary means. sustainable cities and communities. requirements. The path SMEs partake during their high-potential sectors. The scheme also contributes
life cycle is no longer linear. For this purpose, AUB to SDGs 8 & 9, by supporting enterprises to expand
their business, which will promote economic growth,
Responsible Finance Real Estate & Project Financing:
launched various products and services, specifically
deepen industry and generate job opportunities.
focusing on the banking needs of the Small and
AUB Group offers a competitive range of mortgage Medium Enterprises (SME) segment, most important
Guided by our Group-wide SEMS policy, AUB
products and structured solutions for all types is Al-Tajer.
screens all project financing proposals to ensure
Escalating Digital
of commercial & residential properties across
that finance will be directed towards projects that
different sectors. This support includes services
have a minimal negative impact on both the society
such as arranging payment of household expenses.
Al-Tajer:
and environment. Accordingly, the Group will
finance projects that are designed, built, operated,
and maintained in a manner consistent with
Also, AUB provides long-term lending for large-
scale infrastructure & industrial projects, with
Al-Tajer is a one-stop solution for all banking and
payment needs for SMEs, helping them build Transformation
tailored project finance solutions. Thus, AUB Group sustainable and competitive businesses. Al-Tajer
the applicable national laws and environmental goes far beyond conventional banking services,
contributes to economic and social development, Digital Transformation is considered a cornerstone
standards, and will make best efforts to ensure empowering local SMEs with the means to transform
through deepening industrialization, creating job to achieving our strategic objective of redefining
that all projects are operated in compliance with and embrace the digital world and grow their sales.
opportunities and supporting real-estate sectors. the future of the banking sector through embracing
the applicable national laws, IFC Performance Al-Tajer community helps you connect with the right
This will enable Bahrain to achieve its goal of state-of-the-art technology, providing performance
Standards, and World Bank (EHS) Guidelines. The partner to accomplish your goals. It is a gateway
achieving a robust economic growth that benefits excellence in every part of the customer journey.
Bank also ensures to communicate our guidelines that enables SMEs to give back to the community by
all people (Future aspiration 1 of Bahrain’s Vision Covid’19 has accelerated the shift towards
to our corporate customers in contributing to a helping other SMEs to grow.
2030). In addition, real estate and project financing digitalization in the banking sector, highlighting
sustainable and environmentally friendly economy.
will support the achievement of SDGs Goals 8, 9 & 11. the crucial role of digital customer engagement.
Other Support to SMEs: Investments in network infrastructure, data-analysis
Moreover, AUBUK offers lending facilities covering We continuously aim to empower SMEs to sustain platforms and AI applications, secure and easy-to-use
Sustainable Products & Services residential mortgages and commercial property and grow their business, which will contribute to digital payment systems, and supporting a strong,
loans, with the aim to support the real-estate sector. national and regional priorities. In this regard, the total decentralized, and diverse network of technology
Green Finance:
volume of AUB Group’s lending to SMEs increased startups are all needed to capture the gains of the
Our Group supports green finance through actively
participating in and providing bilateral financing with Financing Mega Projects: by 27% in 2020, relative to 2019. In addition, the digital economy. In an immediate response to the
Recently, AUB started to support and finance several number of our SME clients grew significantly. AUB coronavirus pandemic, the Group directed its focus
a total of $ 100 MM. The Group focuses on financing
projects, contributing to national development. Kuwait also focused on supporting SMEs through on implementing its digital transformation strategy,
several projects for the desalination of water and
The Bank provided syndicated loans, a dedicated SME unit, that provides support to with an emphasis on engaging customers virtually.
wastewater treatment.
amounting to USD 2,975 million, directed to medium-sized local enterprises and individuals The Bank continued its Group-wide Transformation
In addition, AUB Kuwait supports the Kuwait National various projects in several sectors, with a focus through financing their business requirements. initiative for delivering customer-centric driven
Focal Point for Environmental Projects by providing on projects in energy, tourism, manufacturing, Moreover, AUB Kuwait sponsored and participated process automation solutions. Products and
all services on liquidity matters of the company by financial, and telecommunication sectors. in the Falcon’s Nest Competition to support startup services are made available through digital channels
projects.
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