SABB's ESG Compliance Lending to Increase to 20% in Short Term, Says CEO
The CEO of the Saudi British Bank (SABB) says that in the "very short term," or in the next five to seven years, the bank wants to increase its environmental, social, and governance framework compliance balance lending sheet by 15 to 20%.
Tony Cripps said at the Saudi Green Initiative Forum in Sharm El Sheikh, Egypt, which is happening at the same time as the UN Climate Change Conference, that the Riyadh-based bank currently devotes about 5% of its balance sheet to lending that meets ESG standards.
“So, when it becomes one quarter of your entire business, you better pay attention to it,” he said.
One of the first conversations Cripps had with the Saudi Central Bank, known as SAMA, was about developing a framework in which the finance industry collaborates with regulators and the government.
"This is needed to look at how we can work together to develop the right regulatory framework, how we can develop the right products, and how we can define the taxonomy that everyone needs, to be able to say what's green and what isn’t,” he explained.
The conversation also covered what the industry and clients need to know to understand why such a change is necessary.
He applauded Saudi Arabia for learning the best global practices in Europe, China, and the rest of Asia and swiftly putting them into effect.
Cripps said that transition financing is important for meeting net-zero emission goals and that these goals won't be met if money isn't put toward new technology.
“It is hard to imagine not having the ability to use oil and gas, but we need to start financing through renewables as a way to see that transition through the next 30 to 40 years,” Cripps explained.
“So, it was really that kickstarted the loan market,” Cripps said.
SABB has also bought the first green asset management product from HSBC so that investors can get into the private bank market.
The lender launched a deposit product for its retail market and its corporate market so that customers who want to contribute can place their money on deposit in a green format in a Shariah-compliant manner, he noted
“So, products are being developed, but the pace needs to evolve. It needs to extend to the equity markets as it has done in other jurisdictions,” Cripps added.
Source: Arab News