Unveiling efficient organizational models for CSR and Sustainability: National Bank of Kuwait
The National Bank of Kuwait (NBK) has developed a comprehensive approach to addressing sustainability, ESG and climate-related matters within its organization. Hiba Ahmad Assi, NBK’s Senior Sustainability Officer, Group Investor Relations and Communications, tells us about their organizational structure and strategy, and efforts to align the Bank’s performance with global sustainability standards.
The National Bank of Kuwait (NBK) has developed a comprehensive approach to addressing sustainability, ESG and climate-related matters within its organization. Hiba Ahmad Assi, NBK’s Senior Sustainability Officer, Group Investor Relations and Communications, tells us about their organizational structure and strategy, and efforts to align the Bank’s performance with global sustainability standards.
How would you best describe your institution’s organizational structure for addressing sustainability, ESG and climate related matters? How many people are dedicated to sustainability matters in your organization?
NBK’s ESG and sustainability-related matters are supported and endorsed by the Bank’s Board of Directors. Driven by transparency and accountability, the Board and its sub-committees’ charters were formally revised during 2022 to reflect key ESG-related responsibilities and to steer the Board’s decision-making in line with NBK’s ESG strategy. The Board acknowledges its duty to manage how emerging ESG and climate change risks and opportunities should be addressed in line with NBK’s business strategy, material risks and business drivers.
Additionally, in 2022, the executive management’s responsibilities were further solidified to include ESG-related matters in its decision-making processes, oversight and affairs. The executive management is closely working with NBK’s groups and businesses to assess ESG risks and opportunities and how the Bank could competitively respond to the evolving landscape presented by the transition to a lower carbon economy. To that extent, in 2022, the Bank’s executive management approved the Group’s ESG strategy that transforms NBK’s ESG strategic focus to higher levels of integration into its business, operations and activities. The ESG strategy sets the pathway towards building a more sustainable future by mobilizing capital and focusing efforts towards solving the critical environmental and social challenges we face.
Accordingly, an ESG governance structure was finalized and approved by the Board in March 2023. This resulted in the establishment of a management-level Sustainability & Climate Change Committee, which is chaired by NBK’s vice chairman and Group chief executive officer, and five sustainability sub-committees responsible for governing and steering decision-making in line with the Bank’s ESG strategy. On a day-to-day basis, NBK has a dedicated Sustainability Unit which is responsible for managing and providing support services for the execution of the ESG strategy framework and operation of the sustainability committees. Additionally, the Sustainability Unit is responsible for the Bank’s ESG reporting and disclosures. Currently, the unit consists of three employees.
Are there any lessons learned that you could share from the journey of formalizing and establishing of your sustainability organizational structure?
It is important to note that there is no one-size-fits-all approach when developing a sustainability organizational structure. Organizations’ sustainability needs and objectives differ from one another based on what ESG-related risks, issues, impacts and opportunities are most important for the organization and its stakeholders. Accordingly, materiality assessment played an integral role in developing our sustainability organizational structure. The material topics we identified helped us with organizing and assigning responsibilities around the ESG issues that matter to our business and are of significance to our key internal and external stakeholders, in line with NBK’s ESG strategy. To support and drive sustainability across the Bank, we view having a more modular organizational design rather than a central sustainability organizational structure as more effective and efficient. This allows our identified material topics and ESG issues to be assigned to business units and groups that have expertise on the topic and will be primarily responsible for leading the Bank’s response to it.
How do you measure sustainability performance in your organization? What kind of indicators do you have? Who is measuring the mentioned indicators?
NBK’s ESG strategy is supported by key targets and commitments in those areas where we have the greatest potential, developed to support a sustainable and equitable transition to a low carbon economy and deliver a positive social impact on people and communities. As part of this, NBK has developed interim targets to reduce our gross operational emissions by 25% by the year 2025, compared to our 2021 baseline. Furthermore, in January 2023, NBK committed to become carbon neutral by 2060 in line with Kuwait’s net-zero pledge. Combining its carbon neutrality commitment with accountability and transparency, NBK will be communicating, over the coming 18-24 months, its pathways and scientifically aligned strategic goals to achieve its ‘carbon neutral by 2060’ ambition.
How do you align sustainability performance with your strategy and targets?
NBK aligns its ESG and sustainability performance against a range of international standards and frameworks, namely the Global Reporting Initiative (GRI) standards, Sustainability Accounting Standards Board (SASB), UN Sustainable Development Goals (SDGs), UN Global Compact principles, and GHG Protocol, among others. This helps enhance the transparency, credibility, comparability and global recognition of our ESG strategy and targets. Additionally, the Bank’s ESG governance structure that is supported by its Board and executive management plays an integral role in supervising, coordinating and managing the overall Group ESG strategy and the implementation of the Group’s ESG commitments, initiatives and activities in line with the Group ESG Strategy, business strategy, material risks and business drivers.
Which innovations do you expect to have the biggest impact on sustainability performance in the next five years?
The transition to a lower carbon economy presents numerous opportunities and unlocks prospects to finance transition activities. NBK, as a major banking and financial services firm with a diverse set of stakeholders based in the Middle East, a region whose economies are driven primarily by fossil fuel, is sensitive to ESG and climate risk issues. Nevertheless, the Bank assesses and manages various trade-offs in respect of strategic and operational decisions. Kuwait’s commitment to achieve carbon neutrality by 2060 unlocks potential opportunities presented by the transition to the low carbon economy and facilitates our role as a financial institution in mobilizing capital to support the transition. We aim to strategically engage and work closely with our clients to manage climate-related risks and support them with their own transition and decarbonization plans. Operationally, NBK is exploring innovative research and development technologies to magnify its reliance on renewable energy beyond 2025, and to reach net zero operationally by 2035, in line with its net-zero commitment.
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