KUWAIT: NBK-Wealth showcased its thought leadership and expertise in the financial sector by actively participating in an impactful panel discussion at the Future Investment Initiative (FII) held in Riyadh. This platform allowed the bank to engage with industry leaders and stakeholders, addressing critical issues that shape the banking landscape and influence economic growth. Representing the Group, Faisal Al-Hamad, CEO of NBK Wealth, shared his insights on pivotal topics, emphasizing the Group’s achievements and vision for integrating social responsibility within its core operations, in alignment with NBK Group’s overarching commitment to sustainable development.
The panel featured a diverse array of experts, including Andrew Bester, Member of the Management Board and Head of Wholesale Banking at ING Group, and Dr Sidi Ould Tah from the Arab Bank for Economic Development of Africa (BADEA). These distinguished leaders contributed a wealth of knowledge and diverse perspectives, enriching the dialogue on the essential role banks play in fostering social impact.
A commitment to social impact
A central theme of the discussion was whether banks should prioritize social impact amid ongoing economic pressures and market volatility. Al-Hamad underscored that social impact must be integral to a bank’s daily operations, fundamentally shaping its culture and decision-making processes. He emphasized the necessity of defining social impact in relation to specific geographies and local needs, essential for driving sustainable change and empowering communities. This sentiment was echoed by Bester and Dr Ould Tah, who agreed that banks must recognize their societal roles beyond profit-making.
The conversation delved into the finance industry’s commitments to social responsibility and sustainability, raising questions about the potential for lasting change versus a return to traditional profit-driven models. The panel engaged in a series of compelling questions that prompted an in-depth examination of banks’ responsibilities in today’s financial landscape.
Participants explored the opportunities presented by a $4.5 trillion circular economy, particularly for banks seeking impactful investments. They discussed how banks can effectively communicate to investors that socially responsible investing can yield positive financial returns, particularly in sectors such as renewable energy, waste management, and sustainable agriculture. Al-Hamad noted that such investments not only align with long-term growth but also cultivate a healthier population, thereby boosting demand for banking services.
NBK’s triple bottom line approach
Al-Hamad highlighted that NBK leads the charge in this movement, exemplifying a strong commitment to social impact investing through its triple bottom line approach, which balances people, planet, and profits. In 2023, NBK launched its inaugural three-year Environmental, Social, and Governance (ESG) strategy, setting ambitious targets, including a goal of accumulating $10 billion in sustainable assets by 2030 to facilitate a transition to a low-carbon economy.
The panel also addressed the call from the United Nations Environment Programme Finance Initiative (UNEP FI) for banks to embed circularity into their strategies. The panelists agreed that transformative change requires banks to focus on long-term growth through the integration of circular economy principles, which can generate significant economic benefits, including reduced costs for raw materials and energy.
Al-Hamad shared that NBK has proactively addressed expectations for banks to consider environmental and social impacts in lending. In April 2024, NBK joined the Partnership for Carbon Accounting Financials (PCAF) to quantify and disclose its financed emissions, enhancing its understanding of environmental impacts and supporting more impactful initiatives.
Leveraging technology for impact
The discussion also emphasized the role of technology in bridging the information gap that often hinders social impact initiatives. Al-Hamad remarked, "Leveraging technology is essential to enhance our understanding of social impacts, enabling stakeholders to make informed decisions.” As investors increasingly seek data-driven insights, banks must harness technology to facilitate access to crucial information. Panelists highlighted the potential for International Sustainability Standards Board (ISSB) standards to transform impact disclosures, anticipating advancements in technology that would make disclosures regarding social and environmental impacts more frequent and automated. Enhanced tracking across supply chains can improve transparency, while data analytics and artificial intelligence can bolster reporting and accountability.
Innovation in a competitive landscape
The panel addressed the pressing need for banks to innovate in a competitive landscape, particularly in response to the agility and customer-centric focus of fintech companies. Al-Hamad emphasized that to drive meaningful societal impact, banks must embrace innovation. Traditional banks are increasingly investing in technology and digital initiatives, leveraging advanced data analytics to gain insights into customer preferences and tailor their offerings. Al-Hamad highlighted NBK’s commitment to continuous learning and development, empowering teams to adopt innovative practices. He cited the launch of Weyay Bank in 2021, the first end-to-end digital bank in Kuwait, which emphasizes financial literacy and caters to the underserved youth demographic.
Government initiatives and sustainable finance
The panel also examined the role of government initiatives in fostering sustainable finance and their impact on market dynamics. While such initiatives aim to encourage investments in renewable energy and sustainable technologies, it is crucial that they do not simply redirect capital to meet regulatory criteria without achieving meaningful change.
Al-Hamad acknowledged that aligning with international regulatory requirements has become vital for transforming business models. He noted that stricter regulations are compelling banks to adopt ambitious strategies for mitigating environmental and social impacts. NBK has already accumulated approximately $3.65 billion in sustainable assets, with a target to reach $10 billion by 2030.
Ensuring integrity and combating greenwashing
The conversation highlighted the need for genuine integrity in social impact initiatives, addressing the prevalence of "greenwashing.” The panel advocated for clear, measurable standards for sustainability claims and independent verification to enhance credibility. Regular audits and public access to sustainability reports can significantly bolster accountability, while regulatory bodies must have the authority to impose penalties for misleading claims. Al-Hamad reaffirmed NBK’s commitment to ensuring the integrity of its sustainability initiatives, emphasizing that its ESG strategy is woven into the bank’s operations with oversight from its board of directors. In 2024, NBK became the first bank in Kuwait to issue a $500 million Green Bond, underscoring its dedication to facilitating genuine sustainable outcomes.
Redefining banking for a better future
As the discussion concluded, panelists emphasized the urgent need for banks to redefine their core purpose to reflect a commitment to positive societal impact. They advocated for banks to act as caretakers of resources, prioritizing investments that yield positive societal outcomes while fostering financial literacy among customers. Reflecting on the insights shared, the panelists underscored the collective responsibility of the banking sector to transcend traditional profit motives.
The call to action for financial leaders was clear: redefine your bank’s core purpose and embrace the opportunity to be a true force for positive change. As a leader in the banking sector, NBK has consistently demonstrated its commitment to ESG principles, underpinning its operations with a responsible banking ethos. Through strategic initiatives and a focus on sustainable practices, NBK not only aligns with global standards but also actively contributes to the well-being of the communities it serves. This unwavering dedication positions NBK as a true pioneer in the financial landscape, driving positive change and setting a benchmark for others in the industry to follow.