AAIB – Maximizing Value Beyond Disclosure

By Perihan Abdel Ghaly (Arab African International Bank), Arab African International Bank
02:29 PM, July 13, 2016

Having reached a decade plus in sustainability and business innovation, the Arab African International Bank (AAIB) has served as a leader in Egypt and the MENA region and a trendsetter in the financial sector regarding banking and finance sustainability.

AAIB’s journey toward sustainability dates back to 2003, when the bank became the first financial institution in Egypt to join the UN Global Compact, launched the AAIB undergraduate competition for banking and finance, and introduced social and environmental risk to its credit policy. In addition to publishing its report on the G4 Sustainability Guidelines of the Global Reporting Initiative (GRI), AAIB goes beyond disclosure requirements to reveal the long process of learning from experiences, exploring gap analyses, and serving as a role model for sustainable finance. The G4 report is more a journey of discovery that helps organizations focus their sights on setting goals, measuring sustainability performance, and managing change in order to implement better practices.

Although sustainability reporting is not yet obligatory in Egypt, AAIB has been taking proactive steps toward disclosing its sustainability practices since 2005. The reporting journey then evolved to include various reporting initiatives based on other international frameworks, guidelines, and standards, such as the
United Nations Global Compact; the Equator Principles, which are customized for financial services; and the London Benchmarking Group for impact assessment.

These elements help tackle AAIB’s environmental and social risk-assessment on project lending, as well as measure the business and social impacts of our annual community investments. In 2010, AAIB took its first step toward publishing its first sustainability report, which engaged all the bank’s lines of business and key functions. Followed by the Carbon Footprint Report in 2014, AAIB decided it was time for a more advanced
reporting level that is more holistically inclusive of all the bank’s sustainability reports and based on the most holistic approach to reporting, namely the GRI.

This decade-long experience in reporting has led to the bank’s adoption of its own reporting framework, which went beyond data collection and information disclosure to include materiality assessment of the most pressing subjects for our stakeholders, as well as a holistic stakeholder engagement – both internally as well as
externally – to decide on these issues.

Internal stakeholders’ engagement: Sustainability reporting workshops Educating our staff and creating awareness is a major goal in establishing a strong foundation for embracing sustainability in banking operations as well as developing sustainability into a collective effort.

For measuring the key performance indicators in the GRI report, the bank conducted a series of sessions and workshops for the employees to create awareness on different levels among juniors and liaison officers, first-line managers, senior managers, and top management. Although the most common approach in endorsing the culture of sustainability in the organization is the top-down approach, AAIB introduced sustainability
awareness horizontally and vertically to achieve the highest impact and transmit the sustainability gene from one generation to the next.

The internal awareness process took place for five consecutive days for 97 employees in order to educate different lines of business across all managerial levels about sustainability and reporting.

External stakeholders engagement: The Partners Club

Sustainability awareness extends beyond the internal culture of AAIB and reaches the bank’s external stakeholders, such as clients, subsidiaries, government, brokers, fund managers, as well as insurance and financial advisors. The external stakeholders were selected based on their high influence on AAIB, as well as the reliance of AAIB on these stakeholders in day-to-day operations and long-term business relations. The Partners Club saw the attendance of 97 influential stakeholders in AAIB that represented the bank’s corporate clients, subsidiaries, advertising agencies and suppliers, printing houses, business partners, investors, and consultants.

AAIB’s Partners Club is aimed at:
• external stakeholder engagement
• establishing stakeholder relations and networking
• creating awareness on sustainability matters and issues

Building a sustainability strategy is a way to develop a more structured and coherent sustainability approach that demonstrates commitment – not only to AAIB’s shareholders, but also to the community and the environment. As CSR and sustainability are about value creation, AAIB has developed a framework
and approach that follows the bank’s spheres of influence, including core business operations, voluntary contributions, and policy advocacy.

Moving forward, the GRI assessment and organization’s screening directed the top management toward establishing strong levels of support from top leadership to promote the concept of sustainable finance over the coming years. Accordingly, 2016 witnessed the launch of the second phase of the MOSTADAM platform for promoting sustainable finance in Egypt and the MENA region.

MOSTADAM collaborated strategically with the Frankfurt School of Finance and Management in Germany to certify experts in small and medium enterprises as well as climate and renewable energy. The platform registered candidates from Egypt, Somaliland, and the Netherlands. AAIB aims at creating an industry movement in Egypt and the MENA region by introducing new sustainable products and services, preparing expertise, and supporting a sustainable business model.

Post-assessment goals and objectives:
• lead and create a forum for sustainable finance globally
• embrace sustainability in core banking operations and branding
• educate financial institutions in Egypt about sustainable finance
• develop comprehensive models for sustainable finance
• exchange best practices and successful role models globally

AAIB has established a solid foundation  with regard to sustainability. The bank is still on its way to reaching an “advanced” level of sustainability behavior. AAIB has had success in engaging the work environment and generating strong commitments about responsible business operations. The overall performance reflects AAIB’s vision for sustainability.

AAIB was the first bank in Egypt’s financial sector to accomplish the following:

2003 – 2010: Launches AAIB Award – annual banking competition for university undergraduates

2005: Joins the UN Global Compact

2007: Joins the LBG to measure community investments

2007: Establishes the first independent foundation for social development in health and education:
We Owe It to Egypt foundation

2009: Joins the Equator Principles for environmental and social risk-assessment in project lending

2010: First to release a sustainability report within the banking sector in Egypt

2013: Launches the First Platform for Promoting Sustainable Finance in Egypt and MENA region within the
banking sector

2014: Launches the first certified module on sustainable finance to 12 banks in Egypt; certified by EBI

2016: Launches the first certified training modules for banking executives on renewable energy and climate change finance, and SME finance

2016: AAIB publishes its second sustainability report based on GRI G4

Regional and international recognition:

2010: CSR Arabia Network Regional Awards, Dubai

2011 – 2016: Good Practice in UNGC Yearbook

2015: CSR Golden Shield, Dubai

2015: Best Green Bank Award by CFI

2016: AAIB awarded by Euromoney as "Best CSR in the Middle East", Dubai

About the Authors
Abdel Ghaly, Perihan

 Perihan Abdel Ghaly works as a CSR Executive officer for the Arab African International Bank.

Arab African International Bank

Incorporated in 1964 as the first Arab multinational bank in Egypt, Arab African International Bank was established by a Special Law as a joint venture between the Central Bank of Egypt and Kuwait Investment Authority. Since its inception, AAIB has been known as one of the most distinguished commercial and investment banks in the region.

While maintaining its core competence as a corporate bank, AAIB is making break throughs in retail activities through expanding its innovative product range and geographic presence in the most commercially strategic locations. One of the fastest growing banks in Egypt, AAIB is gaining significant momentum towards assuming a leading position among Egyptian banks.

AAIB's products and services are designed to meet the evolving needs of corporate clients, their employees and selected high net worth individuals.

The views expressed in this article are the author's own and do not necessarily reflect CSR Manager's editorial policy.
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