Commercial International Bank (CIB) won MENA Sustainable Bank of the Year at the virtual Middle East & North Africa Banking Excellence Awards 2022 for its long-standing support for sustainable finance via green and solar loans and the global Environmental, Social, and Governance (ESG) agenda. It is the first bank in Egypt, which will host the UN COP27 climate change conference in November, to issue a corporate green bond.
Even CIB’s new headquarters is green adhering to the International Finance Corporation’s (IFC) Excellence in Design for Greater Efficiencies (EDGE) building certificate, which denotes a resource efficient building. It saves energy consumption by 41.7% and water consumption by 29.7% compared to its predecessor, and there has been an additional saving in material usage by 25.2%.
The EDGE registration was progressed using the green bond proceeds that were eligible for the project. In June 2021, CIB opened subscriptions for Egypt’s first ever green bond to be issued in the local market, after getting approval from the local Financial Regulatory Authority (FRA).
Corporate green bond
The private placement is valued at US$100 million in noncallable fixed rate bonds. In addition to subscribing to the bond the IFC provided technical advisory support to CIB, helping the bank to develop an additional pipeline of industrial energy efficient and green building transactions. Technical assistance is provided to CIB’s clients, helping them to also adopt low-cost and eco-friendly building solutions, and to participate in IFC’s EDGE certification program for green buildings.
An Egyptian University building has joined the program, saving 155 Gwh/year in energy consumption and water consumption by 5,934m3/year. Carbon emissions will fall by 66tCo2/year. There is also a bakery line that save 21% in energy and 46.5 tons of carbon dioxide (CO2) thanks to the installation of new technology funded via the green bond.
Green bond proceeds align with several UN Sustainable Development Goals (SDGs) that are also in alignment with CIB’s own internal sustainability strategy. Proceeds must support:
SDG 6: Clean Water and Sanitation
SDG 7: Affordable and Clean Energy
SDG 9: Industry, Innovation, and Infrastructure
SDG 11: Sustainable Cities and Communities
SDG 13: Climate Action.
CIB has a number of its own Sustainable Finance products aimed at its clients, including:
Green Loan: the CIB Green Credit Line supports corporate customers who want to achieve economic growth through environmentally targeted projects and practices. The loan is provided by CIB’s funds at a preferential interest rate and is focused on energy efficiency and renewable energy projects, although any projects that provide evidence of positive environmental impact are considered.
Retail Solar Loan: CIB offers retail customers a solar loan with special financing to buy and install solar panels. Developed in cooperation with several of the world’s leading solar energy organizations, the product is already exhibiting competitive return rates. It comes with a flexible repayment plan of up to five years and helps those wanting to pursue their own green agenda.
Egyptian Pollution Abatement Program (EPAP): this supports the conversion and/or expansion in pollution abatement, energy efficiency, industrial waste management, cleaner production or resource efficiency in Egypt. The bank happily funds projects that cut pollution.
Environmental Compliance Office Finance Program: this supports industrial plants that promote cleaner technology for energy saving, pollution prevention and resource efficiency.
An Agribusiness Development Program also offers subsidized agricultural development support aimed at modernizing the Egyptian agricultural sector.
Net Zero Banking Alliance
CIB became a founding signatory of NZBA in 2021. It brought together an initial cohort of 43 of the world’s biggest banks with a focus on delivering the banking sector’s ambition to align its climate change commitments with the Paris Agreement goals set out under the auspices of the UN.
With this in mind, CIB committed itself to supporting the transition of the operational and attributable greenhouse gas (GHG) emissions from its lending and investment portfolios to achieve net zero by 2050 or sooner. CIB was appointed to represent Africa on the NZBA Steering Group and is an active member.
The bank has also committed itself to including the Sustainability Accounting Standards Board (SASB) Disclosures in its annual report in this area to improve transparency and alignment with internal reporting norms in this area. Another reporting innovation concerns its use of the Comprehensive Principles for Responsible Banking (PRB) Impact Assessment Report protocol. The bank looks at its portfolio each year using this methodology.
Policy parameters
The Sustainable Finance policy at CIB defines and sets a comprehensive framework for the bank. It translates its Environmental, Social, and Governance (ESG) commitments into achieving long-term value creation for all stakeholders and instills a governance framework to monitor proper implementation. It is applicable to all departments, functions, and lines of business, which must adhere to it.
The internal policy has been developed in alignment with national, regional, and international agreements, goals, and standards concerning sustainability, as evidenced by the use of UN Sustainable Development Goals for proceeds from the corporate green bond issued in Egypt.
The scope of the bank’s internal policy covers environmental & social risk management (ESRM), sustainable finance, and its own operational footprint, for which a report and amelioration procedures has been produced.
CIB’s ESRM system has been in place since 2016, illustrating its long-standing commitment in this area. Its sustainable finance options, outlined above, provide clients with the necessary tools and products to aid their own transition to a more responsibly profitable economic model. The credit risk element aligns with all relevant Egyptian laws, IFC performance standards, and the European Bank for Reconstruction and Development (EBRD) performance standards.
There is even a Sustainable Finance Academy, funded by the bank, to help its employees, clients and peers understand the importance of the ESG agenda for future business growth and societal and environmental well-being.