RIYADH: The Saudi British Bank aims to grow its environmental, social and governance framework compliance balance lending sheet between 15 to 20 percent in the “very short term” or over the next five to seven years, according to its CEO.
Speaking at the Saudi Green Initiative Forum – taking place alongside the UN’s Climate Change Conference in Sharm El Sheikh, Egypt – Tony Cripps explained that the Riyadh-based bank has around 5 percent of its balance sheet currently dedicated to ESG compliant lending.
“So, when it becomes one quarter of your entire business you better pay attention to it,” he said.
Cripps noted that one of the first discussions he had with the Saudi Central Bank, known as SAMA, was about establishing a framework where the finance industry works 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, how we can define the taxonomy that everyone needs, to be able to say what’s green and what isn’t,” he explained.
The discussion also involved the education required for the industry and for clients to understand why such a transition is imperative.
He praised Saudi Arabia for looking at best global practices in Europe, China, and the rest of Asia and rapidly implementing those lessons.
On transition financing, Cripps said this is crucial to meeting net-zero emissions targets, and that these goals would not be reached without new technology being financed.
“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.
Last year, Saudi Arabia issued the first SR14.12 billion ($3.76 billion) green loan for the Red Sea Development Co., with four banks including SABB.
“So, it was really that kickstarted the loan market,” Cripps said.
SABB also has bought the first green asset management product with HSBC, so that investors are able to access 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, there are products 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.