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ESG Focussed Banking in Core Aspects

Ajman Bank’s ESG programme aims to impact commercial enterprises, individuals, and communities

Ajman Bank is an Islamic bank where responsible banking is a core value, and Environmental, Social & Governance (ESG) principles are intrinsic to its business model.

“As an Islamic bank, responsible banking is ingrained in our core processes and offerings. The recent increase in global and national commitment towards environmental, social, and governance matters serves as an opportunity for us to further enhance and structure our operations and business. We have strengthened our stance by aligning ourselves with both the UAE Environmental Vision 2030 and Ajman 2030 Vision,” informs Zohaib Ali Zahid, Head of Corporate Governance and ESG at Ajman Bank.

Zohaib considers the UAE’s national vision integral to the Bank’s future direction: “Supporting initiatives that drive socio-economic development, encourage investment, and improve commercial infrastructure in a sustainable way is how we integrate environmental and social considerations. Ajman Bank gives equal focus to both environmental and social sustainability. We are continuously expanding our strategic relationships with key stakeholders, including special economic zones, municipal authorities, chambers of commerce, mainland authorities, and other bodies to be at the centre of initiatives geared towards sustainable economic development.”

The bank’s environmental commitment is encapsulated in a straightforward two-pronged ESG vision: to reduce the impact of climate change on the Bank’s own business and to minimise the impact of its business on the climate. This vision guides the bank’s internal risk management, operational transformation, and externally directed business endeavours.

“We aim to leverage our core strength of specialization to help clients adopt sustainable business models, which in turn will enable them to benefit more from our sustainable finance programme,” explains Zohaib.

The bank is also establishing in-house advisory capabilities in its front-end institutional relationship management structures to support its client base.

While larger businesses have tailored their models towards sustainability, many small and medium enterprises (SMEs) have yet to address the realities of climate change. Consequently, ESG decision-making data is often unavailable for banks, impeding their ability to support such clients in transition and physical risk management. Zohaib views data availability as the biggest challenge facing the sustainable finance community globally.

Ajman Bank is implementing technologies to address this challenge. “We are adapting our analytical systems to bridge data gaps as much as possible and address residual gaps through intelligent data remediation. Another challenge we see is that despite the buzz around ESG, some businesses are unable to clearly visualise the value of investing in a sustainable future for themselves. Therefore, we engage with them to create awareness and help them understand the risks and benefits of conducting business deals and projects sustainably,” says Zohaib.

The bank’s ESG programme aims to impact commercial enterprises, individuals, and communities. For example, the bank recently launched a family banking feature that enables families to gain financial literacy, develop joint financial plans, and promote saving and investment behaviours through the bank’s digital banking app, ‘Ajman Bank Connect’. This digital feature quickly gained popularity, and the app’s rating has risen to one of the highest-rated banking apps in the UAE.

Internally, the bank is upgrading its risk management framework, taking into consideration the risk and opportunity trade-offs and embedding ESG assessment into its core lending and investing decisions. It is also modifying its procurement processes to ensure it procures from sustainable resources. The bank is promoting internal initiatives towards the use of biodegradable materials, reuse and recycle programmes, and energy-efficient practices under its environmental stewardship programme.

“Our flagship ‘CarbonAware House Model’ programme aims to neutralise our own carbon footprint in a systematic and sustainable manner. We are committed to honesty, accuracy, and modesty in our sustainability disclosures, and we are systematically increasing the quality and depth of these disclosures. We also recognise the power of collaboration among banks and are open to joining hands with peer banks whenever we can create a positive impact,” says Zohaib.

“One of the key social aspects that we are passionate about, both internally and externally, is tailoring our services to people of determination. All our offices, branches, and website are designed to be accessible; our website is one of the few in the UAE that can be adapted to how the user wishes to view or listen to its content,” affirms Zohaib.

Ajman Bank is diverse in terms of gender, age, religion, and ethnic background, and it boasts a high ratio of female employees at all levels of hierarchy. “This year, we proudly welcomed our first female board member, and we are continuously working on initiatives with prestigious global institutions to empower women in leadership roles. Our Emiratisation ratio is one of the highest in the UAE, and we won the coveted ‘NAFIS Award’ this year,” says Zohaib.

With green financing becoming significantly popular worldwide and, in the UAE, Ajman Bank identifies and prioritises projects that have a tangible positive impact on the environment and society.