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Challenge
RSM’s client is a local bank in Kuwait that sought to enhance its sustainability performance and achieve significant milestones on its ESG journey.
Solution
RSM developed a comprehensive strategic framework to guide the integrations of ESG factors into the bank's business operations, decision-making processes, and long-term planning for sustainable growth.
Success
By leveraging RSM’s expertise, our client has taken substantial strides towards its sustainability transition, positioning itself as a responsible and forward-thinking financial institution.
Client overview:
RSM’s client is a local bank in Kuwait that sought to enhance its sustainability performance and achieve significant milestones on its ESG journey. The bank recognised the growing importance of ESG factors across the financial services industry and the need to integrate sustainable practices into its operations and decision-making processes.
Background:
RSM was engaged to provide a range of ESG consulting and reporting services.
Our project objectives:
- To measure and disclose the bank's ESG and economic impacts.
- To assess the bank's ESG maturity level and identify gaps and areas for improvement.
- To integrate ESG and climate risk considerations into the bank's policies and processes.
- To develop a sustainable finance framework to govern the bank's green practices and the development and offering of green products.
- To establish an ESG strategy framework to guide the bank's sustainability transition.
Our approach:
RSM adopted a structured approach to achieve the project objectives:
- ESG maturity assessment: RSM conducted an assessment to identify the bank's current ESG performance gaps, to help inform the development of strategies and recommendations to enhance its sustainability practices.
- Sustainability reporting: RSM reviewed the client’s ESG performance over two consecutive years, across its own operations and value chain, and against agreed metrics. The report was aligned with guidelines of the Global Reporting Initiative, along with the integration of MSCI criteria.
- Integrating climate risk considerations: By establishing processes for collecting data on our clients' emissions, locations, and supply chains to identify exposures, RSM helped the bank to adapt its operational policies and processes to integrate climate risk considerations.
- Sustainable finance framework: To develop the framework, RSM followed ICMA's Green Bond Principles and LSTA's Sustainability-Linked Loan Principles, covering use of proceeds, KPI selection, targets, reporting, and verification.
- Strategy development: Leveraging insights from the maturity assessment and sustainability reports, RSM developed a comprehensive strategic framework shaped by the impacts, risks, and opportunities arising from the maturity assessment. This framework guided the integration of ESG factors into the bank's business operations, decision-making processes, and long-term planning for sustainable growth.
Challenges:
- Complex regulatory environment: RSM’s project team helped the client to navigate the highly regulated financial services landscape and evolving ESG reporting requirements by staying abreast of the emerging regulations and establishing robust ESG due diligence processes.
- Organisational buy-in: RSM took time at the beginning of the project to clearly communicate the strategic importance and benefits of integrating ESG principles across the organisation, taking special care to involve key stakeholders early in the process through workshops and feedback sessions to understand their perspectives and concerns.
How success was measured
- Greener loan portfolio: RSM helped the bank to link approximately 25% of the bank's loan portfolio with green financing activities.
- Greener real estate investment: Approximately 50% of the bank's real estate investment portfolio is in green real estate, showcasing the bank's commitment to diversifying and increasing its ESG footprint through the sustainable finance framework developed by RSM.
- Improved S&P ESG rating: RSM’s ESG strategy framework helped the bank to achieve a 140% improvement in its S&P ESG rating, attributed to the systemic adoption of ESG principles in its practices and reporting.
- Increased proportion of green investments: Approximately 11% of the bank's total investment portfolio is now invested in ESG, green or sustainability-related bonds. RSM’s integration of climate risk considerations into the bank’s operations, along with its sustainable finance framework, helped to shape the bank’s ongoing green investment decisions.
Creating a unique offering
Through a structured approach, RSM’s team in Kuwait addressed our client’s specific needs, conducted thorough assessments, and developed tailored frameworks and strategies that have enabled the bank to integrate ESG principles into its policies and processes, enhance its sustainability performance, and increasing its investments in green financing and sustainable bonds.
The project highlights RSM’s ability to navigate complex regulatory landscapes, address evolving ESG reporting requirements, and foster stakeholder buy-in and commitment. By leveraging RSM’s expertise, our client has taken substantial strides towards its sustainability transition, positioning itself as a responsible and forward-thinking financial institution.
