The Commercial International Bank (CIB), Egypt’s leading private sector bank, is joining forces with the International Finance Corporation (IFC) to establish and put into effect a robust climate risk management system to guarantee the bank’s stability, regulatory compliance, and ultimately fulfill its clients’ funding requirements.
The advisory project will comprise an initial portfolio screening for climate risk, as well as the formulation of scenario planning and stress testing procedures for CIB, the long-term IFC partner.
The aim is to help the bank monitor its exposure to climate risk and ensure that any climate-related financial concerns are highlighted in its portfolio.
The new initiative follows IFC’s investment in CIB’s landmark issuance of Egypt’s first private sector green bond in 2021. With support from IFC, CIB also developed the first credit line fully dedicated to certifying green buildings in North Africa.
“Focused on engaging all stakeholders in addressing climate action, the partnership agreement signed between the IFC and CIB will provide technical consulting services to CIB, supporting the development of a climate risk management framework, which includes training and capacity building. This is not the first cooperation between the CIB and IFC, as in 2021, $100 million was dedicated to Egypt’s first private sector green bond to help unlock finance for climate-smart projects, reduce greenhouse gas emissions, and support the country’s transition to a greener economy,” said Egypt’s Minister of International Cooperation Rania Al-Mashat.
“Climate-related financial risks are increasingly becoming more relevant for financial institutions,” said CIB’s Chief Risk Officer, Talha Karim. “Central banks, financial supervisors, investors, and other parties around the world are taking a keen interest in risks and opportunities deriving from climate strategies. CIB believes that climate-related risks are cross-cutting drivers of the existing risk categories such as Credit, Operational, Market, Liquidity, and Reputational Risks. IFC’s partnership with CIB will further enhance the Bank’s process of integrating the climate-related risks into the existing risk management framework, as well as to support aligning with the evolving international standards and the best practices in this regard”.
This latest project, supported by the Germany Federal Ministry for Economic Affairs and Climate Action (BMWK), is part of IFC’s climate program, which aims to scale up private sector financing in the financial sector for climate mitigation and adaptation projects while helping to mitigate climate risks. Addressing climate change is a priority for the World Bank Group, which is committed to aligning 100 percent of all new financing operations with the goals of the Paris Agreement by the fiscal year 2025.
“Climate change is the defining issue of our time. Banks, like all institutions, must adapt to the risks it poses,” said Sérgio Pimenta, IFC’s Vice President for Africa. “We’re delighted CIB is once again leading the way in accelerating the green transition and laying the foundations for a stronger, more sustainable financial sector, which can manage climate risks and meet the needs of its stakeholders.”
“CIB’s journey with climate risk started in 2020 when we first joined the Task Force on Climate-Related Financial Disclosures (TCFD) and aligned with the Equator Principles in accordance with international standards and best practices,” said Dr. Dalia Abdel Kader, CIB’s Chief Sustainability Officer. “Now, building on the success of CIB’s collaboration with the IFC and the issuance of the Green Bond, which helped us further develop our Environmental, Social Risk Management (ESRM) system, CIB is keen to take its partnership with the IFC to the next level. Given the complexity of climate risk management, we see our new IFC partnership as a great addition to substantiate our climate risk management experience and will help us further integrate climate risk management within our strategies and systems.
