Climate Change Data

Environmental Metrics

ESG Focus Areas

• Economic
• Environmental
• Social
• Governance

Environmental Achievements

• Reduced energy consumption by approximately 60% in three years (2018-2020) due to initiatives like LED lighting, efficient A/C units, and water-saving fixtures.
• Reduced water consumption by 51% in 2020 compared to 2018 through water-saving measures.
• Reduced carbon emissions (Scope 2) by 59% in 2019 and 58.8% in 2020 compared to 2018.

Social Achievements

• Launched a wellness program benefiting over 1,000 employees and family members.
• Provided fully paid maternity leave (70 days) and paid paternity leave (1 week) to employees.
• Increased Kuwaiti national hires to 98% in 2019 and 99% in 2020.
• Maintained a low non-performing finance (NPF) percentage for SMEs (0.02% in 2020).

Governance Achievements

• Achieved ISO/IEC 27001:2013 certification for Cyber and Data Security.
• Implemented a robust whistleblowing policy.
• Established clear grievance mechanisms for performance management and disciplinary actions.
• Maintained a strong corporate governance structure aligned with CBK guidelines and global standards.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impact on economic activity and customer demand.
• Water scarcity in Kuwait.
• Global climate change and its potential impact on Kuwait's coastal areas.

Mitigation Strategies

• Allocated KD 284 million in provisions for credit and impairment losses as a hedging step against pandemic impacts.
• Implemented water-saving measures to reduce consumption.
• Integrated environmental considerations into project financing and supported green sukuk issuance.
• Developed alternative sourcing strategies and contingency plans to manage supply chain disruptions.

Supply Chain Management

Responsible Procurement

• Procurement Policy
• Procurement Procedures Manual
• Shari’a Compliance Audit Policy and Manual

Climate-Related Risks & Opportunities

Physical Risks

• Severe climatic waves

Reporting Standards

Frameworks Used: GRI Standards: Core option

Certifications: ISO/IEC 27001:2013

UN Sustainable Development Goals

• Goal 3 (Good Health and Well-being)
• Goal 8 (Decent Work and Economic Growth)
• Goal 9 (Industry, Innovation and Infrastructure)
• Goal 11 (Sustainable Cities and Communities)
• Goal 17 (Partnerships for the Goals)

KFH's initiatives contribute to these SDGs through various programs and activities related to health, employment, infrastructure development, community engagement, and global partnerships.

Sustainable Products & Innovation

• Green sukuk
• Digital banking services

Awards & Recognition

• World’s Best Islamic Takaful Award (KFH Takaful, 2020)

Environmental Metrics

ESG Focus Areas

• Economic
• Environmental
• Social
• Governance

Environmental Achievements

• Launched “Keep it green” initiative.
• Recycled 37% of paper.
• USD 350 Mn Tier 2 sustainability Sukuk issuance transaction.

Social Achievements

• Zero incidents of Discrimination and Harassment
• 23% female employees
• Average Training Hours: 16.9 hrs
• Kuwaitization at KFH: 76%
• Local Procurement: 82%
• Education Investment: 517,340 KWD
• CSR Activities: +200
• Charity Donations: +24MM KWD

Governance Achievements

• Establishment of Governance and Sustainability Committee
• 100% of employees received Anti-Corruption Training
• 100% Non-Executive Board Members

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to COVID-19 pandemic
• Global economic challenges

Mitigation Strategies

• Developed strategies to enhance asset quality, minimize expenses, increase profitability and return on equity.
• Increased investment in Green Sukuk to diversify financing portfolio.
• Implemented remote work procedures and policies to maintain physical distancing during the pandemic.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• AML & CFT screening of suppliers
• Preference for suppliers with international certifications (e.g., ISO)
• Requirement for supplier provision of employee insurance

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Investment in Green Sukuk

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Standards: Core Option

Certifications: ISO/IEC 27001:2013 (Cyber and Data Security), PCI DSS v3.2.1 (Merchant Services)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 3 (Good Health and Well-being)
• Goal 8 (Decent Work and Economic Growth)
• Goal 9 (Industry, Innovation, and Infrastructure)
• Goal 11 (Sustainable Cities and Communities)
• Goal 17 (Partnerships for the Goals)

The report details how various KFH initiatives contribute to these SDGs.

Sustainable Products & Innovation

• Eco-friendly credit cards made with 85.5% recycled plastic

Awards & Recognition

• Best Domestic Bank in Kuwait (Asiamoney)
• Islamic Bank of the Year - Middle East (The Banker)
• Islamic Bank of the Year – Kuwait (The Banker)
• World’s Best Islamic Financial Institution 2021 (Global Finance Magazine)
• World’s Best Islamic Project Finance Provider (Global Finance Magazine)
• World’s Best Islamic Takaful (Global Finance Magazine - KFH-Takaful)
• Best Islamic Bank in Turkey (Kuveyt Turk)
• Best Islamic Bank in Europe (KT Bank AG)
• World`s Best Islamic Takaful Award (Global Finance Magazine)

Environmental Metrics

ESG Focus Areas

• Islamic finance
• Green finance
• Digitalization
• Financial inclusion
• Community development
• Environmental stewardship
• Employee well-being
• Governance

Environmental Achievements

• First bank in Kuwait to receive GSAS - Gold Certification for KFH Auto Showroom
• Issued US$350mn sustainability sukuk for Kuveyt Türk
• More than 40% of new credit cards issued in 2022 were made from recycled plastic

Social Achievements

• Launched a set of awareness messages on banking services and products in sign language
• Appointed fully trained staff in sign language in 6 bank branches
• Strategic partnership with Coded Academy
• Support for MSMEs through various initiatives
• Increased retail financing extended to women by 13.4%

Governance Achievements

• Only bank in Kuwait to form a Board-level sustainability committee
• Established a sustainability business unit with defined strategy and performance indicators
• Implemented a comprehensive suite of AML/CFT policies and procedures
• No fines imposed on the Bank due to fraud or violation of CBK instructions in 2022

Climate Goals & Targets

Environmental Challenges

• Resistance to change during digital transformation
• Legacy systems and infrastructure
• Data integration and management
• Cybersecurity risks

Mitigation Strategies

• Investment in change management strategies
• Phased approach to modernization
• Implementation of robust data management systems
• Prioritization of cybersecurity measures

Supply Chain Management

Responsible Procurement

• AML and CFT regulations compliance
• Rigorous screening process to identify and prevent conflicts of interest
• Integration of environmental criteria

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI – Core Option

Certifications: ISO 27001:2013, PCI DSS v3.2.1

Third-party Assurance: FBRH Consultants Ltd

Sustainable Products & Innovation

• Eco-friendly credit cards
• Green Sukuk

Awards & Recognition

• Global Sustainability Assessment System GSAS – Gold Level Certificate for KFH Auto building
• World’s Best Islamic Financial Institution 2022
• Best Islamic Financial Institution in the Middle East
• World`s Best Islamic Takaful
• Safest Islamic Bank at the world level
• Islamic Bank of the Year 2022 – Kuwait
• Best Islamic Bank in the Middle East
• Best Bank in Kuwait
• Best Islamic Bank in Kuwait
• Corporate Social Responsibility in the Middle East
• Best Advance in Employee Engagement
• Best Advance in Business Automation
• Best Use of Payments in a Programme

Environmental Metrics

ESG Focus Areas

• Economic
• Environmental
• Social
• Governance

Environmental Achievements

• Reduced Scope 1 GHG emissions to 5,688.8 tCO2e in 2023 from 8,215 tCO2e in 2022 (due to proper reporting and tracking of AC charges).
• Launched the first-of-its-kind Carbon Footprint report in Kuwait’s banking sector.
• Introduced the “Green Products Financing” campaign to support the construction of private housing with strict environmental standards.
• KFH’s Auto showroom received the Global Sustainability Assessment System (GSAS) Gold Level Certificate.

Social Achievements

• Launched the Forssah program to invest in talents and empower them.
• Signed the Women’s Empowerment Principles (WEPs) Agreement with the United Nations Development Programme (UNDP).
• Increased the number of employees with disabilities to 234 in 2023 from 163 in 2022.
• Voluntary turnover rate decreased to 6.98% in 2023 from 7.8% in 2022.
• Total training hours increased to 88,028 hours in 2023 from 50,518 hours in 2022.
• Ranked “Market Leader” in Kuwait by Euromoney magazine in recognition of its social responsibility.

Governance Achievements

• Strengthened ESG standards, positioning itself as a leading bank in the region.
• Implemented a comprehensive “Corporate Governance Framework” for sustainability and growth.
• Established six Board-level committees with written charters.
• Maintained a robust capital adequacy ratio of 18.18% in 2023.
• No fines were imposed on the Bank due to fraud or non-compliance with CBK instructions in 2023.
• Implemented a comprehensive suite of AML/CFT policies and procedures.
• Implemented an advanced Endpoint Detection and Response (EDR) solution to mitigate cyber-attacks.

Climate Goals & Targets

Environmental Challenges

• Climate change risks and opportunities.
• Technology adoption challenges in digital transformation.
• Skill gaps and talent shortages in digital transformation.
• Data management challenges in digital transformation.

Mitigation Strategies

• Integrated climate-related risks and opportunities into decision-making processes.
• Collaborated with IT subsidiary, International Turnkey Systems (ITS), to replace legacy core banking system.
• Improved training programs to upskill employees and attract top talent.
• Implemented robust data management practices.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct
• Ethical standards
• Anti-corruption policies
• Increased tenders to suppliers aligning with circular economy principles.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards, IIRC Integrated Reporting Framework

Certifications: ISO 27001:2022, PCI DSS v 4.0

Third-party Assurance: FBRH Consultants Ltd

UN Sustainable Development Goals

• Goal 1: No Poverty
• Goal 2: Zero Hunger
• Goal 3: Good Health and Well-being
• Goal 4: Quality Education
• Goal 5: Gender Equality
• Goal 7: Affordable and Clean Energy
• Goal 8: Decent Work and Economic Growth
• Goal 10: Reduced Inequalities
• Goal 13: Climate Action
• Goal 14: Life Below Water
• Goal 15: Life on Land

KFH's sustainability strategy aligns with the UN SDGs through various initiatives.

Sustainable Products & Innovation

• Green finance products for retail and corporate clients
• Credit cards made from recycled plastic

Awards & Recognition

• Bank of the Year – Kuwait
• Best Islamic Project Finance Provider – Global
• Best Islamic Corporate Bank – Global
• Best Islamic Takaful – Global
• World’s Best Islamic Financial Institution
• Best Islamic SME Bank – Global
• Best Islamic Financial Institution – Middle East
• Best Islamic Financial Institution in Turkey
• Kuwait’s Best Bank for Sustainable Finance
• Best Investment Bank
• Best Islamic Bank in Kuwait
• World’s Best Islamic Bank for ESG
• Customer Experience Transformation Award
• Sustainability Award in the Middle East
• Best Islamic Finance House – Europe, Middle East, and Africa Region
• Best Financial Institution Sukuk
• Best Sovereign Sukuk
• Best Supernational Sukuk
• Most Innovative Sukuk
• Best Financial Institution M&A Deal
• Gold Medal in Best Advance in Employee Recognition Program
• Gold Medal in Best Unique or Innovative Talent Management Program
• Bronze Medal in the “Best Advance in Employee Engagement”
• Market Leader in CSR in Kuwait