Al Rajhi Capital
Climate Impact & Sustainability Data (2018, 2020E)
Reporting Period: 2018
Environmental Metrics
Carbon Intensity:10.2kg CO2/boe
ESG Focus Areas
- Environmental
- Social
- Governance
Environmental Achievements
- Low per barrel gas flaring rates along with low water production contribute to low upstream carbon intensity (10.2kg CO2/boe)
Social Achievements
- Construction of The King Abdulaziz Center for World Culture (iThra) in Dhahran
- Adoption of a new Corporate Citizenship Policy in 2018 focusing on community economic growth, environmental protection, community empowerment, and community-based initiatives.
Governance Achievements
- Introduction of new corporate governance and compliance policies; procedures to monitor sanctions and trade restrictions, and to comply with anti-bribery and corruption practices; a cyber-security governance management policy.
Climate Goals & Targets
Environmental Challenges
- Climate change concerns may reduce future demand for hydrocarbon products due to regulations, policies, and international agreements aimed at reducing GHG emissions.
Mitigation Strategies
- Following best practices during extraction, resulting in low upstream carbon intensity and water oil ratio.
Supply Chain Management
Climate-Related Risks & Opportunities
Transition Risks
- Shift to lower carbon intensity fossil fuels and government actions such as carbon emission caps, carbon taxes, efficiency standards, and incentives for alternative energy sources.
Reporting Period: 2020E
Environmental Metrics
Climate Goals & Targets
Environmental Challenges
- Weak demand due to COVID-19
- Reduced purchasing power due to increase in VAT to 15% from 5% and removal of cost of living allowance
- Lower oil prices and weak outlook due to global slowdown
Mitigation Strategies
- Expect consumer companies to undergo structural changes and emerge with a new strategy where e-commerce will be a prominent channel to penetrate the market.
- Companies revisiting their strategy with VAT at 15%, expat levy ending in 2020, possibilities of rent renegotiation with landlords and restructuring of administrative costs during COVID-19.
- Increase in expenditure towards warehouse and logistics as the e-retailing penetrates in the kingdom.
Supply Chain Management
Responsible Procurement
- Organized retailers have a strong supply chain management by having direct tie-ups with the manufacturers