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How Sustainability is Governed at FAB

At FAB, we have formally integrated new committees and teams to the existing governance structure to be aligned with the Group’s recently launched ESG Strategy. The sustainability policy sits within our Board Risk and Compliance Committee (BRCC) who guide and implement the Group’s Sustainability vision. The Committee is the highest authority on ESG performance that monitors and reports on progress by engaging with leadership and business lines across the organisation. The sustainability policy feeds up into the Group ESG Committee (G-ESGC) with the Group CEO having oversight of the actions and activities relating to sustainability, climate change and ESG. On a functional level, the G-ESGC is supported by ESG and Sustainable Finance Committee (ESG-SFC) that converts policies and board directions into ESG strategies and monitors the ESG performances of business lines and support functions.

Transforming Our Governance Model

The main topics of concern related to the governance category are as follows:

Disclosure

  • Disclosure of ESG KPIs and performance update on quarterly basis, together with financial reporting

Incentives linked to ESG

  • Incorporate ESG Criteria into FAB Group’s Balance score card from 2022

Whistleblower policies and processes governance structures for dealing with ESG issues

  • Establish and update Board sub-committees with clear ESG responsibilities
  • Continued and enhanced focus on Financial Crime and Anti Bribery
  • Ensure strong governance and control measures for modern slavery and child labour aligned with global best practices

Responsible use of ESG data

  • Full implementation of Task Force on Climate – related Financial Disclosures (TCFD) recommendations
  • Implementation of new ESG Risk Framework
  • Ensuring transparency by enhancing our governance model

Explore more the Governance Structure for 2021

sustainability
sustainability

ESG Risk Framework Components

The Group adopts a holistic approach in integrating ESG risks starting with raising the level of ESG awareness and preparedness, developing a sound ESG risk governance structure and responsibilities, and developing tools and methods to identify, assess, manage, and report on ESG risks.


Enabler(s): Establish an ESG driven culture across the organization

Enabler(s): Systems, tools, policy, and board and senior management sponsorship

The key measures considered in identifying ESG risks across the Group’s operations include:

A – Relevant legislations and standards

ESG risks repository from relevant legislations and international guidelines that apply to the Group’s operations (e.g. CBUAE, BoE, MAS).

B – ESG risk taxonomy

An ESG risks taxonomy map for direct and indirect impacts on the Group’s principal risk categories (e.g. credit, market, liquidity, compliance, operational etc.).

C – Material ESG risks

A list of ESG risks are identified and updated annually through two dimensions

  • 1) Likelihood of occurring and
  • 2) Severity of impacting business operations and financial importance. Stakeholders representing the Group’s business units are involved in this exercise.

D – ESG risk appetite statement

The ESG risk appetite is aligned with the Group’s risk appetite framework It includes quantitative and qualitative criteria that sets the Group’s tolerance to ESG risks.

Quantitative metrics

  • ESG risk indicators set the Group’s tolerance to indirect ESG risks emanating from exposures to counterparties and vendors with high-risk ratings, along with appetite limits cascaded down to business functions
  • ESG performance indicators set the Group’s risk tolerance to direct ESG risks by monitoring the performance of the Group’s own ESG performance

Qualitative risk criteria

  • Includes a list of countries, sectors and activities of heightened sensitivity to ESG risks, which could negatively impact the Group (e g negative screening list, ESG critical activities and high ESG risk areas).

Transitioning to a Low Carbon Future

Net zero transition

  • Sustainable Finance by 2030 worth more than USD 75 billion
  • Incorporate ESG as part of the vendor sourcing, selection and evaluation process
  • Incorporate smart energy management systems to improve data tracking, measurement and energy efficiency

Climate adaptation and resilience

  • Reduce carbon intensity for key sectors by 2030
  • Majority of energy for FAB operations to be from renewable sources by 2030
  • 30% reduction in water and energy consumption per employee by 2030
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