Manama, November 6 (BNA): As part of the Central Bank of Bahrain’s goal to maintain disclosure transparency and high standards of corporate governance, in addition to its commitment to social and climate goals, the Central Bank of Bahrain is currently working on developing Environmental, Social and Governance (ESG) disclosure guidelines to assist companies in ESG integration and reporting against a wide range of environmental, social and corporate governance factors.
The CBB views ESG reports as effective tools for all stakeholders to better examine the company’s efficiency, sustainability and risk exposure. Given the impact of ESG factors on a company’s ability to execute its business plan and produce value in the long term, the CBB is placing great emphasis on integrating disclosure guidelines into the CBB’s regulatory framework. The Guidelines aim to ensure the progressive adoption of ESG disclosures that are relevant, specific, comprehensive, clear, verifiable, balanced and consistent.
The guidelines will be based on international best practices, frameworks and initiatives, taking into account responses to the ESG report issued earlier this year by the Central Bank of Bahrain to all listed companies, insurance companies, banks and Tier 1 investment firms.
The survey is designed to study market trends towards ESG. Key findings for listed companies included: 70% of respondents declared ESG issues “relevant” to their business model and strategy, 85% of respondents who did not report any ESG factors are currently evaluating and/or planning to adopt an ESG in the near future. And 54% of respondents declared ESG disclosures an important way to communicate with stakeholders.
For banks, the majority of respondents declared ESG issues to be “relevant” to their business model and strategy, have a management-level committee to oversee sustainability-related goals and objectives, and declared ESG disclosures an important means of communicating with stakeholders. Furthermore, insurance and investment companies showed similar recognition of the relevance of ESG disclosure to their business model and strategy, with 63% and 56%, respectively, reporting that ESG policies are relevant to their strategy.
The CBB issued a circular to all licensees in November 2021 to raise awareness of climate-related risks, followed by a detailed guidance note in March 2022 aimed at ensuring that licensees regulated by the CBB are informed of developments and practices in climate-related risk management as they will shape business models and commercial operations across different geographies in the coming years. The CBB seeks periodic feedback from licensees on their willingness to implement a framework to identify and manage climate-related risks and also take advantage of climate-related opportunities. It is envisaged that ESG disclosure guidelines will now be developed to align the objectives of the Climate Risk Report as well as being a comprehensive reference for ESG factors.
In addition, the Bahrain Bourse, the exchange authorized by the Central Bank of Bahrain as a self-regulatory organization, issued its Environmental, Social and Corporate Governance Reporting Guidelines on June 11, 2020 in an effort to support sustainable capital markets through enhanced disclosure standards. It aims to provide a tool to encourage issuers to provide ESG information to investors.
The Central Bank of Bahrain continues its efforts to highlight the need to mitigate risks related to environmental, social and governance issues and encourage related disclosures in line with Bahrain Economic Vision 2030 and the United Nations Sustainable Development Goals (SDGs) in accordance with the Government of Bahrain’s commitment to achieving a global climate. Objectives.
The CBB expects to issue disclosure guidance on Environment, Society and Governance in the first half of 2023 which will be directed to listed companies and licensees of the CBB.
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