AAIB’s New Approach to Risk Management
AAIB comprehended the fact that (ESG) environmental, social and governance aspects, are not disconnected from entire banking operations and products.
In 2009, AAIB adopted the Equator Principles to guide its corporate activities with embracing the ESG (Environment, Social and Governance) aspects into the project lending operations.
Public Advocacy & Capacity Building
A year after adopting the EP, AAIB joined efforts with the International Finance Corporation (IFC) and successfully trained all credit and risk staff members and managers to endorse the EP principles. In parallel, in 2010 AAIB developed its own policies and procedures for lending operations and non-traditional/innovative risk assessment. Along this path, in our efforts to encourage public advocacy and raise awareness towards attending social and environmental challenges, we joined efforts with the International Finance Corporation (IFC) and conducted workshops for peer banks in Corporate & Risk departments regarding the ESG concept.
AAIB Continuous Compliance with EP
While admitting its commitment to the EP in 2009, AAIB continuously comply with the annual strategic review defined by the EP steering committee between 2010 and 2013. Based on this, AAIB has complied with a set of a command of strategic reviews and new rules, which produced a series of recommendations on key areas (thematic areas, climate change, human rights, reporting and transparency, stakeholder engagement and governance) that affect the EP reporting process and significance.
In 2013, the EP association again conducted a review to incorporate a wider scope for the project lending operations’ assessment, the scope extended to include Bridge Loans that are worth Two Million U.S $ (2 Million $). The EP association for voting to all members, including AAIB, raised the strategic review. The EP published Draft III on July 2013; AAIB complied as an EP association member new policies and report accordingly.
Policies & Procedures
In order for AAIB to embrace/endorse the EP in its project lending operations & corporate activities, AAIB cooperated with an international consultant to create/draft a customized environmental and social risk policies and procedures to guide the bank’s operations and activities. The customized policies and procedures charted has detailed the manner in which AAIB corporate project lending operations will function according to the EP.
Today, AAIB is in process of updating its customized policies & procedures to comply with EP draft 3 which was release in 2013; the draft has expanded the EP scope to include bridge loans up to 2 M$.
Training for Building Capacity (Staff Engagement)
70% of credit and risk managers in AAIB, and officers attended the EP Training
Because AAIB realizes the significant of embracing the ESG (Environment, Social & Governance) aspects in the banking operations & activities, in 2009 AAIB has joined efforts with the International Finance Corporation (IFC) to educate and train our corporate and risk staff.
Besides the internal operational change and awareness, the training extended the awareness to peer banks as an extended effort to a comprehensive impact on banking operations nationwide.
The two-day training of the Credit Department and Risk Management Department staff in the new Equator Principles Policy and Procedures took place off site twice, engaging 70% of credit and risk management staff. This covered the newly adopted Equator Principles as well as the amended policies, procedures and processes.
Training for Industry Change (Public Advocacy)
50% of Egypt's Financial Institutions were invited to the EP Workshop
In a joint effort between the bank and the International Finance Corporation (IFC) to launch the Equator Principles, a series of workshops were conducted in November 2009 to discuss "Sustainability in the Financial Sector: Risk Management by Financial Institutions".
More than 50 financial institutions across the region were invited to attend the workshop in a move to mobilize the financial industry in the region to build awareness of social-environmental risks associated with project finance. This will help banks assess, mitigate, document, monitor the environmental and social risk associated with financing projects, and through collaboration establish industry best practice.
Recognizing the importance of governance & transparency with our stakeholders, and supporting the EPs mission, on adoption of the EP, each EP association member is committed to report at least annually about its Equator Principles implementation processes and experience, taking into account appropriate confidentiality considerations.
The reporting should include the number of transactions screened by each EP Financial Institution, and information regarding implementation.