Regulatory Alerts2022-12-14
Sustainable Development and Sustainable Finance Directives for Local Banks
The Central Bank of Kuwait issued Circular No. 2/BS, IBS/500/2022 to mandate all local banks to integrate Environment, Social, and Governance (ESG) factors into their corporate governance, risk management, and investment strategies. The directive requires banks to develop climate-friendly financial products, conduct material ESG impact assessments for lending decisions, and incorporate climate risks into their Internal Capital Adequacy Assessment Process. Furthermore, local banks must secure board approval for sustainable finance policies, enhance staff training and internal operational sustainability, and publish annual Sustainability Reports to ensure transparency and long-term financial stability.
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