Chapter Two 14: Guiding Principles for Sustainable Finance

The "Guiding Principles for Sustainable Finance" aim to initiate planning and set the general framework for applying sustainable finance, building capacity, and providing the necessary resources to implement these principles.

Principle One: Building Capacity and Knowledge Work to build and develop the capacities of all bank employees, and put in place training plans that contribute to building and enhancing their knowledge regarding concepts and methods of applying sustainable finance.

1. Build capacity with the aim of putting in place necessary policies according to international best practices.
2. Cooperate with the Central Bank of Egypt, the Banking Institute, and other training bodies, internally and externally, in preparing and implementing programs necessary to train all bank employees in the field of sustainable finance.
3. Train staff on data collection and analysis methods and the use of information systems in preparation for preparing necessary reports.
4. Encourage bank employees to apply the principles gradually and focus on recommended practices and guidelines.

Principle Two: Enhancing Sustainable Finance Apply the concept of sustainable finance and work to integrate environmental, social, and governance elements into the bank's financing activities, as well as developing a vision for managing environmental and social risks and taking them into consideration when measuring the bank's risks.

1. Begin formulating a vision to modify current bank policies and procedures so that they include sustainable finance elements, while keeping in mind setting clear goals for the bank under the umbrella of sustainable finance.
2. Work to increase and encourage financing or investment in projects that respect sustainable finance elements and achieve sustainable development, for example, financing the construction of new and renewable energy generation stations, and financing waste recycling projects.

Letter from the Governor of the Central Bank of Egypt issued on July 18, 2021

3. Support financial inclusion in general and facilitate access to formal financial services, and work to innovate products and services for low- and middle-income individuals and persons with disabilities.
4. Integrate environmental and social risks and utilize technological solutions to measure them when preparing credit studies for customers to make decisions on granting or renewing credit facilities.
5. Pay more attention to innovation and issuing green banking products such as green loans, green investment funds, and green bonds.
6. Provide for paper usage reduction and decrease unnecessary customer visits to branches by encouraging the use of digital financial services, with the aim of lowering carbon impacts.
7. Assign tasks related to sustainable finance to specific managers of bank sectors; these tasks must not fall under the umbrella of Corporate Social Responsibility (CSR) management.

Principle Three: Engaging Stakeholders

1. Study climate change risks in proposed financed projects and work to manage those risks.
2. Establish foundations for identifying and managing climate change risks and working to mitigate them, in addition to encouraging financing for projects that contribute to addressing the issue of climate change.
3. Enhance cooperation with ministries, government entities, and all stakeholders at the national and international levels.
   1. Cooperate with government entities, ministries, non-governmental organizations, and international financial institutions.
   2. Utilize experts, environmental scientists, and academic circles in determining the environmental impact of proposed financed projects, as well as keeping up with the latest technologies and practices in this field.
   3. Activate the role of the Egyptian Banks Union in engaging all stakeholders.

Principle Four: Managing Climate Change Risks

1. Work to identify various risks related to climate change, classify them, and work to mitigate them.

2. Encourage financing for projects aimed at mitigating climate change and global warming.

3. Increase awareness and develop bank staff capabilities in the field of managing risks resulting from climate change.

Principle Five: Applying Sustainability Principles to the Bank's Internal Activities and Operations Work to avoid negative environmental and social effects resulting from the bank's activities, and enhance positive environmental and social impacts while applying best governance practices.

1. Begin establishing systems and procedures to ensure the application of sustainability principles and consideration of environmental, social, and governance elements within all internal bank works and activities.
2. Work to identify and reduce negative environmental impacts through the following:
   a. Measuring the carbon impact resulting from buildings, branches, and equipment used. b. Improving waste management (reducing it and applying the principle of reuse and recycling).
   c. Adopting standards for water and energy efficiency.
   d. Adopting environmentally friendly building standards (which reduce energy consumption) by increasing natural light, or one of the effective energy solutions, or otherwise. e. Encouraging electronic communication between internal departments of the bank and replacing paper usage with it.
3. Begin preparing an annual report detailing the bank's efforts in applying sustainability principles in its internal activities.

Principle Six: Reporting
Begin preparing periodic reports on the bank's activities in the field of sustainable finance.

1. Create and develop integrated information systems regarding sustainable finance in preparation for preparing necessary reports.
2. Begin conducting gap analysis studies to determine future steps for applying sustainable finance.
3. Begin measuring the impact of applying the principles on the current portfolio and its reflection on the stability and performance of the bank.
4. Begin preparing periodic reports on the efforts made in sustainable finance, in addition to the challenges facing the bank in its implementation and proposed solutions.