Being aware that the banking and asset management industries are playing an active role in addressing global sustainability issues such as climate change, Arab Bank Switzerland Ltd. is willing to take its Environmental, Social and Corporate Governance (ESG) responsibilities seriously.

The impacts of climate change on ecosystems, societies, and economies worldwide, as well as the growing environmental and human rights concerns have resulted in a fast-changing regulatory and competitive landscape, which is affecting us, our suppliers and our clients.

In response to these emerging risks and opportunities, we at Arab Bank Switzerland Ltd are committed to shaping appropriate solutions.

We have therefore started defining a comprehensive ESG risk policy framework that will ultimately apply to all our transactions, services, financial products, and activities.

As part of this process, we have started identifying and assessing ESG risks arising out of or in connection with our activities, investment decisions and recommendations, as this will help us understand and manage the potential adverse impacts of our activities and decisions on the environment, the communities in which we are active and society in general, as well as mitigate the associated risks affecting our clients and us. These ESG risks can be defined as environmental, social or governance events or conditions which are likely to have a material adverse impact on the value of our investments, our clients, people and the reputation of Arab Bank Switzerland. These risks include climate change, unsustainable use of natural resources, modern slavery, global pandemics, growing social inequalities and exclusion.

In parallel, we are committed to defining and implementing procedures and tools designed to enable the identification, assessment and monitoring of those ESG risks, with a view to integrate them into our standard risk management, compliance, investment decision and operational processes, including:

  • Our client onboarding process;
  • Our remuneration policy;
  • Our transaction due diligence and investment decision making process;
  • The development and launch of new financial products and services: ESG risks associated with new financial products and services will be reviewed and assessed before their launch in order to assess their compatibility and consistency with our ESG objectives;
  • Our day-to-day operations; and
  • The selection of our suppliers, service providers and business partners.

Those tools and procedures will allow us to continuously monitor and assess our clients’, financial products’ and the Bank’s exposure to sectors and activities that are prone to bearing ESG risks and attempt to benchmark the sustainability of our portfolios against regional and/or sector averages.

Until now, Arab Bank Switzerland, as portfolio manager of AB Alternative Fund SICAV-SIF – European Real Estate Sub-Fund, has not considered the potential adverse impacts of its investment decisions on sustainability factors, due mainly to the lack of availability of harmonized and consistent ESG data and indicators that would have allowed our portfolio management team to identify effectively and assess accurately such potential adverse impacts.

However, Arab Bank Switzerland Ltd is committed to ensuring that, going forward, it will be able to consider, measure and where applicable mitigate the potential adverse impacts of its investment decisions. To that effect, we have started defining objective ESG indicators and metrics for each of our activities, services and financial products (including AB Alternative Fund SICAV-SIF – European Real Estate Sub-Fund), with the aim of giving our teams the tools necessary to comprehend and assess the foreseeable impacts of their investment decisions/ recommendations and consequently to enable them to adjust such decisions or recommendations where appropriate.

We would expect to have finalized the integration of ESG considerations in our investment decision making process in respect of AB Alternative Fund SICAV-SIF – European Real Estate Sub-Fund and consequently to be in a position to measure the impact of our investment decisions based on reliable ESG indicators by June 2022.

Although Arab Bank Switzerland Ltd is not bound by the requirements of FINMA circular 2010/1 on remunerations or EU regulations on sustainability-related disclosures, as a responsible financial market participant, we have decided to adopt a “best-in-class” approach to ESG by adhering voluntarily to some of the key principles and requirements set forth in such regulations and reflecting those principles in our remuneration policy.

As part of our efforts to integrate ESG considerations in our internal policies and operations, we have therefore reviewed and upgraded our organisation’s remuneration policy with a view to:

  • promote sound and effective risk management with respect to sustainability risks;
  • ensure that the structure of our remuneration principles and schemes (i) does not encourage excessive risk‐taking with respect to sustainability risks, and (ii) is aligned with, and will contribute to our strategy, long-term interest and ESG objectives.

In this context, each employee of Arab Bank Switzerland Ltd will be assigned clear and measurable non-financial qualitative goals (including in terms of regulatory compliance and contribution to the Bank’s ESG objectives), and his/ her performance will be reviewed annually against those goals to foster responsible investment practices as well as compliant and respectful behaviours consistent with the ESG objectives of the Bank.