Iraqi Banks Under Scrutiny

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The Central Bank of Iraq (CBI) has recently released a report assessing the environmental, social, and governance (ESG) practices of Iraqi banks. The assessment evaluated various aspects of bank practices, including governance framework, board structure, disclosure, and commitment to ESG principles.

Assessment Methodology

The CBI’s ESG Scorecard Report evaluated 98 questions across six categories:

Governance Framework & Commitment
Board Structure & Composition
Control Environment
Disclosure & Transparency
Commitment to ESG Practices
Role of Shareholders & Stakeholders

Iraqi Islamic banks were required to respond to an additional eight questions related to Shari’a Law duties.

Categorization

The report grouped the banks into four categories based on their ESG practices:

Leaders (above 70%): Demonstrated strong ESG practices, but still require improvement in certain areas.
Good (51-70%): Showed good ESG practices, with some room for improvement.
Fair (41-50%): Required significant improvement in ESG practices.
Basic (below 40%): Had limited or no ESG practices.

Key Findings

The top-scoring banks, dubbed “Leaders,” demonstrated strong ESG practices but still require improvement in certain areas. The CBI will use the scorecard to facilitate discussions with each bank on how they can enhance their ESG policies.

Importance of Transparency and Accountability

The report highlights the importance of transparency and accountability in ESG practices, particularly as global regulatory bodies, such as the European Commission, implement stricter reporting requirements.

Key Takeaways

• Iraqi banks’ ESG practices vary significantly across categories. • Leaders in ESG practices scored above 70%, while others require improvement. • The CBI will use the scorecard to facilitate discussions with each bank on enhancing their ESG policies. • Global regulatory bodies are increasingly focusing on ESG reporting, with the European Commission’s Corporate Sustainability Reporting Directive set to come into effect in 2024.

Source

Central Bank of Iraq (CBI) ESG Scorecard Report.