Commercial Bank of Qatar’s strategic approach to innovation and sustainability

The Commercial Bank of Qatar (CBQ) is taking a strategic approach to sustainability, integrating environmental, social, and governance (ESG) principles into its operations. Moving beyond isolated initiatives, the bank is embedding sustainability into its core strategy by establishing a sustainability framework and aligning with global standards. CBQ's aim is to guide both its internal operations and its broader customer-centric ecosystem in Qatar and the region.

Foo Boon Ping, managing editor of The Asian Banker met with Aimen Kallala AGM, head of strategy and analytics and Karolina Sylwia Pachucy, head of branding and strategy to discuss CBQ’s strategic approach to innovation and sustainability. They were also accompanied by Rowaida Alameddine, corporate communication manager and Eman Ismail, marketing manager at the bank.

Strategic sustainability framework and alignment

CBQ emphasised the importance of a strategic sustainability framework that goes beyond individual projects or initiatives. This framework is designed to ensure alignment across various business units and regional operations, integrating ESG principles into long-term planning and performance management. By fostering a culture where sustainability is a fundamental part of decision-making, the bank aims to manage risks and identify opportunities in line with sustainable development goals. 

The bank’s approach aligns with global sustainability standards and Qatar's National Vision 2030, which aims to transform Qatar into an advanced society capable of sustainable development. CBQ has recently received an upgrade to its ESG sustainability rating from 'B' to 'A' by MSCI, indicating progress in its efforts and an acknowledgment of its initiatives towards better ESG practices. However, CBQ recognises that this process is ongoing and that the full impact of these efforts will become clearer over time.

Green bonds and financing

Commercial Bank (P.S.Q.C.) has successfully issued its inaugural green bond denominated in CHF (Swiss Franc). This is Commercial Bank’s debut green bond issuance under its Sustainable Finance Framework published in 2023 and represents the next step in its sustainable financing journey. Commercial Bank claims that the bond is the largest ever CHF green bond issued in Qatar, the largest CHF bond issuance from Qatar since 2013, and the largest CHF green bond out of the Central and Eastern Europe, Middle East and Africa (CEEMEA) region since 2021.

Commercial Bank considers sustainable financing as an integral part of its overall financing strategy and seeks to provide global and domestic bond investors with access to the positive environmental impacts associated with green projects in Qatar through the Green Bond issuance.

Commercial Bank expects to allocate proceeds to categories such as sustainable water and wastewater management, green buildings and clean transportation, which is expected to contribute towards achieving the goals of Qatar National Vision 2030 and Qatar’s National Environment and Climate Change Strategy.

To avoid “greenwashing” and to maintain transparency in ESG financing, the bank stated that on annual basis and until full allocation, it will publish an allocation report and impact report. Commercial Bank will engage a third-party reviewer to provide an annual assessment on the alignment of the allocation of funds with the Framework’s criteria.

EVs and green mortgages

As part of its sustainability efforts, CBQ has introduced measures to reduce its carbon footprint through initiatives like the electric vehicle (EV) fleet and green mortgages. The bank is in the process of replacing its traditional vehicle fleet with electric vehicles, aiming to promote cleaner transportation solutions and reduce greenhouse gas emissions. This move aligns with CBQ's broader commitment to sustainability and its effort to support Qatar’s transition to a low-carbon economy.

Additionally, CBQ has launched green mortgages to encourage customers to invest in energy-efficient homes. These mortgages offer favourable terms for properties that meet specific environmental standards, promoting sustainable living and helping reduce the carbon footprint associated with residential buildings. The green mortgage programme is part of CBQ’s strategy to incentivise environmentally conscious choices among its customers and contribute to the development of sustainable communities in Qatar.

Collaborating with clients and partners

CBQ has expressed its focus on working with key clients to promote sustainable practices. The bank discussed its ongoing efforts to help clients transition towards more sustainable operations. For example, CBQ has mentioned working towards creating partnerships that would help a major airline client adopt a fully paperless system. While specific details of this collaboration are still in development, the bank sees this as an opportunity to set new sustainability standards in industries such as aviation.

Additionally, CBQ is exploring opportunities with companies in the downstream petroleum sector to facilitate greener supply chain financing. These collaborations are part of CBQ's broader strategy to encourage ESG integration across various industries. The bank is also leveraging partnerships with regional institutions like the National Bank of Oman (NBO) in Oman and United Arab Bank (UAB) in the UAE, both of which it has major strategic stakes in, focusing on green initiatives in real estate financing. CBQ recognises that these initiatives are still in their early stages and that their long-term impact will be evaluated over time.

Developing a green supply and value chain

CBQ is working on developing a green supply and value chain financing framework, aiming to assist clients in certifying their practices and aligning with ESG standards.  This initiative is part of the bank’s commitment to helping companies adopt sustainable practices that not only meet local regulations but also enhance their global competitiveness.

The bank’s role in this framework involves offering support and tools for clients to facilitate ESG compliance. CBQ acknowledged that building a green ecosystem is a complex process that requires time and collaboration. The measurable outcomes of this initiative will become more apparent as it develops further, but it signifies the bank's proactive stance in promoting sustainable business practices among its clientele.

Digital transformation and financial inclusion

Digital innovation is a significant part of CBQ’s sustainability efforts. The bank has introduced the CBQ Corporate Internet Banking Portal to enable paperless transactions, aiming to reduce the environmental footprint of its operations. This portal integrates the corporate trade portal, improving operational efficiency and reducing the use of physical resources. By digitising its services, the bank not only enhances customer experience but also contributes to reducing paper waste, aligning with its sustainability objectives.

CBQ has also been advancing financial inclusion through its "Pay Cards" programme, which targets underserved communities, including migrant workers and household helpers. These cards provide access to essential banking services and offer a secure way for users to manage their finances. Additionally, the "Household Accounts" initiative supports domestic workers by facilitating direct salary transfers, thus promoting financial inclusion and security for this segment of the population. While the full impact of these initiatives is still being evaluated, they reflect the bank’s commitment to social responsibility.

Vision for a sustainable future

CBQ is taking measured steps to integrate sustainability into its core operations. By developing a strategic sustainability framework, planning the issuance of green bonds, fostering ESG partnerships, and embracing digitalisation and digital transformation, the bank is working towards a more sustainable future in the financial sector. CBQ acknowledges that many of its initiatives are in development and that the focus must be on delivering measurable outcomes and maintaining transparency in its ESG efforts.

Striving to set a benchmark in sustainable finance

To solidify its role in sustainable finance, CBQ plans to continue focusing on measurable impacts and transparency in its initiatives. By fostering collaboration, working with third-party certifications, and engaging with stakeholders, the bank aims to drive ESG integration across its ecosystem. As CBQ progresses, it sees an opportunity to set a benchmark for sustainable banking practices in Qatar and the region. Continued innovation and strategic partnerships will be key to realising this vision and ensuring the bank's long-term contribution to a more sustainable world.