ESG

Related disclosures

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. takes 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.

Our

approach

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) Ltd. 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:

Client onboarding

Remuneration policy

Transaction due diligence and investment decision making process

Development and launch of new financial products and services *

Day-to-day operations

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 our organisation’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.

* 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

No current consideration of sustainability adverse impact

Until now, Arab Bank (Switzerland) Ltd., 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.

Key principles

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.

Risk management

promote sound and effective risk management with respect to sustainability risks

Remuneration policy

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.