Steps taken by the Central Bank of Bahrain (CBB) for the introduction of a standardised regulatory framework for environmental, social, and corporate governance (ESG) reporting have been underlined during the 28th Conference of the Parties to the UN Framework Convention on Climate Change (COP28) in Dubai.

This came about during the Bahrain Bourse’s (BHB) participation in the ongoing event alongside the Central Bank of Bahrain (CBB).

At COP28, the exchange joined the regulator in participating in the panel discussion titled ‘Navigating the ESG Landscape: Insights from Bahrain Bourse and the Central Bank of Bahrain’ which took place at Bahrain Pavilion.

The panel included BHB chief executive Shaikh Khalifa bin Ebrahim Al Khalifa and CBB executive director of financial institutions supervision Abeer Al Saad and was moderated by KPMG Bahrain head of markets Kalyan Subramanian.

During the panel discussion, the panellists highlighted the rising awareness of ESG issues in the region and the importance of ESG reporting to sustainable growth.

The panelists also emphasised the role of regulatory authorities and exchanges in enhancing the implementation of ESG reporting requirements and ensuring sustainable and transparent capital markets.

This has resulted in the recent introduction of regulatory framework for ESG reporting by the CBB that is applicable on all listed companies and targeted CBB licensees and comes into effect for the reporting period ending December 2024.

Shaikh Khalifa said: “We are pleased to attend and participate at COP28 to highlight the major milestones undertaken by Bahrain Bourse to enhance transparency and disclosure in Bahrain’s capital market by supporting listed companies’ alignment with Bahrain’s Economic Vision 2030 and the UN sustainable development goals (SDGs).

“We began our ESG journey with the issuance of the voluntary reporting guidelines for listed companies in 2020 to encourage and assist listed companies in disclosing ESG information. We strongly applaud the steps undertaken by the CBB for introduction of a standardised regulatory framework for ESG reporting, which will bring greater consistency and comparability to ESG disclosures within the market particularly on climate change, as this forms a key milestone towards achieving a net-zero economy. This milestone will facilitate further growth within the wider sustainability ecosystem in capital markets through promoting green finance initiatives and green indices products.”

Efforts

He added: “The announcements made by the CBB build upon Bahrain Bourse’s efforts in promoting sustainable capital markets, and fall in line with the kingdom’s commitment towards achieving net zero by 2060 and decarbonisation efforts. The ESG mandatory disclosure also builds upon Bahrain Bourse’s commitment as a Partner Exchange Member of the Sustainable Stock Exchanges (SSE) initiative and a member of the World Federation of Exchanges, in which Bahrain Bourse has made formal commitment to drive sustainability in the capital market of Bahrain.”

Ms Al Saad said: “We at the CBB recognise the importance of ESG reporting and our instrumental role in enhancing transparency and corporate governance across the kingdom, as well as its necessity for driving sustainable economic growth and ensuring long-term stability. By introducing the ESG Module, we are setting a clear framework and guidelines that will enable listed companies and financial institutions to effectively measure, report, and manage their ESG performance.”

She added: “The CBB acknowledges that there may be challenges in implementing ESG reporting, particularly in the initial years. However, companies are expected to make reasonable efforts to report Key Performance Indicators, and transparently explain any limitations in reporting and outline the steps being taken to address those limitations. The issuance of the recent ESG Module represents a significant step towards sustainable financial markets and comes in line with Bahrain Economic Vision 2030 and the UN SDGs, in accordance with the commitment of the Government of Bahrain.

“We invite all financial institutions in Bahrain to embrace this transformative journey and collaborate with us in realising the vision of a more sustainable financial sector.”

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