Al Rajhi Bank conducts an annual materiality assessment to ensure we prioritise and identify the environmental, social and governance (ESG) topics that are most important to our stakeholders and our business. Referencing the Saudi Exchange ESG Disclosure Guidelines as the ESG reporting framework for the year under review, Al Rajhi Bank worked with one of the world’s largest pure play sustainability consultancies to evaluate our materiality assessment approach against local and global peer-adopted approaches. This was the preliminary step in Al Rajhi Bank’s three-phased execution in the development of a comprehensive ESG strategy, transforming the assessment and application of materiality to meet the growing significance we place on our ESG credentials.
Identifying areas for improvement
The Peer Benchmark compared Al Rajhi’s existing materiality assessment and that of its peers against six best practice evaluation attributes of ESG performance; material topic identification and prioritisation, stakeholder engagement, ESG standards and frameworks, transparency, materiality trends and geographic approach. While there was a degree of alignment with peers in the ESG topics prioritised by the Bank, certain key strengths as well as areas for improvement were identified.
The Bank immediately followed the Peer Benchmark with a Materiality Review as phase two of the ESG strategy development plan, where a number of immediate and long-term opportunities were discovered. These would enable the Bank to align with global best practices and trends to enhance the overall approach to materiality, setting a solid foundation for our strategic direction to create value across the ESG landscape. Among the immediately actionable recommendations was an indicative short, concise list of 13 ESG-based material topics that were to be considered a foundation for a more comprehensive list of new material topics that will support the Bank’s ESG strategy and reporting process:
- Climate Change
- Human Labour and Rights
- Customer Experience
- Employee Attraction, Development and Retention
- Employee Health and Wellbeing
- Community Investment and Engagement
- Digitalisation and Automation
- Customer Satisfaction
- Innovation and Product Development
- Diversity and Inclusion
- Green Banking and Lending
- Governance, Ethics and Accountability
- Sustainable and Socially Responsible Procurement
In 2021, these 13 new ESG-based material topics served as the basis for the Bank’s materiality assessment and ESG Report, duly aligned with the Bank’s overarching Bank of the Future strategy, and validated by both internal and external stakeholders. The strategic relevance of the ESG topics was assessed on two dimensions; their importance to stakeholders and their importance to the Bank. Following the assessment, each topic was mapped accordingly onto the Al Rajhi materiality matrix rated from significant to highly significant in importance, enabling the Bank to closely align its ESG strategy with stakeholder expectations.
Material topics receive management attention, especially with regard to the Bank’s business strategy, resource allocation, and activities. They are assigned to the relevant Heads of business or functional units. Resource allocation is based on the degree of materiality of any particular risk or opportunity.
In line with the materiality study, the Bank continues to develop and roll out policies as required to guide its employees in the smooth and efficient implementation of their duties.