sustainability strategy

alrajhi bank’s approach to ESG

With the increasing focus on ESG factors in the financial industry, alrajhi bank continued to assess, mitigate and seek ESG opportunities and integrate ESG risks into its control and management structure and business strategy during the year in review. The bank continued to focus on offering Shariah compliant, digital ready banking solutions, with its strong foundations in Islamic banking positioning the bank to better address emerging ESG and sustainable finance objectives. This alignment continues to protect the bank from participating in any investments that do not conform to broader ESG standards.

Based on Shariah principles, alrajhi bank has a unique approach to ethical investments, and refrains from participating in any investments in businesses that are considered unlawful and unethical by Shariah law, including alcohol, gambling, and tobacco. Based on the Shariah compliant ESG framework, the bank has adopted a sustainable value creation model that entails good governance, management and ethical financial practices. This approach has enabled the bank to retain and strengthen its position as the world’s leading Islamic Bank in market cap with USD 100.9 Bn. by the end of the reporting period.

The Bank continued to maintain its focus in financial conduct and sustainability, prioritising and progressing high impact initiatives in line with the new ‘harmonize the group’ strategy and enhancing third-party ESG ratings. This collective and focused effort resulted in the bank achieving an ‘A’ ESG Rating from MSCI in 2024.

alrajhi bank’s sustainability strategy was most recently reviewed in 2024, which set quantitative and temporal ESG targets such as launching a sustainable fund and increasing the female workforce. These objectives align to the bank’s overall business KPIs to drive its successful delivery, and were strategically spread across four key pillars:

The first pillar proves alrajhi bank’s readiness as a financial leader to contribute to the Kingdom’s Vision 2030 goals by fostering the growth and diversification of the Saudi economy. This includes the expansion of the bank’s operations in the private sector and the SMEs with an aim of enhancing their contribution towards the GDP, and the expansion of the product and service offering by the bank to support multiple Vision 2030 goals. The Bank’s commitment to supporting the Kingdom’s Net Zero goals through financing green energy projects, as well as the bank’s own investment in renewable energy and resource efficiency is highlighted under this pillar.

The second pillar focuses on Digital Future, where the bank will also remain committed to strengthening the digital banking platform with advanced technology and infrastructure. This commitment also contributes to financial inclusion by leveraging digital solutions. alrajhi bank has successfully positioned itself as an industry pioneer in utilising customer analytics and cultivating digital talent. Additional information about the bank’s digital skills can be found in pages 186 to 190 of this report.

alrajhi bank being a Shariah compliant bank is committed to sound financial conduct and governance which is reflected in the third pillar of ESG. This commitment is evident in the bank’s constant efforts to offer the Kingdom’s best customer service, and the bank has recently been rated at a Net Promoter Score (NPS) of 85 by a leading consultancy firm. This pillar also covers safety and security as well as the bank’s benchmarked governance standards.

The fourth pillar consists of social development initiatives aimed at strengthening community connections. alrajhi bank sustains its social license to operate throughout the Kingdom by focusing on the provision of financial services, volunteering, supporting community projects, and enhancing the quality of life for vulnerable groups.

ESG management and disclosure

Similar to previous years, all voluntary ESG disclosures of alrajhi bank for the year under review have been prepared in accordance with Saudi Exchange ESG Disclosure Guidelines which can be accessed at www.sseinitiative.org. These guidelines were released by the Saudi Exchange as part of its on-going efforts to promote sustainable and transparent capital markets in line with its role as a Partner Stock Exchange in the United Nations Sustainable Stock Exchanges (SSE) initiative.

External ratings