In 2022, alrajhi bank developed and introduced its Sustainable Finance Framework that acts as the basis of issuing sustainable sukuks, syndicated loans and other debt capital market instruments; collectively termed as sustainable financing instruments. Through its sustainable finance framework, the bank will finance eligible sustainable projects which conform to the sustainable finance principles listed below:
alrajhi bank’s Sustainable Finance Framework is centred around four components, to ensure its alignment with the Principles:
1
alrajhi bank is committed to allocating funds at least equivalent to the net proceeds from its Sustainable Financing Instruments to support sustainable projects that meet specific eligibility criteria outlined in the Framework. For projects that are being refinanced, a maximum three-year look-back period will be in place, and the bank expects to fully allocate each issuance within two years of its issuance date.
2
The methodology for evaluating and selecting projects will guarantee that the funds from any Sustainable Financing Instrument are utilised for financing or refinancing eligible sustainable projects.
3
The funds raised from alrajhi bank’s Sustainable Financing Instruments will be placed in the bank’s general funding accounts and earmarked for eligible projects, tracked via the bank’s Sustainable Finance Register. Any funds that are not immediately allocated will be invested according to the bank’s standard liquidity policy in cash or cash equivalents.
4
Each year, alrajhi bank will provide both an allocation report and an impact report concerning its eligible projects. These reports will be updated annually until all net proceeds from any Sustainable Financing Instrument are fully allocated or until the instrument is no longer active.
Furthermore, to align with industry best practices, the bank intends to hire an external reviewer to assess annually how well the allocation of funds corresponds to the Framework’s established criteria. To this extent, the bank achieved third party verification of its Sustainable Finance Framework from S&P Global in 2023. To measure the social and environmental impact of its projects, the bank also sought the Carbon Trust’s assistance in conducting an impact assessment on the eligible sustainable finance projects under its Sustainable Finance Framework. The details of the impact assessment are available here and the independent verification report is available here.
Through its Sustainable Finance Framework, alrajhi bank’s objective is to advance environmental and social prosperity through its investments. The bank considers the following categories under its Sustainable Finance Framework:
1. Renewable Energy
2. Energy Efficiency
3. Sustainable Water Management
4. Pollution Prevention and Control
5. Environmentally Sustainable Management of Living Natural Resources and Land Use
6. Clean Transportation
7. Sustainable Buildings
1. Employment Generation and Programs Designed to Prevent and/or Alleviate Unemployment Stemming from Socio-economic Crises
2. Affordable Housing
3. Access to Essential Services
Exclusion List: The proceeds of any Sustainable Financing Instruments will not be allocated to projects where the majority of revenues are derived from fossil fuels, nuclear power generation, conflict minerals, weapons, gambling, vaping, tobacco, alcohol, mining, and/or oil and gas.
alrajhi bank’s Sustainable Finance Working Group (SFWG) is responsible for governing and implementing the initiatives set out in the Sustainable Finance Framework. The SFWG comprises of several members of the Bank’s senior leadership; It is chaired by the Chief Financial Officer (CFO), and comprises the Chief Risk Officer (CRO), the General Managers of both B2B and B2C business verticals, and the Group Treasurer. The Group’s responsibilities entail the following:
The Sustainable Finance Working Group (SFWG) met twice during the reporting period. Topics discussed during the meetings included the success and impact of ongoing projects, potential future projects, as well as the progress of Asset Allocation Report 2025 and the green and social assets of the bank.
alrajhi bank pledges to allocate an amount at least equivalent to the net proceeds of the Sustainable Financing Instruments under the Sustainable Finance Framework to finance and/or re-finance, in whole or in part, sustainable projects that meet the eligibility criteria mentioned below:
| Green projects category | Eligibility criteria | Impact reporting metrics |
| Renewable Energy | Projects related to the production, transmission and storage of energy from the following renewable sources:
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| Energy efficiency | Projects that reduce energy consumption by at least 20% compared to the average of national energy consumption of an equivalent project or technology, such as:
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| Sustainable Water management | Projects related to construction, upgrades, renovations or improvements for transportation and treatment of wastewater, including:
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| Pollution Prevention and Control | Projects related to construction, upgrades and renovation of facilities for collection, sorting, processing and conversion and treatment of waste, including:
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| Environmentally Sustainable Management of Living Natural Resources and Land Use | Projects related to sustainable forestry practices certified in accordance with the Forestry Stewardship Council (FSC) or Programme for the Endorsement of Forest Certified (PEFC) |
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| Clean Transportation | Projects related to low carbon vehicles and associated infrastructure for public, passenger and freight transportation meeting the following criteria:
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| Sustainable Buildings | Projects related to acquisition, development, construction and refurbishment of buildings that belongs to the top 15% in terms of energy efficiency of their local market or have received, or expect to receive based on its design, construction and operational plans, certification according to third-party verified green building standards, including:
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| Employment Generation, and Programs Designed to Prevent and/or Alleviate Unemployment Stemming from Socio-economic Crises | Financing and/or refinancing of loans to Micro, Small and Medium Enterprises (MSME) and microfinance clients, as well as the provision of support measures to these clients such as offering extension of payment periods and exemption of facility fees during natural disasters and pandemics Target Populations
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| Affordable Housing
GRI 203-1
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Financing and/or refinancing of government-supported or government subsidised mortgages in partnership with mortgage financing programmes for the provision of affordable housing as well as projects related to the development and construction of homes covered under such programmes Target Population: Populations eligible for government-supported affordable housing mortgage financing schemes |
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| Access to Essential Services
GRI 203-1
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Projects related to the construction or expansion of public hospitals and schools for the provision of not-for-profit, free or subsidised healthcare and education, including government-owned public-private partnerships (PPP) for the:
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The Bank will take measures to disclose to investors the expected share of financing versus refinancing for any Sustainable Financing instrument.
The Sustainable Finance Register, which is used to allocate funds towards Eligible Sustainable Projects, will contain information relating to:
a. Sustainable Financing Instrument details: pricing date, maturity date, principal amount of proceeds, coupon, ISIN number etc.
b. Eligible Sustainable Projects, including the project category, project description, project location, total loan amount and the Banks’s loan amount, amount disbursed, settled currency etc.
c. Amount of unallocated proceeds
alrajhi bank’s current allocation of proceeds prioritizes the social aspect, dedicating 91.3% of funds to the affordable housing project, while 8.7% is allocated for environmental initiatives such as renewable energy, energy efficiency, sustainable water management and clean transportation.
In 2024, alrajhi bank partnered with Carbon Trust to conduct an impact assessment of the Eligible Sustainability Projects it finances and/or co-finances through. This includes identifying projects that have resulted in the reduction or avoidance of greenhouse gas emissions estimated to have occurred, energy generation figures and number of beneficiaries of mortgage subsidies. The assessment is based for the net benefit resulting from the asset in a given period of operation and reporting period was between 01 January 2024 to 31 December 2024, the following highlights were observed:
total sustainable assets, with 100% outstanding sustainable financing instrument proceeds allocated
operational attributable avoided emissions
under construction estimated attributable avoided emissions
assessed projects
Out of the 10 assessed projects, 9 are already operational, and just one project is currently under construction
1 Electric Vehicle Project alrajhi bank has allocated USD 53 Mn. to promote clean transportation in Saudi Arabia.
*Note: Impact for this project is yet to be assessed as it is still in the early stages of development, and hence was not included in the scope of Carbon Trust's impact assessment.
1 Battery Energy Storage Project
This project is partly operational and partly under construction, with an attributable electrical storage capacity of
1,200 MWh.
1 Biodiesel Powered Plant The total attributable annual production from the plant is 1,276MWh.
Attributable annual avoided emissions (tCO2e):
58
1 Desalination Plant Project Attributed Annual Water Collected (m3): 3,788,902
Attributable Annual Water Treated (m3):
1,553,450
Attributed annual avoided emissions (tCO2e):
11,899
Attributable annual energy savings (MWh):
19,127
1 Affordable Housing Project alrajhi bank works with the Real Estate Development Fund and the Ministry of Housing to finance or re-finance government supported or subsidised mortgages, as well as development and construction of homes, under housing support programs.
Housing units constructed
35,659
Individuals benefitting from affordable housing
89,147
With the KSA government setting am ambitious Vision 2030 target to increase SME contribution to the Kingdom’s GDP from 20% to 35% by 2030, working capital needs of the growing sector needed to be prudently addressed.
alrajhi bank’s Corporate Banking Group (CBG) takes a segmented and tailored approach to finance and support the growth of the micro, small and medium enterprise (MSME) sector of the Kingdom, which plays a key role in the diversification of the Saudi economy. MSMEs are supported with a growing portfolio of lending products to meet their varying financing requirements by leveraging collective group capabilities.
A digital first approach is applied when introducing products and services to the SME segment, with the availability of an online portal, mobile app and end-to-end digitalised journeys made available. Empowering SMEs with remote banking facilities that not only provide easy access to credit, but also greater convenience and affordability, anywhere anytime access to payments, payroll and accounting among other facilities, greater security, better cashflow management, data-driven insights to grow the business, and overall operational efficiencies.
More details on how the bank supports MSMEs can be found in the MSME Business section in page 63 of the Report, while more details on the Bank’s microcredit subsidiary Emkan can be found on page 82.
