COP28 provided a forum for banks, insurers, investors, policymakers, and private sector organizations to discuss decarbonization in detail. One key topic was adopting policies and best practices for managing sustainability risks in the financial sector. A new best practice gaining traction is the green ledger approach which helps achieving sustainability goals, and one organization leading the way is the United Arab Bank (UAB).
Thanks to its ongoing digital transformation journey, the bank is enhancing its services to its customers and employees, while also preparing the way to adopt SAP’s ‘carbon accounting’ methodology with continual measurement and reporting on green data.
“It was important to move our IT landscape to the cloud to stay abreast of new technologies,” said Shirish Bhide, Chief Executive Officer of UAB, while making an announcement about the bank’s digitalization strategy at the Sustainable Finance Forum at COP28 in Dubai. “The move will prepare us to utilize the sustainability metrics and analytics embedded in SAP solutions and lay the foundations for a green ledger approach.”
Based in the United Arab Emirates (UAE), UAB is a mid-sized financial solutions provider offering tailor-made financial services in both corporate and retail banking. The bank is modernizing its IT infrastructure, leveraging RISE with SAP hosted on AWS to support environmental and workforce sustainability goals.
Financing the green economy
Banks play a key role in allocating finances not only for the functioning of the economy, but in shaping a greener one. By channeling private investment towards the transition to a climate-neutral, resource efficient and fair economy, they can help align sustainable finance with the real economy.
According to the UN Climate Finance Framework, private sector finance is the largest source of financial flows for climate action, particularly mitigation. But you can’t mitigate what you can’t measure.
To help companies manage sustainability business data from the bottom-up with actual data on a transactional level, SAP developed an accounting system for emissions data that is as auditable, transparent, and reliable as a system for measuring financial data. The data is vital to seeing holistically across the value chain to understand where emissions are occurring, setting accurate net-zero targets, and identifying specific areas for decarbonization impact.
“SAP really strikes at the heart of what we do,” said Bhide. “As a responsible corporate citizen, United Arab Bank places a high priority on driving positive change in the communities we serve and on amplifying our contribution to the Sustainable Development Goals. The initiatives that we have established in recent years have placed us in a robust position, empowering us to make significant positive contributions in 2023, which marks the Year of Sustainability in the UAE.”
UAB believes that managing ESG risks and driving a strong sustainability agenda contribute to long-term value creation for its stakeholders, its business and the economy at large. To achieve this agenda, it developed a Sustainability Framework that articulates its commitment and discloses it to its stakeholders.
Accounting for carbon
UAB puts sustainability at the heart and core of everything it does, be it on the people, process or portfolio front. It sees itself as a consultant to its customers to help them develop their own sustainability strategies. But before becoming an enabler, the bank is striving to be an exemplar.
Moving to the Cloud on AWS, for example, is allowing UAB to eliminate a lot of its servers, reducing energy consumption, which automatically reduces emissions.
“It’s important for us to take our customers on this journey with us. Every time we meet customers, we try to educate them. It’s a long-haul effort, but I am a big fan of baby steps, because there are 99 steps in between zero and one hundred. For me, every step forward is big,” said Bhide, summarizing UAB’s philosophy on accelerating digitalization to become more sustainable.
Transitioning to a greener economy requires massive changes to not only IT systems but across all systems including manufacturing, food production and energy, and they all need to be financed.
“We know our customers want to do the right thing, but they often don’t know where to start. We might help them look at their product portfolio and consider where their suppliers are getting their materials from. We help them look at their production or transportation processes to identify ways to start reducing their carbon footprint. We help them identify steps, no matter how small, to take towards mitigating their carbon footprint,” he explained.
UAB is also investing in new enterprise resource planning (ERP), human capital management (HCM) and customer relationship management (CRM) systems from SAP to eliminate non-value-added tasks, so that staff can focus on addressing their customers’ needs. UAB will also upgrade its procurement functions. With the implementation of SAP Ariba and SAP Signature Management with DocuSign, UAB will benefit from digitalization and automation of its procurement processes, which can reduce paper wastage by up to 80%.
Sergio Maccotta, Senior Vice President, SAP Middle East and Africa – South, commented, “By expanding its existing relationship with SAP and embracing cloud computing, UAB is future-proofing its operations to enable it to respond to market changes with agility. This lays the groundwork for adopting solutions that will enable UAB to collect data, analyze its ESG goals, and report on its green line. SAP believes businesses of all sizes and across industries need to adopt cloud solutions so that they can benefit from ongoing advances in AI, sustainability data and automation.”
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