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Measuring disparity among Gulf countries
KUWAIT CITY, Oct 20: A study that has been published by the Oxford Business Group shows Kuwait’s economy complied with only two of the 8 criteria set by it to determine the extent to which Gulf economies comply with sustainability standards, especially environmental governance standards, reports Al-Anba daily. The first criterion that Kuwait is committed comes in the form of general goals for sustainability, and the reason for this was the link of the criterion to the development plan “New Kuwait Vision 2035”, which set among its goals a diversified sustainable economy, as the executive plan to achieve this goal included the implementation of 24 projects, provided that the last project is to be completed by 2029.
As for the second criterion that Kuwait complied with, is the standards for companies’ disclosure of sustainability, which is due to Boursa Kuwait setting a guide for listed companies on how to prepare corporate and social and environmental governance reports and encouraging them to prepare these reports in preparation for their commitment.
Nonetheless, the study praised the efforts of the Central Bank of Kuwait to encourage the completion of banking transactions through digital channels, which contributes to the application of environmental governance standards. The study indicated that it launched in 2018, the standards for digital payment solutions, the testing environment for financial companies’ products in the same year, the setting up of a cybersecurity framework in 2020, and recently allowing the establishment of fully digital banks.
The Kuwaiti banks are trying to overcome the low level of commitment of the rest of the Kuwaiti business sector in light of their association more than others with foreigners on two tracks — the first is through foreign investors in the banks’ issuance of international bonds, which Kuwait desperately needs to comply with capital adequacy standards, and the second track after foreigners have become heavy investors in the shares of most Kuwaiti banks, following the upgrade of the Kuwaiti Stock Exchange to global indices, which contributed to the fl ow of foreign investments to the shares of the Premier Market in particular, most of which are from banks.
Foreigners became major shareholders in Kuwaiti banks, as their ownership percentage in the National Bank of Kuwait amounted to 23.7 percent, Burgan Bank about 17.7 percent, Gulf Bank 16.4 percent, and Kuwait Finance House 11.3 percent. They also invested in other banks with rates of less than 10 percent. The report set 8 criteria for measuring disparity among the Gulf countries such as the general Sustainability Objectives: All six Gulf countries have committed to setting goals to achieve sustainability; a sustainable financing strategy: Only the UAE announced this strategy; standards for corporate sustainability disclosure: All Gulf countries have committed to setting these standards, except for the Sultanate of Oman; standards for financial disclosure of climate risks: No Gulf country has so far set these standards, while the UAE is currently working on them.
This is in addition to the framework for sustainable financing: no Gulf country has yet set these standards, while the UAE is only working on them at the moment; standards for sustainable investment products: no Gulf country has set this kind of standards; a program to issue sustainable sovereign bonds: Saudi Arabia (after issuing the report, Riyadh issued green bonds), the UAE and the Sultanate of Oman are on the way to issue this type of bond and indicators of sustainability: only the UAE and Qatar have these indicators, and Saudi Arabia is now working on developing indicators, while the rest of the three countries do not have any indicators. These eight criteria show the extent of disparity, as well as the failure of most Gulf countries to keep pace with the global path related to the application of sustainability standards, most notably environmental governance standards.