KUWAIT Law and Practice Contributed by: Yousef Al Shereedah, Abdulrahman Al-Roumi and Bashayer Al-Tuwais, International Counsel Bureau – Lawyers and Legal Consultants
ESG Integration into Governance and Risk Management The integration of ESG factors into governance structures is strongly encouraged for CBK-reg - ulated entities: • The CMA, through Module 15, Chapter 12, and the CBK Circular No 2/BS, IBS/500/2022, encourages banks to embed ESG into risk management and strategic decision-making processes. • Entities are encouraged to adopt policies that address climate risks and develop sustain - able financial products that promote green finance and support environmentally sustain - able projects. • Boursa Kuwait’s ESG Guidelines, introduced in the “Unified Direction for a Sustainable Future” (2021), further encourage companies to integrate ESG practices into governance structures, aligning with both national and international sustainability goals. While these practices are not yet mandatory, they form an essential part of Kuwait’s long-term sustainability strategy. Voluntary ESG Reporting ESG reporting is currently voluntary but strongly encouraged across the regulatory landscape: • The CMA, under Decision No 136 of 2022 and Module 12 of the CMA By-laws, recommends that CBK-Regulated Entities publish annual sustainability reports aligned with internation - al standards, such as the Global Reporting Initiative (GRI) or Sustainability Accounting Standards Board (SASB) frameworks. • Boursa Kuwait also encourages companies to disclose their ESG practices as part of their annual reporting cycles, or through stan - dalone sustainability reports. Boursa recom -
mends using the GRI and SASB standards, as well as Integrated Reporting (IR), to ensure comprehensive and comparable ESG disclo - sures. • These reports should include materiality assessments and cover relevant environmen - tal, social, and governance factors. While voluntary, publishing such reports is seen as a best practice for enhancing transparency and investor confidence. Sustainable Financial Products and Climate Risk The development of sustainable financial prod - ucts and consideration of climate risks are strongly encouraged: • The CBK Circular No 2/BS, IBS/500/2022 encourages banks to create financial prod - ucts that align with sustainability goals, such as green bonds and other climate-friendly financial instruments. • The circular also emphasises integrating climate risk management into lending and investment decisions to ensure long-term resilience and alignment with environmental objectives. • Boursa Kuwait’s Guidelines similarly encour - age companies to support green finance initiatives and emphasise the importance of integrating climate-related risks into broader business strategies. Stakeholder Engagement and Materiality CBK-Regulated Entities are encouraged to engage stakeholders, including investors, employees, and regulators, during materiality assessments. This ensures that ESG reports address the most relevant factors for the com - pany’s operations and stakeholders, enhancing the relevance and credibility of the information disclosed.
309 CHAMBERS.COM
Powered by FlippingBook