Interview: Usman Ahmed
In what ways can the Bahraini banking sector support the realisation of the national net-zero target?
USMAN AHMED: The Bahraini banking sector is poised to play a critical role in achieving the national net-zero target. Banks can incentivise emissions reductions through sustainability-linked loans and the provision of capital expenditure financing for clean energy projects. In addition, expanding sustainable finance options and establishing platforms for carbon credits are key opportunities. Operationally, banks should reduce their own carbon footprint and provide advisory services to businesses. Initiatives such as financing facilities for installing solar panels can help contribute to the attainment of the kingdom’s long-term sustainability goals, while simultaneously opening new business avenues.
To what extent will the introduction of mandatory environmental, social and governance (ESG) disclosure requirements impact the business climate?
AHMED: Mandatory ESG disclosures are expected to significantly enhance Bahrain’s business environment by increasing transparency, attracting international investors and improving risk management. These measures are set to foster better corporate governance and informed investment decisions. For example, Bahrain Bourse’s ESG Reporting Guidelines, which feature 32 metrics, help reinforce financial responsibility.
How important are sustainable finance frameworks for banking institutions in Bahrain?
AHMED: Sustainable finance frameworks have become increasingly critical for banks to effectively manage environmental and social risks. Moreover, these frameworks allow banks to capitalise on new growth opportunities during the transition towards a sustainable economy. In Bahrain, sustainable finance frameworks must align with local economic needs, regulations and the readiness of businesses to adopt sustainable practices. NBB is at an advanced stage of implementing its own such framework, allowing it to effectively evaluate and manage climate-related risks and opportunities.
Where do you see the most significant opportunities for banks to generate social value and promote community empowerment in Bahrain?
AHMED: Banks can generate social value by advancing financial inclusion to underprivileged communities, and supporting the growth of small and medium-sized enterprises (SMEs). Constituting over 90% of Bahrain’s commercial enterprises, the SME segment is the backbone of the national economy. Banks can offer such entities customised solutions to encourage diversification and employment creation. Additionally, expanding access to banking services through initiatives such as financial literacy programmes can empower young people and underserved populations.
What role do you see for financial technology ( fintech) in expanding financial inclusion and economic productivity in the kingdom?
AHMED: Fintech is playing a transformative role in expanding financial inclusion and enhancing economic productivity in Bahrain. However, the rapid integration of technologies such as artificial intelligence (AI) and cloud computing has introduced several governance challenges for the financial services sector. One of the primary concerns is the need for effective oversight to manage algorithmic biases that can arise in AI-driven decision-making processes. Moreover, cloud computing presents challenges related to data security and privacy.
To tackle these challenges, Bahraini banks must proactively implement comprehensive strategies that address the specific risks associated with emerging technologies. Additionally, continuous stakeholder collaboration is essential for developing a regulatory environment that supports business innovation, while also protecting consumers and maintaining the continued stability of the Bahraini financial ecosystem.
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