The Governor of the Central Bank of Iraq-CBI, Ali Al-Alaq, announced on Monday a pioneering financial sustainability road map for the Iraqi banking sector, marking a significant milestone in the region. This initiative forms part of the broader efforts to enhance the sector’s development.
During the launch ceremony for the Financial Sustainability Road map and the Guide to Environmental, Social, and Corporate Governance (ESG) Standards for Banks, Al-Alaq emphasized the importance of ESG standards in fostering sustainable banking.
He noted: “Today, we address a critical and foundational aspect in the development of Iraq’s banking sector. The term “ESG standards” has seen turbulent growth since its inception in 2005, driven by environmental factors and responses to climate change, alongside the increasing significance of social considerations.”
Al-Alaq explained that ESG standards are vital for any economic entity or company, regardless of its mission or products. Their importance to the financial sector is particularly critical due to the profound impact social and environmental changes have on its operation. He stressed the need for effective regulatory, oversight, and technical frameworks to mitigate risks and safeguard the rights of shareholders and stakeholders.
Moreover, these frameworks contribute to achieving financial stability, as both economic and social stability are impacted by the repercussions of crises, much like environmental and social challenges influence overall stability.
He continued, “We are proud to announce the financial sustainability road map for Iraq’s banking sector, covering the years 2023 to 2029, which incorporates both social and institutional standards. This project is a testament to the Central Bank’s ongoing efforts to elevate the banking sector by adhering to international best practices and keep up on global developments in the banking industry.”
With this announcement, the Central Bank of Iraq becomes the first in the region to implement such a guide. Al-Alaq acknowledged the pivotal role played by international experts from the International Finance Corporation (IFC), a member of the World Bank Group, in crafting the roadmap. He also expressed his gratitude for the strong and productive partnership with the IFC.
Al-Alaq further thanked the Central Bank team for their exceptional efforts and recognized the support provided by the Kingdom of the Netherlands, which has played a key role in assisting Iraq with the implementation of these essential programs.
Finally, Governor Al-Alaq signed an agreement with the IFC regarding the Financial Sustainability Roadmap.