The Central Bank of Bahrain (CBB) has announced the issuance of new ESG reporting requirements on the 19th November 2023. It is hoped that the requirements, which commenced development in 2022, will enable the addressing of ESG-related risks in the jurisdiction in line with the Bahrain Economic Vision 2030.
The CBB’s latest sustainability regulatory effort will mandate listed companies, banks, financing companies, insurance firms and investment firms to report ESG factors beginning in the 2024 financial year.
“Shareholders and investors now expect companies to demonstrate greater transparency regarding their impact on the environment, society and governance practices. The ESG module aims to serve as a valuable tool for companies starting their reporting journey with the aim of creating reliable, informative and comparable reports,” Abeer Al Saad, the executive director of financial institutions supervision at the CBB, commented.
According to Abeer, the module will serve as a tool to enable the creation of reliable, informative and comparable reports.
The guidelines draw reference to international best practices and consider the results of the CBB’s 2022 market survey, which examined the market attitudes toward ESG issues.
The survey results found that 70% of listed companies consider ESG issues relevant to their business model and strategy. About 85% of respondents who were not reporting any ESG factors were evaluating and planning on ESG adoption in the near future. The majority of surveyed banks stated that ESG issues are relevant to their business model and strategy.
Notably, the newly issued framework is applicable to a wider scope of investment firms than originally surveyed with the inclusion of both Category 1 and Category 2 investment firms as opposed to the exclusion of the latter category.
Also in contrast with its original projections is the issuance date, which was anticipated to be released in the first half of this year.
The Kingdom of Bahrain has made several regulatory efforts toward sustainability in the financial sector over the past few years, including the issuance of a guidance note by the CBB on climate-related risks which followed the central bank’s climate risk awareness efforts beginning the year prior.
Separately, the Bahrain Bourse issued ESG reporting guidelines in June 2020 to support sustainable capital markets through enhanced disclosure standards.