The UAE is set to host the 28th United Nations Climate Change Conference of the Parties (COP28) in November 2023, and we are now in the countdown phase. This conference will mark a significant milestone for the world to assess progress on the Paris Agreement. Situated in an area characterized by extreme heat and freshwater scarcity, the UAE has long considered climate change as a challenge that must be overcome. As a regional leader in the fields of energy and sustainable development, the UAE has continuously developed its economy while diversifying its sources of revenue. Simultaneously, it actively seeks practical solutions to global issues. This year coincides with the UAE's "Year of Sustainability," during which the government has initiated a nationwide climate action campaign, calling for the collective effort to build a greener tomorrow.
Given the impact of climate change on the global economy and financial stability, climate risk has become a shared focal point for global financial regulatory agencies in recent years. Many countries' regulators now require financial institutions to continuously establish green financial governance and risk management frameworks.
In an active effort to participate in international governance, respond to local government initiatives, and meet local regulatory requirements, China Construction Bank DIFC branch has proactively strengthened its environmental and climate risk management. In a recent initiative, the branch has invited an external professional consulting firm to facilitate a climate risk seminar in which more than 20 members from the management team and relevant positions participated.
The seminar, revolving around two critical components of climate risk—physical risk and transition risk—provided a detailed exposition of the economic impacts of climate risk and its contagion effects on various other risks, such as credit risk and liquidity risk.
During the group discussions, participants referred to the draft guidelines proposed by the UAE Central Bank regarding climate risk under the Basel Accords and combined the distribution of customer industries and potential climate risk vulnerabilities at the branch level, conducted case studies and lively discussion, simulated solutions successfully from multiple dimensions, including internal controls, monitoring, risk management, and implementation steps. Through this training, the branch has further firmly built ESG risk management awareness from top to bottom, which lays a solid foundation for the gradual improvement of the branch's ESG risk management system.
In recent years, guided by China Construction Bank Group's new financial philosophy, our branch has placed a high emphasis on ESG management, aligned our efforts with the green development direction of the UAE, responded to the UAE's 2050 carbon neutrality development strategy and green agenda, and gained a profound understanding of the principles of green and sustainable development, as well as the significance of sound corporate governance for the branch's medium- and long-term growth. Additionally, we have outlined clear objectives, strategies, and methods for ESG and green financial development at the branch level, which will continue to guide our future endeavors in business transformation, low-carbon operations, social responsibility implementation, corporate governance, and disclosure practices.
The branch actively supports COP28, the 28th United Nations Climate Change Conference of the Parties, through tangible actions such as participating in green and low-carbon jogging events, organizing activities like desert beautification and tree planting initiatives, and implementing internal energy conservation and environmental protection efforts. In doing so, the branch makes a meaningful contribution to global ecological civilization in a sustainable and green manner.
