Palestine’s sustainable banking leader for 62 years, Bank of Palestine (BoP) represents the future of banking with high-impact sustainable finance initiatives, gender & financial inclusion, and digital innovation. Mahmoud Shawa, BoP’s CEO, discusses the bank’s strategic commitment to sustainability and its role supporting Palestine’s economic growth and climate change goals.
Global Finance: How has BoP’s commitment to sustainability influenced the bank’s business strategy?
Mahmoud Shawa: Bank of Palestine was established in 1960 to provide financial support to small farmers and orange orchard owners to help them operate and expand their businesses. Our business strategy has always been focused on the real economy. Our mission is rooted in a values-based system encompassing sustainable practices to impact economic and social development.
BoP remains committed to SMEs, which represent around 95% of Palestine’s economic activity. We are currently the main lender to SMEs in Palestine.
Over the years, we have become a leader in empowering women both at the bank and in our business community. Women employees are 43% of our workforce in 2022, up from 14% in 2007, and our board has a 50%/50% gender balance. For customers, BoP launched “Felestineya,” a flagship program providing financial and non-financial services to women entrepreneurs or women with existing businesses.
Financial inclusion is integral to our core DNA and business strategy. With 50% of Palestine’s population unbanked, digital inclusion and innovation are strategic priorities for BoP. The sustainability practices embedded since inception have helped sustain positive growth and profits. The bank has grown in every indicator effectively becoming Palestine’s leading banking and financial institution with USD$ 6.5 billion in assets, the largest branch footprint and a leader in digital and inclusive banking. Its sound and strong financial ratios coupled with its sustainability strategy is attracting international impact investors like Proparco and other such investors, who are keen to become part of the growth and impact story of Bank of Palestine. We continue to look for strategic institutional impact investors who can be part of the growth strategy of the bank for the next 5 years.
GF: How is BoP working to achieve Palestine’s ESG goals?
MS: The environment is a major ESG challenge for Palestine. Because we lack control of certain areas in our territories that are controlled by Israeli authorities. As such, we cannot control some aspects of the environmental damage Israel causes in these areas, such as chemical dumping.
Palestine is a member of the COP United Nations Climate Change Conference and has committed to the Sustainable Development Goals. Given the financial crisis in the Palestinian Authority, however, environmental initiatives have not been prioritized, despite increased attention from businesses and the community.
BoP is leading by example, it is implementing a sustainability strategy at the bank, committing to reduce carbon footprint due to its operations. The bank is embarking on a digitization strategy reducing the volume of paperwork towards a more paperless environment, removing the use of plastic and relying on renewable energy. We are also increasing our portfolio of green loans to customers encouraging more such loans for renewable and energy efficiency in cooperation with SUNREF program introduced by PROPARCO of France. In terms of thought leadership on climate risk, the bank will host a Climate Change conference in cooperation with EBRD in December 2022. We will shed light on the issue of climate risk governance in the banking and financial sectors and help raise awareness among our peers in the banking sector.
GF: What are BoP’s main sustainability goals & accomplishments?
MS: Our major sustainability goals start with mainstreaming sustainability across the bank. We are integrating sustainability management priorities into our governance and performance management systems. BoP is the first Palestinian bank to issue a Sustainability Report based on GRI Standards. We consolidated CSR functions into a dedicated Sustainability Department reporting to the CEO. We are also the region’s first bank to establish a board committee for ESG governance and oversight. The department regularly communicates with the Board of Directors and Executive Committee.
BoP is reducing its ecological footprint by adopting energy-efficient technologies and practices. For example, we launched a campaign to plant trees and reduce the bank’s consumption of plastic and paper. In 2023, we are investing in a solar farm to run operations, reducing our reliance on fossil-fueled electricity.
As a sustainability leader, we are engaging our clients in our green banking efforts and increasing awareness among clients and staff about environmental issues and our impacts.
BoP is also committed to increasing economic sustainability in the community. We are extending our services to reach all segments of society and are continuing our social investments benefiting vulnerable communities, with an emphasis on crisis support, education, and health care.
GF: How is BoP shaping sustainable banking in Palestine?
MS: Working with the United Nations and other humanitarian agencies, BoP is dispensing aid electronically through food vouchers via mobile and cash payment using POS machines. By eliminating the need for bank accounts, we are providing easy, secure, and real-time payment solutions to the most vulnerable who are often without bank accounts.
Our “Felestineya” programs are empowering women, who only represent 19% of Palestine’s workforce. “Felestineya” offers women collateral-free loans and other financial services to encourage them to enter the workforce and become business leaders.
We are also promoting renewable energy and energy-efficient projects through our “green lending” products and our Sunref Palestine agreements with Proparco to fund green energy projects.
GF: How are BoP’s sustainability initiatives having a positive community impact?
MS: Our SME financing supports job creation, entrepreneurship, innovation, and financial stability, which drives economic growth. BoP’s “Felestineya” programs have trained over 15,000 women in financial literacy and other business topics.
Our financial inclusion programs, which offer a mobile e-wallet platform and a digital solution through PalPay, our FinTech arm, provide essential financial services for unbanked members of society, primarily the youth, people living in remote and marginalized areas and people with special needs.
BoP launched Palestine’s first social impact program and has historically provided significant community support focused on education, environment, culture, and health, particularly during the pandemic. Our successful health programs include a mobile breast cancer detection clinic that has served thousands of women.