Responsible Competitiveness Report-Strategies for Banking and Insurance Sectors


 Full Report - PDF File  النسخة العربية
 

Executive Summary

·   The responsible competitiveness initiative aims to support the integration of environmental and social concerns into the trade and economic policies of the Jordan government, in a manner that enhances competitiveness

·   In that regard, Jordan’s banking sector has made improvements including changes relevant to corporate governance, transparency, and regulatory environment as well as recruitment and training schemes. Further opportunities to improve the banking sector’s responsible competitiveness while positively contributing to Jordan’s national competitiveness include sustainability reporting by banks

·   While the insurance sector has had successes in areas of collaboration on major national issues like road safety, further improvements are to be made with regard to increasing transparency and stakeholder engagement by the sector

Key Findings

The report builds on the Second National Competitiveness 2008-2009 report and factors a wide range of social and environmental risks, opportunities and issues influencing Jordan’s economic competitive framework. Highlights are provided in this summary.

 

Banking

·   Although Jordan has improved its banking sector in terms of enhanced corporate governance and transparency and recruitment and training schemes, a number of competitiveness challenges are identified:

o   Regulatory enforcement

o   Small number of banks incorporating core competencies in their philanthropic strategies

o   Difficulty retaining staff in the country

o   Strong gender imbalances

o   Lagging behind in integrating environmental and social criteria into lending risk analysis and decision-making

o   No banks extending their internal environmental and social performance practices to include their supply chains

o   Lack of product and service innovation

o   Weak disclosure practices – no banks currently produce Corporate Social Responsibility (CSR) and sustainability report

·   Three key opportunities to improve the banking sector’s competitiveness are identified:

o   Integration of environmental and social risk into lending criteria

o   Sustainability reporting including public reporting on economic, environmental and social performance

o   Sustainability-related product and service innovation

Insurance

·   The focus of Jordan’s insurance sector revolved around talent management, where the sector has had successes in areas of collaboration on major national issues, such as road safety, which has opened the door to collaboration on a wider range of national,sustainability-related issues

·   A number of responsible competitiveness challenges are identified:

o   Tightly regulated sector

o   No expansion into coverage of environmentally and/or socially related insurance risks

o   Small number of insurance companies incorporating core competencies in their philanthropic strategies

o   Challenges in attracting and retaining high caliber employees

o   Gender imbalances

o   Absence in engagement with international sectoral dialogues

o   Restrictions on product and service innovation in the sector

o   Limited transparency of the sector – no individual insurance companies issue public sustainability reports

·   Four key opportunities to improve the insurance sector’s competitiveness are identified:

o   Increase transparency and stakeholder engagement by stakeholders

o   Allow tiered pricing of insurance based on sustainability performance of the insured stakeholder

o   Focus on product/service innovation to address 2-3 major national sustainability issues

o   Make greater efforts towards smart philanthropy

Recommended Actions/Responsibilities

Banking

·   Demand additional disclosure on governance systems and performance in annual reporting

·   Strengthen enforcement of regulation

·   Develop strategy for engaging the banking sector on social and environmental national priorities

·   Consider more progressive gender equality legislation, and higher minimum maternal benefits

·   Arrange introductory training on international standards and encourage their adoption

·   Further enhance government leadership on national microfinance strategy and connect national energy and carbon reduction commitments to the banking sector

·   Conduct market analysis to better understand SME and low income group needs, and barriers to that market

·   Legislate the mandatory submission of sustainability reports

Insurance

·   Re-assess underlying assumptions, beliefs, and frameworks to determine whether policymakers and regulators are providing the appropriate framework to foster innovation in insurance industry

·   Agree to allow greater price differentiation on services, and greater product differentiation and innovation

·   Continue to advance legislation that would support insurance companies in their battle against fraudulent claims

·   Adopt an open mind perspective when working with the sector on experimental, potential breakthrough solutions

·   Determine the best pathway forward for offering micro-insurance in a manner that allows greatest coverage and protection, while protecting the consumer

·   Explore the types of service innovations that could be offered

·   Legislate mandatory sustainability reporting

·   Coordinate introductory level Global Reporting Initiative training and related best practice to the issuance of sustainability reports

 

Report Name

Date

Timeline

Responsible Competitiveness Report-Strategies for banking and insurance sectors

2009

Not Relevant

Author

Supporting Donor

Accountability

Sustainability Excellence

Not Relevant

Sector

Lead Ministry

Financial Services

Ministry of Planning & International Cooperation

Key Topics

Banking – Collaboration – Innovation – Insurance – Responsible Competitiveness –Stakeholder engagement – Sustainability reporting – Transparency

 

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