ESG Regulation & Initiatives – Implications for the Middle East and Its Financial Institutions

As ESG investing is gaining momentum on the global level, ESG misconceptions and frauds are opening more and more debates. A question is this a positive PR for ESG- showing that it’s affecting and challenging even large corporations OR the absence of unified global framework and regulations leave space for negative PR due to lack of in-depth knowledge about ESG across the value chain, making us think that ESG is still nice to have, too costly, or not a priority?

Speaking about region, we heard thoughtful insights from HE Sheik Fahim al Qasimi about ESG challenges and live examples on how ESG can build regional capacity and value creation through strong case-studies, supply chain transparency, and efficient communication. Greg Fewer highlighted an important role that financial institution play in accelerating ESG. He also emphasized on challenges that management is facing today in delivering credible, transparent and informative reports to investors, to prevent greenwashing risks and consider ESG as a part of their decision making. While Middle East is getting more exposure with coming COP 27 and 28, it will continue to build capacity through renewable energy solutions, innovation, and cutting-edge technologies to allow the transition to a green economy and carbon-neutral world: from venture capital to large infrastructure projects. The good news is that region’s ESG disclosure score doubled in the last 4 years. What is next? Is the UAE ready to adopt a local Taxonomy?

As I heard William Thome, Regional Head, CFA Institute, saying in one breath the mission statement

“CFA Institute leads the investment profession globally by promoting the highest ethics, education and professional excellence for ultimate benefit of society.”

This is what we need for accelerating ESG globally. We are looking forward to seeing this discussion continuing. As the bottom line, the only way forward is to continue to build reputation and credibility, though knowledge, transparency, measurable, consistent data and robust disclosures. High-grade investor stewardship is very much needed.