Businesses finally get to have some real ESG standards to live up to

Businesses finally get to have some real ESG standards to live up to

The secret is out. Environmental, Social and Governance (ESG) investments hold significant potential for GCC markets. The pace of adoption has been astonishing. The Dubai Financial Market launched its ESG index in 2020. Abu Dhabi Global Market launched its sustainable finance initiative last year. The Abu Dhabi sovereign wealth fund, Mubadala, established a responsible investment arm in 2021. Saudi Arabia’s Public Investment Fund (PIF) uses ESG to consider investment strategies. And 46 per cent of CEOs in the Middle East are aiming to increase ESG investments over the coming three years. The Pandora’s box of ESG investment is open. That’s good news for the region. ESG investments not only contribute toward the long-term energy transition. They are also increasingly lucrative. Research indicates that ESG assets may hit $53 trillion – by 2025. It is a sector that continues to accelerate. Yet, amid this frothy market activity, there come potential pitfalls. Scrutiny has increased on how ESG-friendly investment houses are spending their dollars. The cynicism of how committed big banks are to the net-zero transition is intensifying. Sustainability commitments are being seen, in the words of Greta Thunberg, as more ‘blah blah blah’. Classifying ESG investments in 2022 is complex. There