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Shady Elborno - Head of Macro Strategy
Published Date: 25 May 2021
Environmental, social and governance (ESG) criteria are a growing area of focus for organizations in the United Arab Emirates, with its importance beginning to impact many areas of corporate operating dynamics. UAE companies are seeing the benefits of developing a more sustainable approach to business, in addition to understanding the potential risks associated with climate change both on their own operations and the societies in which they operate. Policy makers in the UAE are driving through a sustainability agenda through strategic development policies such as Vision 2021’s ‘sustainable environment and infrastructure’ goals, and the UAE’s national development agendas and charters including UAE Energy Strategy 2050, UAE Green Agenda 2015-2030, and the National Innovation Strategy. Furthermore, the importance of this theme is highlighted through the promotion of sustainability as one of the core themes of Expo 2020 taking place later this year.
ESG disclosure guidelines released by the Abu Dhabi Stock Exchange and the Dubai Financial Market are pushing corporates in the UAE to be better corporate citizens by disclosing their ESG performance metrics, and allowing investors an additional and equally important benchmark to financial performance with which those companies can be assessed. Those disclosure guidelines along with a more proactive approach adopted by companies in the UAE will lead to better alignment with long-term government development goals and increased stakeholder confidence in the role corporates will play in promoting more sustainable growth. There is scope for corporates in the UAE to both deepen and broaden their sustainability practices and disclosures, especially as global investor benchmarks become increasingly more stringent.
In this short note, we will focus on the gains specifically in the UAE, as it leads both MENA and the GCC region in the development of its sustainability agenda. This short primer to the ESG space is broken down into three parts. The first is a description of what ESG is and where the UAE is placed. Secondly, we look at ESG reporting regulations in the UAE that companies are required to report on from their fiscal year ending 2020 and beyond. Finally, we highlight a few of the many initiatives that UAE corporates and policymakers are driving in the race for ESG excellence. This is a space with plenty of scope for growth, and we hope to share future insights on specific verticals in this area going forward.
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