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A report by Arthur D Little says the Middle East and North Africa (Mena) region will generate $24.55 billion in green and sustainable finance in 2021, up 532% year-on-year, indicating strong ESG momentum in the region.
In the UAE alone, ESG reporting has multiplied between 2019 and 2022 among key public and private institutions such as the Dubai Financial Market, said the report, titled “ESG Data Governance Perspectives”.
Between 2019 and 2022, the UAE has recorded an increase in the number of ESG reporting by major public and private institutions such as the Dubai Financial Market, the Ministry of Climate Change and Environment, and SCA-listed companies. Led by First Abu Dhabi Bank, Majid Al Futtaim’s fundraising campaign has raised $1.25 billion in 2022 as a credit facility linked to the company’s ESG goals. In addition, Dubai Islamic Bank is currently finalizing its own report on ethics and integrity, thriving workplaces, positive community impact, environmental stewardship, and sustainable finance and investing.
UAE leads
The UAE continues to build on its ESG momentum in the MENA region after witnessing a 32% year-on-year increase in green and sustainable finance issuance in 2022.
Andreas Buelow, Partner at Arthur D. Little, said: “ESG has become the new normal for financial institutions. Perhaps the most important signs of this are still in the products and services offered by banks, which reflect their sustainability ambitions.” Middle East and Green issuance in North African countries is not standing still, in fact growing faster than global growth.
“As new reporting requirements come into effect, banks are faced with an urgent need to initiate strategies and execute concepts across the organization. When implementing ESG strategies, banks are finding that the complexities of ESG data are not fully captured and addressed by current data governance frameworks , leaving these banks with ad-hoc solutions to collect, manage and govern ESG data.”
Environmental, Social and Governance Strategies
Nael Amin, Senior Manager of Arthur D. Little’s Financial Services practice, added: “Many financial institutions in the Middle East have designed comprehensive ESG strategies, opening the door to new avenues for revenue growth, business opportunities, cost reduction, regulatory compliance and employee satisfaction. Spend.
“This growing trend shows that ESG is gaining momentum in financial institutions, as the World Bank is increasingly emphasizing ESG and integrating it into its business models. Banks in the Middle East have recognized the importance of a clear ESG strategy. In the next step , frameworks such as implementation, data governance, etc. are critical. The transition from strategy to implementation is complex and detail-oriented. Different use cases for ESG have different data requirements and multiple stakeholders that add to the complexity. Therefore, when it comes to ESG data There is no standard “one size fits all”.
Putting ESG strategies into action
The latest ADL Viewpoint calls for a two-part scalable solution to address the difficulties of complex data and enable banks to properly and efficiently manage ESG information. In the first step, an ESG data catalog is created to ensure transparency through non-disruptive and easily merged layers. The second step is to establish a governance framework to ensure quality control in a scalable and structured approach.
As a result, banks face unique challenges in putting ESG strategies into practice. A comprehensive ESG strategy encompasses a range of external and internal applications that can help financial institutions move towards the sustainable future they seek. As data governance is at the heart of a comprehensive strategy, we propose a framework built around an ESG data catalog with the following three characteristics:
* Emphasis on data transparency and quality without disrupting the existing data landscape.
* Anticipation of future ESG-related demand.
* Support for handling complex data requirements in an ever-changing regulatory environment.
Financial institutions in the UAE continue to embrace ESG so far, which is gaining momentum and broad acceptance. A sound, thoughtful approach that takes into account the framework outlined in ADL’s latest perspective can set the stage for future success. — trade arab news agency
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