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Home » MENA financial institutions boldly embrace ESG

MENA financial institutions boldly embrace ESG

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Finance

As ESG becomes a more important priority for companies across all industry sectors, more banks and financial institutions across the MENA region are ensuring ESG considerations play an increasingly prominent role in their activities.

Some financial institutions are beginning their sustainability journey. In a statement about Q3 2022 financial results, Abu Dhabi Islamic Bank (ADIB) announced plans to “embed sustainability and ESG frameworks into the existing Islamic banking DNA to ensure a sustainable future for the bank, its employees, the customers and the wider community it serves.”

The statement went on to say that ADIB “will create a more comprehensive ESG risk framework and policies, develop a group sustainability strategy and roadmap, and foster existing talents in the organisation.”

For ADIB, focusing on hiring Emiratis is an important pillar of the social governance part of their ESG work, with Bushrah Alshehhi, head of human resources at ADIB saying the bank has “one of the highest Emiratisation ratios at 45 per cent, which is a testament to our commitment to absorb more local talent into the workforce.”

Forming partnerships with industry is another important way for the region’s financial institutions to play an active role in meeting ESG roles. In September 2022, Emirates NBD signed a memorandum of understanding with Honeywell Forge Connected Services so the two organisations can work together to drive sustainability through investment in energy-efficient building technologies.

““This collaboration with Emirates NBD will help our customers achieve their sustainability goals through digital transformation and access to green financing,” says Mohammed Mohaisen, CEO and president of Honeywell – High Growth Regions, Middle East and North Africa. “It will help to reinvigorate energy projects that have seen limited capital expenditure financing and enable further development of sustainability in buildings across the country, while supporting the UAE’s Net Zero by 2050 Strategic Initiative.”

Another partnership has big ambitions to promote solar energy in the Middle East while establishing investment opportunities for capital holders. In April 2022, a memorandum of understanding was signed between Creek Capital, which is a Dubai Financial Services Authority-regulated asset manager, digital asset provider Fasset, and SirajPower to launch a decentralised finance solution for sustainable power assets. Under the agreement, Fasset will tokenise SirajPower’s solar assets in the UAE to expand opportunities for investors.

“This is a step forward in accelerating the financing of sustainable infrastructure and promoting capital inflows to ESG projects in the Gulf,” says Fasset’s CEO and former advisor to the UAE Prime Minister’s Office, Mohammad Raafi Hossain.

“Since securing US$50 million in funding in 2020 and with ongoing plans to raise a further US$250 million to expand our footprint in the Gulf, SirajPower has been at the frontier of renewable energy in the Middle East and our rapid growth is a testament to the region’s potential in the sustainable power sector,” adds Mohammed Abdulghaffar Hussain, chairman of SirajPower.

In Qatar, the banking sector has shown post-pandemic resilience and stepped up its overall commitment to ESG goals, according to PwC’s Qatar Banking Sector Report, launched in September 2022.  

“Despite the effects of the pandemic, the banking sector in Qatar has shown strong performance in 2021. To promote this long-term stability, we expect the sector to embrace new technology, ESG and ethical banking,” says Ahmed AlKiswani, Qatar financial services leader, PwC Middle East. “The Covid-19 pandemic played an important role in challenging banks to accelerate their digital transformation and sustainability efforts. Embracing ESG frameworks and sustainable banking at the core of banking operations is the need of the hour and fortunately, banks in Qatar are ensuring that ESG is at the top of their agendas.” 

A May 2022 acquisition in Egypt, meanwhile, seeks to promote ESG criteria within the country’s non-banking financial services sector, particularly among small- and medium-sized enterprises. Amethis, the European Bank for Reconstruction and Development (EBRD) and SPE Capital has acquired a major stake in GlobalCorp, a Cairo-based non-banking financial services institution. 

“This investment will support a leading financial company to provide financing to an important segment of the Egyptian economy, covering small and medium businesses,” says Heike Harmgart, EBRD’s managing director for the Southern and Eastern Mediterranean region.

Photo credit : Aleksandar Pasaric/Pexels

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