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KKR, Glass Half Full – Outlook for 2024

by Madaline Dunn
written by Madaline Dunn

Global alternative asset and private equity investor KKR has released its 2024 Global Macro Outlook report. 

The report, by Henry McVey, CIO of KKR’s Balance Sheet and Head of Global Macro and Asset Allocation (GMAA) and his team, highlights a number of key mega-themes, including:

  • Industrial Automation – The report outlines that there is an emergence of an industrial automation cycle, as companies search for new ways to drive productivity and efficiency in a world where demographics and cross-border connectivity are becoming increasingly challenged.
  • Security of Everything – The report was “very bullish” on this theme, noting that regulators and executives worldwide continue to prioritise the resiliency of key inputs such as energy, data, transportation, and pharmaceuticals. It also shared forecasts that governments will spend more on the intersection of climate and supply chains and on cybersecurity, especially in the financial services industry.
  • Intra-Asia Connectivity – Asia, it highlighted, is becoming more Asia-centric as more trade occurs within the region, a trend it said is accelerating. It also said that it sees more countries in the region participating in and benefiting from Asia’s global growth engine.
  • Labor Productivity/Work Force Development – Labor shortages were highlighted for accelerating the trend towards automation and companies focusing more on technology-driven productivity gains, especially in fields like retail, leisure and hospitality, and health care. It was also bullish on worker retraining to help employee skills better match employer demand.
  • Artificial Intelligence – The report highlighted that the “most compelling opportunities” in AI are in the buildout of the physical infrastructure needed for Generative AI to scale and reach its full potential. This includes data centres, semiconductor manufacturing, power transmission, and distribution, among other areas.
  • Decarbonisation – The report was also particularly bullish on the brown-to-green transition across existing corporate and government platforms. It said that these are large-scale opportunities that will allow big sectors of the global economy to become more energy efficient.

Read the full outlook report here: https://www.kkr.com/insights/outlook

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EnvironmentFinanceLatest NewsSocial

Emirati philanthropist Abdulla Al Abdulla pledges $2mln to UNICEF for climate crisis response

by Madaline Dunn
written by Madaline Dunn

Abdulla Al Abdulla, the Chief Operating Officer and Group General Manager of Central Hotels and Resorts, has pledged $2 million to bolster UNICEF’s programmatic response, it has been announced.

This contribution will be strategically allocated to target projects addressing climate change’s direct and indirect consequences. 

The pledged funds, it was shared, will be key in implementing targeted projects that aim to create a sustainable future for children globally.

“In the face of the climate crisis, my commitment to UNICEF’s cause at COP28 is more than a pledge; it’s a promise to safeguard the future of our planet and the well-being of generations to come,” said Abdulla Al Abdulla.

“UNICEF is grateful for the generous donation from Abdulla al Abdulla and for his commitment to help address the impacts of climate change in vulnerable communities. Over 1 billion children are at extremely high risk of severe aAbdulla’sctive climate hazards. This commitment will help UNICEF save and protect children’s lives,” commented UNICEF Deputy Executive Director Kitty van der Heijden.

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EnvironmentFinanceSpecial Reports

Visa and Emirates Nature-WWF study reveals key insights into UAE consumer expectations and banking

by Madaline Dunn
written by Madaline Dunn

During COP28, Visa and Emirates Nature-WWF released the UAE results of their ‘2023 Sustainable Commerce,’ which looked into consumer and business behaviours, and the readiness of infrastructure to support sustainable commerce.

The joint Visa-Emirates Nature-WWF study found that consumers are aware of and doing something about sustainability.

In fact, over two-thirds believe that decarbonisation is not limited to corporate entities, and that individuals can make a difference.

It also found that survey respondents view climate change as a leading societal challenge (63 per cent), followed by the rising cost of living (56 per cent), and plastic pollution (46 per cent).

A total of 69 per cent of individuals expressed their willingness to recommend banks that provide sustainable payment options (cashless/contactless payment), while 64 per cent of consumers stated that they chose a bank with strong green credentials.

Further, more than half of the surveyed consumers (51 per cent) expect their banks to guide them in making sustainable financial choices, and over 50 per cent (52 per cent) look to their banks to help them understand the environmental impact of their purchases.

To read more, head over here: https://ae.visamiddleeast.com/en_AE/about-visa/newsroom/press-releases/prl-30112023.html
For the report, follow this link: https://ae.visamiddleeast.com/content/dam/VCOM/regional/cemea/unitedarabemirates/documents/visa-sustainable-commerce-english.pdf

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FinanceLatest News

Bloomberg and IdealRatings announce Sharia Compliant Indicator for Sukuk on the Bloomberg Terminal

by Madaline Dunn
written by Madaline Dunn

With IdealRatings, a financial data provider specialising in Islamic finance solutions, Bloomberg has announced the launch of an Islamic/Sharia-compliant indicator for fixed income securities (Sukuk) on the Bloomberg Terminal.

This indicator, designed by IdealRatings to comply with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) guidelines, it shared, marks a “significant enhancement” in the tools available to investors for identifying Shariah-compliant securities.

IdealRatings plays a pivotal role in providing the newly launched Sukuk indicator to the Bloomberg Terminal, adhering to globally recognised AAOIFI standards.

IdealRatings’ process involves assigning a clear pass, fail, or restricted status to each Sukuk, strictly following AAOIFI’s principles.

The demand for Islamic fixed-income securities, notably Sukuk, from global investors has been growing, it noted.

According to Fitch Ratings, global Islamic Finance assets crossed $3.3 trillion in 2023, with strong growth expected in 2024.

The global Sukuk issuance for the second quarter of 2023 also rose by 10% in core Islamic finance markets across the Middle East, Africa, and South Asia, further highlighting the sector’s growth and potential.

Giuseppe Netti, Regional Head of Bloomberg, Middle East & Africa, commented: “This launch represents a milestone in our commitment to developing sophisticated tools for Islamic finance. Our long-standing relationship with IdealRatings reflects our dedication to innovation and our ongoing effort to meet the diverse needs of global investors. The Islamic/Sharia-compliant indicator will empower investors with robust data and analytics, crucial for informed decision-making in the dynamic Islamic financial landscape.”

Mohamed Donia, CEO of IdealRatings, said: “The Bloomberg Sukuk indicator initiative represents a significant step forward in providing the industry with comprehensive and reliable data on Shariah-compliant fixed income securities. This collaboration further strengthens our commitment to delivering innovative solutions that meet the evolving needs of Bloomberg’s global client base.”

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FinanceGovernanceLatest News

HAYAH Insurance launches Aiming HAYAH: 2030 initiative

by Madaline Dunn
written by Madaline Dunn

HAYAH Insurance (HAYAH) has launched its “Aiming HAYAH: 2030” initiative.

For its climate action goals, HAYAH shared that it aims to allocate 10 per cent of its portfolio to green bonds, renewable energy projects, and sustainable infrastructure, concurrently reducing its fossil fuel investments by half.

Further, it aims to achieve carbon neutrality within its operations by the end of the decade, reducing emissions and investing in projects that offset its carbon footprint.

It also noted that HAYAH’s “ethical compass” will guide its underwriting process by 2027, ensuring that environmental and social impacts are integral to its decision-making.

By 2028, HAYAH will also fully integrate Environmental, Social, and Governance (ESG) criteria into its investment policies and risk assessments.

In addition, by 2024, HAYAH Insurance said it will “foster a robust culture of sustainability.”

“HAYAH is committed to educating its employees, promoting green practices in the workplace, and inspiring involvement in the sustainability journey,” it said.

HAYAH has pledged to engage stakeholders comprehensively by 2025, it added.

Financial literacy and inclusion remain “crucial” to HAYAH’s community initiatives, it said. By 2024, HAYAH will offer insurance products designed for those previously without access, facilitating better risk management and financial well-being.

By 2026, HAYAH also aspires to support community projects focusing on sustainability, education, and health.

“Sustainability is more than a goal; it’s a promise for a better tomorrow. At HAYAH Insurance, we are committed to this promise, setting definitive goals that will shape our operations and community interactions for years to come. We invite our partners and customers to join us in this vital transition, as we turn the pledges of today into the achievements of tomorrow,” commented Mohamed Seghir, CEO.

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FinanceLatest News

BIBF, GIG Bahrain and Takaful International Company conclude Sustainable Insurance Forum

by Madaline Dunn
written by Madaline Dunn

The Bahrain Institute of Banking and Finance (BIBF), in collaboration with the Bahrain Kuwait Insurance Company (GIG Bahrain) and Takaful International Company. (GIG Bahrain Takaful) has concluded the “Sustainable Insurance Forum: From Awareness to Integration”.

Held on 10th December 2023 at the BIBF headquarters in Bahrain Bay, the event, was the first-of-its-kind initiative in the Kingdom of Bahrain to promote sustainability in the insurance sector.

Over 250 dignitaries, executives, and business experts from diverse sectors attended the forum, showcasing the industry’s collective commitment to sustainable practices.

It featured 18 speakers, including industry leaders and experts who explored the integration of Environmental, Social, and Governance (ESG) factors into insurance operations.

The forum’s inauguration included a keynote address by Ms. Abeer Al Saad, the Executive Director of Financial Institutions Supervision at the Central Bank of Bahrain (CBB), emphasising the importance of sustainability in the financial sector and its alignment with regulatory frameworks. Zeyad Zainal, Chairman of ESG & Head of Digital Transformation at Bahrain Kuwait Insurance Company (GIG Bahrain), affirmed the company’s dedication to ESG principles.

The first session focused on the strategic integration of ESG issues into insurance operations.

The panel included Chiti Gupta – Senior Strategy Consultant ESG at Marsh Advisory, Dr. Simone Krummaker – Associate Dean at Bayes Business School, Samah Al-Hamad – Manager Risk, Compliance and Information Security at Bapco, Najat Alwadi – Manager, Governance, Risk Management, Compliance & Shari’a Control at Takaful International Company (GIG Bahrain Takaful), Satyan Laxman – Head of Strategy & Business Development, Insurance & Investor Relations at Aluminium Bahrain (ALBA), Dr. Annika Thorns – ESG Manager at P&C Global Services at Hannover-Re. The session was moderated Manal Mashkoor, Head of Insurance Centre at the Bahrain Institute of Banking and Finance (BIBF), who highlighted practical approaches to integrate environmental, social, and governance considerations into the core of insurance operations and strategies.

The second session explored the intersection of insurance and sustainability, ranging from climate change considerations to the pursuit of zero neutrality.

It featured Elaine O’Brien – Head of Sustainability Risk Management at Swiss Re, Dr. Tarek Seif – Secretary General of the Insurance Federation of Egypt, Jessica Botelho, Assistant Director at AM Best; and Reema Nowrooz – Chief Underwriting Officer at Takaful International Company (GIG Bahrain Takaful).

Guiding the conversation was Zeeba Askar, President of the CFA Society Bahrain.

The session explored prominent connections between the insurance industry and climate change, with a keen emphasis on the path towards achieving net-zero goals.

The concluding session of the forum delved into the vital role that regulation and oversight play as catalysts for integrating and disclosing environmental, social, and governance affairs. . Elham Taleb – Director of Insurance Supervision at Central Bank of Bahrain (CBB), and Diana Diaz – Program Supervisor at the United Nations Environment Programme (UNEP), actively contributed their insights to the discussion. Guiding the session’s discourse was Nadia Alqassab – Senior Lecturer at the Bahrain Institute of Banking and Finance (BIBF), highlighting the importance of regulatory frameworks in propelling the integration and disclosure of environmental, social, and governance considerations within the insurance sector.

Dr. Ahmed Al Shaikh, Chief Executive Officer of the Bahrain Institute of Baking and Finance (BIBF) commented:”The great success of this forum reflects the insurance sector’s commitment to adopting sustainable practices, shaping a responsible and sustainable future for insurance in the Kingdom of Bahrain.”

Dr Abdulla Sultan, Chief Executive Officer of Bahrain Kuwait Insurance Company (GIG Bahrain), stated: “The success of this forum is a clear indication of the industry’s commitment to driving positive change, leading the sector towards a more responsible and sustainable future.”

Mr. Essam Al Ansari, Chief Executive Officer of Takaful International Company (GIG Bahrain Takaful) added: “The Sustainable Insurance Forum provided a roadmap for sustainable practices in the insurance sector, confirming our commitment to being a leading Islamic insurance company in sustainability.”

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DevelopingFinance

ADIB’s Lamia Khaled Hariz talks sustainable finance, green sukuk and the net-zero pledges of COP28 sponsors 

by Madaline Dunn
written by Madaline Dunn

On the sidelines of COP28 last week, ESG Mena’s Lead Journalist, Madaline Dunn, sat down with Lamia Khaled Hariz, Group Head of Public Affairs and Corporate Communications, Abu Dhabi Islamic Bank (ADIB), to discuss the bank’s approach to sustainable finance, green sukuk issuances and its inclusion on Spendwell’s list of sponsors without UN-backed net-zero targets. 

Lamia, this week at COP28, climate finance has been in the spotlight, with talks focussing on mobilising finance for the green transition. ADIB recently raised $500m from its first-ever green sukuk. Tell me about this and the bank’s wider sustainable finance efforts.

On Monday, [UAE] banks pledged one trillion dirhams for sustainable financing by 2030. ADIB was one of the banks included in that pledge.  

For the time being, our total sustainable financing is around six billion dirhams, and there is a plan to grow this by 2030.  

We have put together a team to assist us with this, and there are a lot of green financing and sustainable financing assets that are being created in the country, from both the government and corporates, given that the UAE is moving to a net-zero plan. 

Can you tell me more about the green sukuk issuance and the impact it will have? 

We issued a green sukuk a month ago, and it was the first dollar denominated green sukuk to be issued by a bank. It was a $500 million green sukuk, and five times oversubscribed. 

It shows that there is a lot of trust in ADIB as a brand and in our financial performance, as well as a good appetite for green sukuk. 

The proceeds from this green sukuk will be used in our Sustainable Finance Framework, a framework that was validated by a second-party opinion. It clearly identifies where this green sukuk will be invested. The idea is to refinance some of our existing assets, or to book new financing under this new sukuk.

The assets we’re looking at are energy-related assets, such as renewable energy, whether solar or wind, and we’re also looking at green homes, green auto finance, pollution prevention, and water treatment. 

These assets exist in this part of the world, and specifically in the UAE, with the net-zero plan.

Can you delve further into your overarching Sustainable Finance Framework, as well as your ESG priorities and parameters?

Our sustainable finance framework clearly defines what can qualify and what cannot. It’s divided between the green assets and the sustainable assets. 

So, under the green assets, we have everything related to renewable energy, green buildings, clean transportation, water treatment, and pollution prevention and we also have the social element, related to affordable housing, public school funding and the like. 

From an ESG perspective, the bank has a clear roadmap and strategy for the next three years. 

We are putting the right governance structure together. We have the Board Committee and the Management Committee that will take care of ESG-related issues, and we have an ESG risk framework in place as well. 

Our Management Committee is all C-level representatives representing different businesses, the risk, the credit and the compliance team and the set by our Group CEO, who will ensure that the ESG elements are integrated within our operation and within the day-to-day business of our bank. 

Above that, there is the ESG board committee, whose responsibility is to oversee the work of the Management Committee and ensure that we are operating within a specific governance framework. 

You mentioned clean transportation, and of course, it’s a central part of the green transition. Tell me about your Electric Vehicle Finance Programme. 

So we launched our electric vehicle programme to encourage our customers to move from conventional cars to electric cars. At one point, the rate was 1.79 per cent, and this is the lowest rate for car financing in the country. 

The demand is incredible. The minute we launched it, we had so many customers calling and applying for it and it’s a product that we intend to keep and grow in the portfolio.

We’re even doing deals with different car dealers in the country so that they will have electric cars, to provide them with better rates as well and encourage our customers to move to electric. 

And can you tell me about some of the initiatives that extend beyond mobility and any partnerships here?

We’re looking at green mortgages as well, or the green home finance, as we call it, and looking to partner with different partners that come and do the fit-out in houses to move customers to renewable energy and see if we can finance this at a good rate, in addition to looking at from a corporate banking perspective, looking at financing the entire supply chain from a green perspective.

As an Islamic bank, what can you tell me about the interconnection of Islamic finance and sustainability and the role it has in the net-zero transition? 

If we look at the spirit of Sharia, Islamic banking, it doesn’t do anything that harms society, the environment, the community, or the customers. And then, if we look at the ESG or sustainability spirit, it’s the same, there’s a lot of overlap.

I always say when you put these two values together, you will have an ideal world, there are a lot of common values.

We do a lot of negative screening as an Islamic Bank, and don’t finance many things, and the same from a sustainability perspective.

That’s why I think it’s easier for an Islamic bank to integrate ESG considerations into our day-to-day operations.

Analysis from Spendwell, which assessed the climate commitments of COP28 sponsors, found that ADIB doesn’t yet have commitments or targets with any initiative within its climate ranking. Why is that? What’s preventing you?

We have just finalised our net zero plan, we didn’t announce that, because of so much news, it was a PR decision. 

So, we did assess our baseline scope one, scope two and scope three, and we have this number in our hand now. The plan is to put a target plan for 2030 and 2050. Hopefully, the plan is to go with the government plan for net zero by 2050. 

But of course, we’re going to have a transitional plan to reach this point, and this is related to our own operational emissions, as well as the financing emissions of our customers.

And what’s the timeline for setting those targets? 

The timeline to announce our targets is within a month. So, hopefully, in January of 2024, and as I said, we are putting in the medium term and the long term as well. 

Finally, we’ve heard about the climate finance gap that must be bridged to realise the energy transition. There have been a lot of pledges, but what needs to happen now to effectively scale climate finance to have a real impact?

We need new projects related to clean and renewable energy, capacity planning, the reskilling of our people, education and collective efforts at the bank level, with corporates, and with the government to be able to scale things up. 

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FinanceGovernanceLatest NewsPolicy & Finance

Whiteshield inaugural Global Trade Resilience Index (GTRI) ranks UAE first among Arabic countries

by Madaline Dunn
written by Madaline Dunn

Whiteshield’s Global Trade Resilience Index (GTRI 2023), was launched on December 7 on the sidelines of COP28. The inaugural event saw government officials, influential figures from international and regional bodies, academics, and leading private sector voices gather.

Whiteshield said it has developed a “unique methodology” to gauge countries’ capacity to absorb trade shocks in the short term and recover in the medium term, with the aim of assisting countries in achieving their sustainable development objectives by identifying areas for improvement across our 58 GTRI indicators, covering 136 economies.

The top 10 GTRI performers include nine high-income countries (Germany 1st, Netherlands 2nd, USA 3rd, France 4th, Japan 5th, UK 6th, Italy 7th, Singapore 8th, Belgium 10th) and only one upper-middle-income (China 9th). Other upper-middle-income countries that ranked high include Malaysia (20th) and Thailand (22nd).

Germany, the world’s third largest exporter, tops the GTRI rankings on account of the strong trade networks and highly diversified trade both in terms of products and trade partners.

The Netherlands, meanwhile, is the world’s sixth-largest trading nation and ranks second in the GTRI due to its strong links to Europe and the rest of the world, advanced logistics and distribution systems, and its “business-friendly environment.”

The third top performer in the GTRI is the United States, the second-largest trading nation in the world.

According to Whitefield, the US’s high rank reflects, among others, the strengths of its global trade network, its role as a major global trading hub, and the diversified and complex goods it trades in.

China, despite. being the world’s top exporting country ranked only 9th. This, is said, was due to a strong capacity to absorb shocks (China plays a major role in the global supply chains with a diversified portfolio of goods and trading partners) but relative weaknesses in its institutional pillar.

The United Arab Emirates (UAE) is the top performer among Arab countries and 31st globally owing to its role as a major global trading hub, its business-friendly environment, highly diversified trade partners, infrastructure, and high quality logistics and customs capacity.

Areas for improvement include enhancing product diversification and moving up the value chain to trade in complex products.

The Kingdom of Saudi Arabia is the 3rd top performer among Arab countries and 47th globally.

Institutional, financial and regulatory reforms, it said, have resulted in major improvements in the business environment and high growth rates in travel, tourism, logistics and fintech sectors.

The Kingdom has managed to expand its trading partners beyond its traditional markets; however, while its trade diversification in goods is improving, it has yet to fully reach its full potential.

Areas for improvement include the facilitation of border measures and stronger law protection.

Fadi Farra, Senior Managing Partner at Whiteshield, said: “In light of the growing discussions around global trade policy issues and their role in supporting the greening of our economies, Whiteshield has pioneered the Global Trade Resilience Index 2023 which presents a novel approach to support countries in identifying areas to improve both their absorptive and recovery capacities to trade shocks. Our goal is to contribute to the success of COP28 and in particular where trade and complementary policies can help drive both climate and sustainable development actions.

Raed Safadi, Whiteshield’s Chief Economist, said: “The GTRI is published at a time when severe disruptions to global markets have undermined trade resilience. While approaches to “near shoring” or “friend shoring” can increase resilience to geo-political risks in the short term, they make countries less resilient to other types of shocks such as the recent COVID-19 pandemic. Whiteshield has developed the GTRI to support countries in enhancing their trade integration while minimising the impact of shocks on their economies. The report is a tool that helps to unlock trade resilience by incorporating innovative methods rooted in the network theory, embedding simulations of trade shocks and tracing their potential impact on trade flows.”

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FinanceLatest News

Man Group and Columbia Center on Sustainable Investment share Climate Research Partnership

by Madaline Dunn
written by Madaline Dunn

Man Group has announced its partnership with the Columbia Center on Sustainable Investment (‘CCSI’) – a joint centre of Columbia Law School and Columbia Climate School – to conduct research addressing how climate impact is defined and measured in fixed income and equity portfolios.

While Man Group and CCSI’s research partnership will focus on identifying practical, real-world gaps in methodologies and metrics concerning tradable instruments specifically; their articulation of key principles and standards, they shared, hope to lay the groundwork for further scalable impact measurement across all asset classes of climate-solution-investing. 

“The investment industry plays an important role to facilitate a thoughtful and rapid transition to a net-zero greenhouse gas economy,” commented Robert Furdak, Chief Investment Officer for Responsible Investment at Man Group. “There has been increased issuance of green bonds and significant investment in decarbonization technologies, however the impact of these efforts is undermined by inconsistent definitions, metrics, and measurement. Our joint research with the academic experts at CCSI will aim to produce a more refined decarbonization framework, which will bring rigor and greater standardization when calculating the climate impact of public market securities.”

“Something that’s often overlooked is just how many institutions are required to make measurable progress in combatting climate change,” said Matt Goldklang, Climate Scientist at Man Numeric. 

Adding: “CCSI represents more than a leading multi-disciplinary research entity; they share our belief that nothing happens in a vacuum, and serve as a unifying force for legal, economy, and policy expertise to address real problems. Plus, they aren’t afraid to ask tough questions – questions that cause uncertainty and expose greenwashing – like how to better link climate science to investing in a low-carbon economy. We are really looking forward to partnering with Columbia on advancing the science, clearing up the uncertainty, and creating more practical, structured, and sustainable solutions for the industry.”

As part of their collaboration, Man Group and CCSI will identify existing industry challenges and develop solution-oriented frameworks for a path forward. 

Then, they will organise and facilitate a symposium workshop to solicit feedback from like-minded financial institutions, experts, standard setters, and Columbia faculty. 

The symposium will foster engaging discussions and debate surrounding the research findings and framework, which Man Group and CCSI will outline in a joint whitepaper on the agreed implementation methodology to ensure climate impact is achieved.

“Every partnership with CCSI must share a common goal of strengthening the sustainable development potential of international investment,” said Perrine Toledano, Director of Research and Policy for Columbia Center on Sustainable Investment. “We are thrilled to partner with Man Group in better arming the investment industry with the ability to measure the impact of transition-enabling climate solutions – an area with significant potential to help mitigate climate change.”

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