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ESG

IFS and PwC UK Partner for Sustainability Management Solution

by Madaline Dunn 1 year ago

written by Madaline Dunn

Global enterprise software solution provider IFS and PwC UK have announced their collaboration on a sustainability management solution. The two shared that the solution will include technology and services aimed at helping customers navigate the sustainability disclosure landscape and embed sustainable practices into business operations.

IFS will develop a Sustainability Management module within IFS Cloud, while PwC will assist in the design and build with Environmental, Social, and Governance (ESG) criteria and regulatory guidance.

The solution is aimed at assisting IFS customers navigate the new requirements of the Corporate Sustainability Reporting Directive (CSRD) and other emerging global regulatory standards.

IFS shared that customers using IFS Cloud will be able to enlist the services of PwC to guide them on a wide range of issues in relation to governance, along with mandatory strategic ESG tasks like conducting a double materiality assessment and offering guidance for CSRD readiness.

Mark Moffat, IFS CEO, commented: “By equipping customers with the necessary tools and data, we are together enabling decisive sustainability action and ensuring we maintain the highest standards in sustainability disclosures.”

Carl Sizer, PwC UK Management Board Member and ESG Sponsor added: “Our expertise in ESG criteria and knowledge of the regulatory landscape will enable us to provide valuable guidance and support in designing a solution that empowers organisations to effectively manage their sustainability initiatives and navigate the evolving regulatory landscape.”

The first version of the Sustainability Management Module is set to launch in the IFS Cloud 24R2 release at the end of November.

PwC UK will provide the required services for companies to be compliant for their first CSRD reporting cycle in 2025, it was shared.

1 year ago 0 comments

Governance Latest News

NBF Hosts Knowledge-Sharing Event to Drive Implementation of ESG Programmes

by Madaline Dunn 1 year ago

written by Madaline Dunn

The National Bank of Fujairah (NBF) recently hosted a knowledge-sharing event aimed at accelerating the implementation of ESG programmes.

The event, held under the theme ‘Accelerating ESG: Turning Plans into Results’, was organised in partnership with the London Stock Exchange Group (LSEG) Data and Analytics team.

A hybrid event, it shared practical guidance and actionable insights for building a meaningful ESG programme and was attended by more than 100 delegates from a diverse range of industries, including both NBF and non-NBF clients, it was shared.

One panel discussion titled ‘Maintaining a sustainable business’, moderated by Luma Saqqaf, Director for the Middle East, Africa, and India region (IMEA), UN PRI (Principles of Responsible Investment), emphasised the importance of building a meaningful ESG programme and taking a holistic approach towards sustainability to stay ahead of the curve while remaining both profitable and competitive.

Panellists included Jessica Robinson, Partner at Solve Strategies, Rach ElGolli, Senior Responsible Finance and Sustainability Advisor at Sustainable Square, and Gouban Gopal, ESG Director, Grant Thornton UAE.

The event was the latest in NBF’s knowledge event series aimed at advancing the commitments made during COP28. The event series also recently explored investment management and Islamic finance, and will run throughout 2024.

1 year ago 0 comments

Environment Finance Latest News

Sustainable Square Consultancy and AFCM Sign MoU

by Madaline Dunn 1 year ago

written by Madaline Dunn

UAE-headquartered Sustainable Square Consultancy has announced that it has signed a Memorandum of Understanding (MOU) with the Arab Federation of Capital Markets (AFCM). The MoU will see the two work together on initiatives to advance the adoption of ESG and sustainability practices within the capital markets and listed companies in the Arab countries.

According to Sustainable Square, the MoU represents the parties’ interest in collaborating across a number of areas, including:

ESG, sustainability and climate change thought leadership,
Capacity building and training, and
Conferences and webinars.

Rami El-Dokany, AFCM Secretary General, commented: “We are thrilled to announce a partnership with Sustainable Square Consultancy! Together, we will join forces to champion ESG and sustainability across the Arab region.

“We’re energised by the prospect of working alongside Sustainable Square’s dedication and expertise. We believe this partnership will be a catalyst for positive change, paving the way for a more sustainable Arab world.”

Monaem Ben Lellahom, Group CEO of Sustainable Square, added: “We are excited about the opportunities arising from our partnership with AFCM, which, like Sustainable Square Consultancy, is dedicated to fostering sustainable business growth in the Arab world and unleashing the potential of stock exchanges, listed companies and other members.”

1 year ago 0 comments

Environment Latest News

Orange Middle East and Africa Launches Engage for Change Platform

by Madaline Dunn 1 year ago

written by Madaline Dunn

Orange Middle East and Africa (OMEA) has launched its Orange Engage for Change platform, which the company said is aimed at driving a positive impact on society and the environment while strengthening team cohesion.

The program, which Orange Foundation and the Orange Digital Centers network, enables each employee to devote three working days a year to projects that have a societal impact. Employees can access opportunities through the web platform, which provides a space for discovering, sharing and getting involved in societal projects.

Asma Ennaifer, Executive Director of CSR and Communications at Orange Middle East and Africa and Secretary General of the Orange Digital Center Foundation, called the platform a “powerful tool” for uniting teams around shared values.

“Every initiative, every action taken by our employees demonstrates our collective ability to bring about significant change. We’re proud to see this commitment come to fruition and to witness the positive impact it generates.”

The company shared that on June 5, a number of local initiatives were organised across our region, including in Mali, where a team of 200 Orange employee volunteers is taking part in the reforestation of an urban park, planting 1,000 trees.

Elsewhere, in Côte d’Ivoire, 43 kilometres from Abidjan, 30 hectares in the Azaguié forest will be reforested by 150 employees.

Jérôme Hénique, CEO of Orange Middle East and Africa, commented: “The launch of Orange Engage for Change symbolizes our deep commitment to corporate social responsibility. By empowering our employees to get directly involved in positive impact projects, we are contributing to the sustainable development of communities in the countries where we operate.”

1 year ago 0 comments

Governance Special Reports

Report: The Rise of Single Family Offices in the MENA

by Madaline Dunn 1 year ago

written by Madaline Dunn

The Tharawat Family Business Forum and LGT Middle East have launched their inaugural Wealth and Legacy: The Rise of Single Family Offices in MENA report, which centres around a survey conducted with 34 leading single family offices from across the region and incorporates expert analysis and insights from family enterprises and academia.

According to the report, 62 per cent of single family offices are now led by second-generation family members, and 41 per cent have next-generation family members making investment decisions and contributing at a strategic level.

Further, it found investment decision-making is already steered by third-generation family members for more than one in three (35 per cent) family offices.

Moreover, it revealed that the top reasons for establishing a single family office were:

• Institutionalising and centralising the family investments (94.2 per cent)

• Managing financial risk (91.2 per cent)

• Succession planning (88.3 per cent)

• Improving the organisation of family assets (85.3 per cent ).

In addition to this, the report detailed that regarding the career aspirations of the next-generation family members, a total of 59.3 per cent expressed eagerness to enter the family business, and 55.6 per cent expressed interest in joining the single family office. That said, 66.7 per cent prefer to establish their own businesses, while 63 per cent are seeking to pursue alternative career pathways.

Indeed, according to the report, MENA single-family offices seem to perceive their main challenges to be around human capital, with 82.4 per cent of those surveyed identifying the challenge of attracting new talent to their organisations as paramount.

Further, keeping family members engaged is seen as “crucial” by 61.8 per cent of respondents, and retaining existing talent concerns 55.9 per cent.

Succession planning (47.1 per cent) and the establishment of robust family governance frameworks (44.1 per cent) were also identified as priorities.

For 47.1 per cent of respondents, ESG criteria do not play a role in shaping the governance policies of their family offices. However, 41.2 per cent acknowledge that while ESG standards are not currently implemented, they are “in the process of considering or developing them.”

The report noted that this split reflects a “polarisation” in the perception of the relevance of ESG principles in ensuring sound governance practices.

Further, it outlined that while some family offices remain unconvinced of the ESG merits, a significant portion is open to integrating these considerations in the future.

“Given the ongoing shifts in global regulatory frameworks and increasing emphasis on sustainability, it is plausible that the stance regarding ESG in family offices may evolve in the coming years,” the report said.

Read the full report here.

1 year ago 0 comments

Environment Special Reports

Workiva: Third Annual ESG Practitioner Survey

by Madaline Dunn 1 year ago

written by Madaline Dunn

The third annual Workiva ESG Practitioner Survey polled over 2,000 people involved in corporate reporting, including finance and accounting, sustainability, risk, and internal audit professionals across North America, Europe, and Asia.

The report found that 87 per cent of ESG practitioners surveyed find it challenging to adapt reporting processes to comply with new regulations; specifically, 77 per cent said that obtaining third-party assurance to comply with the CSRD is challenging.

Further, a total of 59 per cent of respondents agree that ESG regulation has disrupted their company’s reporting processes; this percentage is even higher among executives at 65 per cent.

However, it was also found that 81 per cent of companies not subject to the CSRD still intend to comply.

Indeed, 88 per cent of practitioners agree that having a strong ESG reporting program will give their organisation a competitive advantage, and 84 per cent agree that integrated financial and ESG/sustainability data enables better decision-making that can improve a company’s financial performance.

Moreover, 88 per cent of ESG practitioners believe that assurance over ESG data increases the likelihood that a company will achieve its goals, and 98 per cent are confident in the accuracy of their data.

That being said, eighty-three per cent also agree that collecting accurate data to fulfil the CSRD requirements will be a challenge for their organisation.

To aid in this challenge, 92 per cent of companies are investing in technology to improve collaboration among reporting teams.

The report also found that there remains a disconnect between executives and managers, in that while 53 per cent are totally satisfied with their organisation’s materiality assessment, only 23 per cent of managers are.

Likewise, a similar disparity was found regarding satisfaction with the application of controls over ESG/sustainability data. Forty-eight per cent of executives were satisfied, compared with just 27 per cent of managers.

Read the full report here.

1 year ago 0 comments

Finance Latest News

Sharia-Compliant AI-Powered Portfolio Launched by eToro and Arabesque AI

by Madaline Dunn 1 year ago

written by Madaline Dunn

Trading and investing platform eToro has announced that it has partnered with Arabesque AI, an investment advisory and technology company, to launch a new Sharia-compliant AI-powered portfolio named ShariaAI-Growth in the Middle East.

The platform utilises Arabesque’s AI technology and bank of environmental, social, and governance (ESG) data to identify high-growth US stocks that comply with Sharia principles, it was shared.

The ShariaAI-Growth portfolio comprises up to 40 US equities.

The selection process is as follows:

● Step 1: From the pool of US stocks available on the eToro platform, only those with a market cap of over US$1 billion and an average daily trading volume of over US$10 million are eligible.

● Step 2: The eligible stocks must pass a business activities screen and financial ratio screens to guarantee compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Sharia principles.

● Step 3: The compliant stocks are evaluated with Arabesque’s AI technology to select those with the highest expected returns, strong earnings growth over the previous 12 months and high ESG scores to be included in the final portfolio.

The portfolio is rebalanced quarterly and takes into account expected returns, as well as risk and transaction costs.

The Sharia screening process is based on the AAOIFI Shari’ah Standard No. (21). Initial investment starts at US$500 and investors can access tools and charts to track the portfolio’s performance. Further, eToro’s social feed will keep them up-to-date on developments in the sector.

“Since our launch in the UAE six months ago, our goal has been to tailor our services to meet the evolving needs of our users in the region,” explained George Naddaf, GCC & MENA Regional Manager at eToro.

According to Naddaf, the company’s recent survey of retail investors in the UAE found that 84 per cent consider ESG factors before investing, with 35 per cent emphasising the importance of their investments being Sharia-compliant.

Omar Selim, Group CEO of Arabesque, commented: “We are delighted to partner with eToro to deliver faith-based investment products at scale, powered by Portfolio Dragon and ESGBOOK.”

1 year ago 0 comments

Finance Latest News

Finastra Integrates AI-powered ESG Scoring into Working Capital Solution, Trade Innovation

by Madaline Dunn 1 year ago

written by Madaline Dunn

Finastra has announced the integration of AI-powered ESG scoring capabilities into its working capital solution, Trade Innovation.

The integration with CoriolisESG by TradeSun enables users to book and manage trade and supply chain finance with automated insights into ESG scoring.

It was shared that the solution enhances enterprise intelligence and resilience by measuring key entity data against globally recognised frameworks, such as the UN Sustainable Development Goals and the EU Taxonomy.

Further, captured information provides insight into international business activity, risk assessment, regulation compliance, geopolitical risk, due diligence, and supply chain analysis.

Finastra explained that its partnership with TradeSun encompasses the full TradeSun Intelligence platform, including:

OCR,
Document checking,
Real-time compliance, and
Global markets analytics.

The trade digitisation product has an ESG assessment built in, offered in accordance with the ICC Principles for Sustainable Trade, Wave 2, Pilot Program.

Iain MacLennan, Head of Trade and Supply Chain Finance at Finastra, said: “Sustainability is a growing imperative in the world of trade and with the continued emergence and development of regulations in this space, organizations must ensure they can measure their impact to help meet the worldwide ESG mandates and understand where risk can be better managed.”

Adding: “That vision is now possible for users of our Trade Innovation technology. Delivering this out-of-the-box integration aligns closely with our company purpose to unlock the power of finance for everyone and our mantra of ‘doing well by doing good’. We look forward to helping our customers gain valuable insights into their ESG data for trade.”

Nigel Hook, Founder and CEO at TradeSun, said: “We’re really pleased to be a fintech partner for Finastra. This integration of TradeSun’s CoriolisESG technology into Finastra’s user base provides more businesses with economical solutions that help advance their wider sustainability goals. Together we are accelerating sustainable global trade flows, with intelligent and scalable technology to measure impact and to help ensure a better future for all.”

1 year ago 0 comments

Finance Special Reports

Fitch Ratings: Global ESG Sukuk Outlook Dashboard: 1Q24 report

by Madaline Dunn 1 year ago

written by Madaline Dunn

Fitch Ratings’ Global ESG Sukuk Outlook Dashboard report for 1Q24 has forecast that ESG sukuk will cross USD50 billion globally within the next two years.

This, it said, will be driven by issuers seeking to meet their funding diversification goals and ESG mandates, alongside new regulatory frameworks and government-led sustainability initiatives.

Fitch outlined that global ESG sukuk rose by 60.3 per cent yoy to reach USD40 billion outstanding at the end of the first quarter of this year for all currencies.

It made up 12 per cent of global outstanding sukuk at the end of the first quarter (hard currencies).

Fitch rated about 90 per cent of the global hard-currency ESG sukuk, or USD24.7 billion outstanding, at the end of the first quarter (up 56 per cent yoy).

Saudi Arabia has the highest share (45 per cent) of Fitch-rated ESG sukuk, followed by the UAE (33 per cent), it was shared.

In the GCC countries, ESG sukuk reached USD15.9 billion outstanding, representing 45 per cent of the ESG debt mix, with the balance in bonds.

However, it was noted that ESG sukuk and bond issuance remain nascent in most Organisation of Islamic Cooperation (OIC) countries.

Additionally, the report highlighted that risks include:

Geopolitical volatilities,
Surging oil prices that could reduce funding needs in some core sukuk markets,
New sharia requirements that could alter sukuk credit risk, and
The weakening of the sustainability drive in core markets.

Decarbonisation demand compels increasing ESG compliance

by Madaline Dunn 1 year ago

written by Madaline Dunn

Ethical investment frameworks must be advanced as green-labelled funding flows exceed $1.7 trillion in 2023

Recent years have witnessed a seismic shift in investor appetite for partnerships that align with environmental, social and governance (ESG) principles, enshrined by global development plans, particularly in the aftermath of COP 28.

Governments and the world’s most influential corporations are now increasingly arriving at a consensus about the need to address climate change for long-term socioeconomic continuity – however, change is not uniform. In many parts of the world, regulators continue to push back on making climate change a focus of business and investing decisions. Nonetheless, the narrative is gradually shifting in favour of climate action, with nations including the UAE, setting an example for others to follow and accelerating the transition towards decision-making led by ESG criteria.

For instance, a study released in December by the European Commission’s Joint Research Centre showed European banks charge higher interest rates on loans granted to companies in high flood-risk areas. The trend may be a microcosmic indicator of how environmental risks – which the World Economic Forum has warned could hit the point of no return in the coming years – might compel financial institutions to charge premiums on future lending commitments. The need to weave environmental, social, and governance (ESG) considerations into the future economic blueprint is clear as investors increasingly align their portfolios with sustainable objectives.

Regulatory Push

As governments are compelled to respond to the climate crisis, decarbonisation investments are taking a greater share of global funding flows. Capex commitments for clean energy projects exceeded $1.7 trillion in 2023, according to separate estimates by the International Energy Agency and Bloomberg NEF. Spurred by stabilising interest rates, debt issuances for energy transition purposes increased by 4% to reach $824 billion last year. The financial and government sectors alone raised more than $316 billion in debt for energy transition in 2023.

These investments reflect the critical role that decarbonisation will play in investment decisions, consequently also elevating the status of ESG compliance from a value-add to a service for which businesses can charge a premium – particularly as investors open the doors for green-labelled assets to fulfil their respective net-zero commitments over the next two to three decades. Fifty-six percent of 800 investors polled by deVere Group have said they plan to increase their ESG-focused investments in 2024, and Grant Thornton said last year 85% of its surveyed UK lenders believe a firm’s ESG status and ability to transition to net-zero influence their credit risk assessments.

Investor considerations and strategic government priorities are both helping to advance and strengthen the Middle East’s prevailing ESG frameworks. Regulation is a critical lever in the journey, and mature regional markets have introduced robust avenues and incentives to propel decarbonisation investments. In the UAE, this includes the provision of financing through the Ministry of Industry and Advanced Technology for investment into renewable or clean energy.

The role of government oversight is two-pronged: a PwC Middle East survey shows 63% of regional business leaders stating regulatory compliance as the most important driver for adopting an ESG strategy. Several regional stock exchanges, including in Qatar, Bahrain, Saudi Arabia, and the UAE have already issued guidance on reporting sustainability credentials.

But governments – regionally and globally – have an equally important role to play in mitigating greenwashing. RepRisk research reveals one in every four climate-related ESG risks globally was linked to greenwashing between 2022 and 2023, with the banking and financial services sectors noting a 70% increase in the number of climate-related greenwashing incidents in 2023. Government oversight and regulation are essential to encourage transparency and equitable responsibility towards ESG reporting as sustainability-linked spending continues to grow.

Commercial Pull

While COP 28 has firmly placed decarbonisation at the centre of economic and corporate agendas around the world, the nascency of its pay-off means compliance with ESG currently faces intrinsic scepticism from risk-averse decision-makers. Nevertheless, decarbonisation investments – made compelling by the tangible benefit of energy savings – may smooth the journey towards broader ESG adoption, which is shown to ultimately unlock cheaper capital.

Almost one-third of PwC Middle East’s surveyed respondents cite funding constraints as a barrier to ESG implementation, with just 13% anticipating green loans from banks. This may seem counterintuitive considering MSCI findings that show high ESG-scoring companies experience lower capital costs compared to peers with poor ESG scores, but partly reflects the need to enhance regional green finance awareness, particularly as ESG gains broader acceptance as a platform to embed resilience and readiness into corporate responses to global crises including climate change.

The transition to significantly decarbonised business operations needs leaders and decision-makers to navigate a complex and ever-changing regulatory landscape as well as implement a shift in corporate culture. This is not a small ask, but the most impactful companies of tomorrow will be those that actively create sustainable shareholder value through their continued pursuit of ESG excellence.

By John Iossifidis, Group Chief Executive Officer, Al Ghurair

1 year ago 0 comments

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