The evolution of ESG in the Middle East

Sustainable investing assets have doubled from 2016-2020, and grown more than ten-fold since 2002 to USD 40.51 trillion worldwide. This rapid growth continues to be led by Europe, the US and regions in the East. What is less well understood is that the Middle East is at the core of global ESG development – the region has seen sizeable and somewhat uncelebrated successes. The region has always embraced sustainability and today, it is also embracing the best of international ESG developments. This paper discusses the Middle East’s early roots in sustainable finance – from Islamic finance, to more recent green finance, renewable energies and Sustainable Development Goals (SDGs). Companies are now stepping up their sustainability obligations to meet with global standards. Asset owners are also demanding more from their investments than typical financial returns. Middle Eastern companies have growing responsibilities to adhere with ESG criteria. It concludes that the lack of a universal roadmap for ESG adoption presents some challenges, but also attractive growth opportunities through ESG improvements. The paper discusses these opportunities and briefly analyses Middle Eastern Equity markets from an ESG perspective.

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