Arab News, Monday, Mar 13, 2023 | Sha'ban 21, 1444
Saudi Arabia calls for a balanced approach to ESG investment
Saudi Arabia: Amid global calls to
increase environmental, social, and governance investments, asset managers and
investors in Saudi Arabia want a more nuanced approach that balances ESG demand
with today’s challenging economic reality, according to a Pricewaterhouse
As per the findings of the global survey,
institutions are expected to increase their ESG-related assets under management
to $33.9 trillion by 2026, from $18.4 trillion in 2021.
Environmental activists and many institutional
investors are taking a hard-line stance by insisting on making investments only
in ESG. However, as the survey showed due to high demand 30 percent of the
investors say they struggle to find attractive ESG investment opportunities.
Saudi investors, the PwC report, said warn against
basing decisions “solely on ideological investments” and caution that such an
approach “could lead to the misallocation of capital,” which would negatively
affect investors many of whom are allocating part of the salaries for
Saudi Arabia is taking effective measures to boost
ESG and is an advocate of a diversified energy mix and environmental strategies.
Saudi Aramco, for example, has implemented an
internal governance model that integrates sustainability principles into
business strategy, as the oil giant aims to balance profitability, environmental
protection, and the growth and prosperity of the communities in which it
The Saudi Stock Exchange, meanwhile, has already
issued ESG disclosure guidelines in 2021. The guidelines will help more than 200
listed companies and prospective firms looking to go public with their ESG
reporting and will raise awareness about it in the local market. They will
encourage companies to voluntarily disclose their ESG performance.
Last year, the Saudi Stock Exchange also launched
a partnership with Saudi Arabia’s Cultural Development Fund to provide a channel
through which Saudi companies can connect with and invest in cultural and
heritage projects. It was part of a comprehensive plan to promote robust
compliance with international and local ESG standards.
“Despite the difference in approach and emphasis
about the future of ESG investments, Saudi Arabia is committed to bringing
people together to find solutions to the challenges we must confront,” the
The issue of investing in ESG will be one of the
hot topics for the world’s financial services community gathering in Riyadh for
the second edition of the Financial Services Conference on March 15 and 16.