DFM launches first of its kind Environment, Social and Governance Index
Dubai Financial Market, DFM, on Wednesday launched the UAE Index for Environment, Social and Governance, ESG, as the first index of its kind from the financial markets in the UAE and the region, aiming to measure listed companies embracing ESG best practices.
The S&P/Hawkamah UAE ESG Index is developed in cooperation with S&P Dow Jones Indices, the world's largest and global resource for index-based concepts, data and research, as well as the Hawkamah Institute for Corporate Governance in the UAE (Hawkamah), DFM’s strategic partner in the field of promoting best practices of corporate governance amongst listed companies.
This index is supported by the UAE Securities and Commodities Authority, SCA, as Sultan bin Saeed Al Mansouri, Minister of Economy and Chairman of SCA, has approved DFM’s initiative to launch the index, as part of both sides commitment to realise leadership’s vision on boosting UAE financial markets’ competitiveness and attract further investments.
Minister Al Mansouri said that the launch of the index complements and supports SCA’s efforts in developing the supervisory regime to bring it in line with the best international standards and practices.
It will also promote the culture of governance and enhance the confidence of investors in the UAE capital market, especially after the adoption of a guide to the governance of public joint-stock companies early 2020, which regulates corporate governance and social and environmental responsibility requirements.
Commenting on this significant step, Essa Kazim, Chairman of the DFM, said, "The index provides a trusted and transparent tool that measures listed companies’ commitment to ESG. The appropriate implementation of best practices of corporate governance, disclosure and transparency as well as environmental and social commitment is essential to boost UAE markets’ competitiveness, attract further investments and sustain growth noting that investment institutions across the world are increasingly factoring these matters in investment decisions process."
For his part, Dr. Obaid Al Zaabi, SCA’s CEO, stressed that beside being an important measuring tool, the new index will help to raise awareness about the importance of putting into practice the governance principles outlined in the new guide to the governance of public joint-stock companies.
It will also help to promote the spirit of competitiveness and the compliance of the boards of listed companies with the implementation of the principles, in addition to developing benchmark indicators to evaluate the performance of these companies when it comes to their compliance with the social and environmental responsibility principles.
The S&P/Hawkamah UAE ESG inaugural index sample is consisted of 20 listed companies. It provides five years back tracking enabling market participants to access index performance since 2015. The Index is accessible through DFM’s website as well as any other data dissemination platforms.
"We’re excited to launch this new index in the UAE as more investors look to incorporate ESG best practices in their investment decisions. S&P DJI has been a pioneer in ESG indexing for more than two decades and we look forward to working with our partners and clients in the Middle East and globally to bring ESG into the core of investors’ portfolios," said Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices.