Dubai Financial Market (DFM) launched a the first of its kind UAE Index for Environment, Social and Governance (ESG) in the region, designed to measure listed companies embracing ESG best practices. The S&P/Hawkamah UAE ESG Index is developed in collaboration with S&P Dow Jones Indices and the Hawkamah Institute for Corporate Governance in the UAE (Hawkamah).
The new index is supported by the UAE Securities and Commodities Authority (SCA) and His Excellency Sultan Bin Saeed Almansoori, Minister of Economy and Chairman of the SCA approved DFM’s launch of the index, way to enhance UAE financial markets and attract further investments.
H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and Chairman of the Securities and Commodities Authority (SCA), stated that launching the index supports the Authority’s efforts to develop supervisory regime in line with the best international standards and practices and boost the enhancing the confidence of investors in the UAE capital market.
H.E. Essa Kazim, Chairman of the DFM commented:
In line with DFM’s Sustainability Strategy 2025, we are delighted to launch the first index of its kind from a financial market in the UAE and the region in cooperation with S&P Dow Jones Indices and Hawkamah, as part of our joint efforts to further develop the capital markets’ sector. 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.
Dr. Obaid Al Zaabi, SCA’s CEO said that the new index will help raise awareness about the importance of the governance principles outlined in the new guide to the governance of public joint-stock companies. It will also help in promoting competitive and compliant attuite, as well as setting evaluating indicators for compliance with the social and environmental responsibility principles of these companies.
Dr. Ahmad Al Shaikh, Chairman of Hawkamah, noted:
There is no better time to encourage corporate responsible behaviors than now, the new ESG index will create good competition between listed companies to do the right thing, paying more attention to the environment, social and governance elements when managing their business.
The S&P/Hawkamah UAE ESG inaugural index consists of 20 companies and provides 5 years back tracking and access to index performance since 2015. The index can be accessed through DFM’s website and any other data dissemination platforms.
Reid Steadman, Global Head of ESG Indices at S&P Dow Jones Indices commented:
S&P Dow Jones Indices aims to develop and offer innovative ESG indices, research and data that enable global market participants to meet both their investment and sustainability goals. 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.
The Index sample is reconstituted once year and the top 20 stock are added to the index automatically. The process uses data by Hawkamah, S&P’s ESG screening partner in the Middle East. The companies in the selection are assessed through the Transparency & Disclosure methodology – the company’s disclosure practices are evaluated against ESG criteria. The evaluation process focuses on environmental & social indicators and corporate governance indicators. It seeks out information regarding the companies’ disclosure of the ESG indicators available in the public domain including annual report, website, press releases and/or disclosures on stock exchanges. The goal is to determine transparency in the disclosure documents on any of the indicators that are part of the ESG assessment system.
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