DUBAI — Three UAE companies got place among the top 10 companies at the first tradeable index for the Middle East and North Africa (MENA) region that was launched on Tuesday in Dubai.
Standard & Poor’s, the world’s leading index provider, and Hawkamah, the Institute for Corporate Governance, announced the launch of the first tradeable index for the region’s equity markets that will rank and track the performance, transparency and disclosure of regional companies on Environmental, Social and Corporate Governance (ESG) issues.
UAE’s DP World, one of the world largest port operator, ranked fourth followed by Emirates Integrated Telecommunications Company, known as du. National Bank of Abu Dhabi got eighth position among the top ten MENA companies. The combined weight of the UAE-based three companies reached 8.3 per cent. Egyptian Company for Mobile Services, known as MobiNil, ranked top while Saudi Arabia’s Savola Group ranked second with 3.06 per cent and 3.03 per cent weight respectively.
“It is now widely recognized that ESG issues can have long-term consequences for a company’s financial performance, and linking stock market performance to ESG is perhaps the most effective way to highlight the concept of ESG,” said Alka Banerjee, Vice President of S&P Indices.
The S&P/Hawkamah Pan Arab ESG Index will include the top 50 MENA companies based on their performance on nearly 200 ESG metrics, when compared to their regional peers. Constituents will be drawn from a universe of the 150 largest and most liquid companies listed on the national stock exchanges of 11 markets: Bahrain, Egypt, Jordan, Lebanon, Kuwait, Morocco, Oman, Qatar, Kingdom of Saudi Arabia, Tunisia and the United Arab Emirates.
“For the first time, the ESG performance of companies in the MENA region has been extensively researched, quantified and translated into a series of scores that will be used as the basis for an Index that will help raise awareness of a company’s impact on people, planet and profit,” Banerjee said.
The Index is unique in that it uses a company’s ESG score to determine its weight in the Index, ensuring performance is based on ESG factors rather than sheer market size.
Speaking on the significance of the new index, Dr. Nasser Saidi, Executive Director of Hawkamah, said: “The Index serves the dual purpose of offering a tool for investors for identifying the regional companies that perform well on ESG parameters, while providing an incentive to MENA companies to pursue sustainable business practices through improved environmental and socially responsible operations, as well as enhanced corporate governance systems.”
“There is no doubt the S&P/Hawkamah Pan Arab ESG Index will be an important tool for investors in the region to determine which companies have sustainable futures, and will prove an incentive for businesses to improve their environmental, social and governance practices,” said Dimitris Tsitsiragos, IFC Director Middle East, North Africa and Southern Europe.