The adoption of ESG (Environmental, Social and Governance) themed investing is at a very early stage unlike their global peers, Bonnie Saynay, Global Head of Responsible Investment at Invesco told Gulf News.
Globally, about $23 trillion (Dh84.48 trillion) of the assets under management has been invested in sustainable themes, about 26 per cent of the total managed assets globally, but adoption in the Gulf is at the very initial stages.
“There is earnest interest (for investing in sustainable themes). It’s in exploratory phase of due diligence on how to integrate the high performing ESG companies. The primary focus is on climate change,” Saynay told Gulf News.
The soverigen wealth funds, which manages $3 trillion of assets, in the region, have been early adopters.
“There has been renewed focus on core themes that are impacting the Middle East especially climate change. With the advent of the one planet initiative several sovereign wealth fund in the region has a meaningful commitment on climate change,” she said.
The impact of climate change on the UAE may be alarming as wetlands are seen vulnerable with any increase in temperatures. The UAE is a signatory to the Paris Climate Accords, and has confirmed to increase the use of renewable energy by a fifth to its mix of energy.
Saynay said the sustainability concept is witnessing a natural progression from being a voluntary decision to statutory in certain regions.
Globally, ESG themes are gaining traction like never before, and Synay thinks millennials and women investors would drive its popularity even more.
“We will see a wealth transfer over two and a half decades. And that would ultimately drive asset managers, owners to think about how do I effectively align and meet the requirements that millennials really demand in their portfolio. They don’t only want to earn money, but they want their money to do good. Which is very positive development,” she said.
“The control of world’s wealth by women would be another key consideration as women tend to be value-based aligned towards environmental and social causes,” she added. Globally, around 30 per cent of the wealth is cornered by women, and in the United States the figure has topped 40 per cent.