Financial services institutions globally and in the Middle East are expected to step up their ESG game. Successful companies are likely to reap big rewards, according to a report by the White Shield, an international public policy and strategy advisory firm.
Titled ESG in the Financial Sector: Don’t Be Late to the Party, the report highlights the growing importance of ESG for the financial sector as stakeholders press on organizations from all directions. . Economy – to do their part. ESG in the financial services sector: ‘Don’t be late to the party’
Investors and regulators are paying close attention to the ESG behavior of financial institutions, employees expect more from their employers, and consumer reputations are increasingly linked to ESG performance. increase.
Partner and Director Antonio Somma said: At Whiteshield in our Dubai office.
Showing the rise of ESG is one indicator. A large amount of money has been poured into the ESG-linked bond market (also known as green and social bonds). According to Whiteshield’s analysis (based on data from Bloomberg, Sustainalytics, and others), the market is expected to reach $1.3 trillion by the end of this year, from just $100 billion in 2016.
By 2050, the ESG financial and investment market is projected to grow rapidly to over $50 trillion. Somma: “We expect new business opportunities based on ESG products and services to dominate the scene in the coming years.”
A major driver of the shift to ESG stems from policies by governments and government-affiliated regulatory bodies. However, according to the report, financial services firms that want to lead in ESG areas will need to move beyond regulatory compliance to a more opportunity-driven approach.
Fadi Farra, Founder and Managing Partner of Whiteshield, said: “However, the leader in this space has turned his ESG into a competitive advantage, seized commercial opportunities, gained access to cheaper funding, and built branding among investors and the public. , enabling us to act more resiliently to ESG risks.”
ESG maturity can be expensive and notoriously complex, but research shows the investment is worth it. Whiteshield’s report presents an aggregate analysis of more than 1,000 of his studies on the correlation between ESG and financial performance, with more than half of his studies concluding that ESG has a positive impact on bottom line. I understand.
“When ESG is effectively integrated into strategy, it can improve a company’s financial results. It also leads to a possible future,” Farah said.