The guidelines issued by the stock exchanges across the Middle East are perceived through the lens of potential regulatory requirements that may extend to both listed and non-listed companies. They often use metrics aligned with international frameworks, presenting a clear set of potential investor expectations on ESG information, and companies may see alignment with the guidelines as having reputational benefits. However, while the guidelines have encouraged companies to consider the importance of ESG disclosures, initiate processes such as setting up ESG governance and introduce ESG materiality assessment, some have been more driven to ‘tick the box’ on these requirements or expectations as opposed to focusing on the quality of their ESG disclosures.
As companies in the region progress on their journey, more attention will be need to be paid to ESG data coverage, quality, controls and assurance. In the financial services sector, the Central Bank of UAE (CBUAE) is working to encourage high quality ESG disclosures through its Principles for Sustainability-related Disclosures, voluntary guidance aimed at enhancing companies’ sustainability reporting, including processes, accuracy, coverage and relevance, as well as sustainability-related product labeling. In financial services, such guidance tends to be perceived as a potential regulatory development, so it is reasonable to expect that providers will focus more on the quality, comprehensiveness and transparency of their ESG disclosures along with the presence of clear ESG disclosure procedures.
