ESG and SUSTAINABILITY

Amdeya has best-in-class global expertise on ESG and Sustainability. Amdeya advises banks and companies  on ESG  in one or more of the following ways:

1. Advises banks and companies on preparing ESG plans,
2. Advises banks and companies on the implementation of ESG plans,
3. Advises banks and companies on preparing ESG reports,
4. Advises issuers of ESG-linked financial instruments on how to structure these ESG linkages,
5. Verifies and provides independent third party assurance of the ESG reports of banks and companies, and the labeling of ESG products as “green”, “blue”, and/or “social”.

Amdeya has recently carried out a comprehensive survey of more than 700 banks in 41 countries in MENA and the Central Asia region. The Amdeya survey found out that only a third of the banks in the region have ESG/Sustainability reports. The banks that have ESG reports are also mostly the larger banks in the region.

ESG, as is well known, stands for Environmental, Social and Governance. “Sustainability” is a similar concept, except that Sustainability includes more focus on economic factors, and less on Governance. ESG is now the more generally accepted term for these activities.

Amdeya recognizes that ESG is still in a developing stage, especially in the Emerging Markets. Most banks in the region actually already cover many of the elements of ESG. They however need to plan these better, make them more comprehensive, and report on them. It would not take a major effort for them to report on ESG, as the larger banks in the region are already doing.

The regulators in the region are also likely to start demanding that their banks report on some elements of ESG, and on verification of ESG “labeling” of financial products, and ESG bank reports. The banks and companies in the region would moreover find that ESG is good for business.

The ESG reports of banks and companies would also be more credible if there is independent assurance of what is being reported about ESG activities and products. Some of these products, including bonds, have been recently labeled “green”, “blue”, or “social”. This labeling needs to be verified, to avoid the risk of “greenwashing”. ESG, and sustainability reports by the largest international banks are now independently verified in order to provide assurance to their many stakeholders.

Amdeya believes that the way-forward for banks and companies in the region is to have a “balanced approach” to ESG. Their ESG reports need to cover several elements, in addition to the very important climate-related issues. This is because there are many ESG components that are important for the success of banks and companies in the region. These include good governance, health, financial inclusion, gender equality, water availability, and education. Amdeya’s approach is to cover around 30 important elements in ESG that banks and companies can pursue and report on.

The future trends point clearly that banks and companies in the region need to give increasing attention to ESG in their business. It is highly likely that the more successful banks and companies would be those that factor in ESG in their plans, and report on these in a structured manner, on an annual verifiable basis.

For more information on how Amdeya can help in providing ESG and Sustainability advice, you can contact ESG@amdeya.com.