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ESG investing continues to soar, but Saudi investors urge for a balanced approach

Saudi investors warn against basing decisions “solely on ideological investments”.

ESG investing continues to soar, but Saudi investors urge for a balanced approach
[Source photo: Anvita Gupta/Fast Company Middle East]

Amid Saudi Arabia taking adequate measures to boost ESG and environmental strategies, asset managers and investors are urging an approach that balances the growing demand for ESG investments and the country’s current economy.

According to a PwC, institutions intend to increase $33.9 trillion in ESG-related assets by 2026, up from $18.4 trillion in 2021.

The survey found that 30% of investors find identifying attractive ESG investment opportunities challenging.

According to the research, Saudi investors advise against making decisions “solely on ideological investments” and warn that doing so “may lead to the misallocation of capital,” which would be detrimental to investors who frequently set aside a portion of their earnings for retirement.

“Despite the difference in approach and emphasis about the future of ESG investments, Saudi Arabia is committed to bringing people together to find solutions to the challenges we must confront,” the report noted.

As the global financial services industry congregates in Riyadh for the second iteration of the Financial Services Conference on March 15 and 16, investing in ESG will be one of the hot themes.

Meanwhile, the Saudi Stock Exchange 2021 has released ESG disclosure requirements. More than 200 listed companies and prospective businesses aiming to go public with their ESG reporting will benefit from the rules, which will also increase awareness of it in the local market. They will promote voluntary disclosure of ESG performance by businesses.

To give Saudi businesses a way to get in touch with and participate in cultural and heritage projects, the Saudi Stock Exchange and Saudi Arabia’s Culture Development Fund began cooperation last year. It was a component of a broader strategy to encourage strict adherence to regional and global ESG standards.

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