ESG for a cleaner future

By Captain Mahmood Al Mahmood

One of the areas we look at when redefining our lifestyle in the new year is our financial health. Because of the many channels available these days to thrive fiscally, I am not just talking about household savings.

Many individuals are looking at investing in the stock market and many GCC companies are seeking to attract investors through IPOs.

In such an atmosphere of financial activity, we are increasingly hearing about ESG as a whetstone for testing the ethical corporate standards of a company.

Environmental, social, and governance (ESG) investing refers to a set of standards for a company’s behavior used by socially conscious investors to screen the companies that they are interested in investing in.

Environmental criteria considers how a company safeguard s the environment, including corporate policies addressing climate change, for example.

Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights.

It is no longer enough for us to look at the bottom line and expect a fat return. The talk about our individual responsibility towards climate change and social justice has made it important for each one of us to understand our ESG responsibility as investors.

The Bahrain Bourse too has joined the GCC Exchanges Committee and endorsed the adoption of unified GCC ESG metrics across all GCC Exchanges.

The metrics comprise 29 standards (10 Environmental, 10 Social, and 9 Governance metrics) that are aligned with the World Federation of Exchanges and Sustainable Stock Exchanges Initiative and include categories across GHG emissions, energy usage, water usage, gender pay, employee turnover, gender diversity, data privacy, ethics and more.

I trust that this will be a move amongst all corporate divisions to embrace these standards so that we can move forward to a cleaner, more productive and gentler world together