ESG Investments Whats Is It And Why Does It Matter?

ESG has taken off successfully enough to become a potential investment opportunity in the Middle East region. This has made possible the entire goal of learning, earning, and sustaining the human race on the planet.

A meaningful change must be measurable and it is only a community of solution-seekers who are ready to put in the work, not just by contributing finances but a heady blend of environmentalists, sociologists, economists, strategists, and technologists. When experience meets commitment, change is inevitable. The theory of finance and business is far from the action required to ensure its workability. Critical thinking and technology can work together to find solutions that are slated to create a defining moment in the field of sustainable development.

Investors are increasingly using non-financial factors as part of their analytics to identify potential risks and growth opportunities.

There are three critical elements of sustainable investing:

• Sustainable investing is less about rejecting fundamental concepts and is instead the addition of an environmental twang to the existent management assets. It is a value add to the current scenario.
• Sustainable investing is built on deeper insights into ESG considerations
• This type of investing takes into account all stakeholders, and their interests are consistent with how companies are developing in real-time.

All of this is indicative of the changing trends where one is moving from a purely financially enabled economy to a more circular economy where multiple factors are taken into account including society and its governance. At the heart of corporate governance to we are witnessing a dramatic change in the Middle East wherein companies have moved from a simple CSR responsibility to a more holistic responsibility that has environmentalists working with various industry experts and political leaders to make a respectable change in the world.

However, one cannot but be wary of the crosscurrents between the various stakeholders especially since the strike rate of success still remains to be a variable component for many investors. No one can yet measure the impact of sustainable investments to say with certainty that this will be a game-changer in the future.

There is good news for those who have made conscientious costly investments though and that is thanks to the active involvement of all three independents : Environment, Society, and Government, the decision making has become far more transparent and plausible for those philandering about with a question mark, “Will this work?” or “Won’t this work?”

ESGs are good news for the UAE and the Middle East per se. However, catering to a redundant mindset and the traditional modes of spending are still hurdles to a 100% success rate. Should one fall prey to such mental models, there is a higher chance that with the existing regulatory expectations and challenging economics thanks to the pandemic, the alternative of feeding a redundant mental model that caves into cash flow over eco-flow leaves the industry vulnerable to decline.

For investors, it is important to remember, that you owe the planet as much as you do your own family.