Dubai Financial Market launches ESG Index

Dubai Financial Market on Wednesday (Apr 22) launched an Environment, Social and Governance (ESG) Index.

The new S&P/Hawkamah UAE ESG Index measures listed companies that report ESG best practices and consists of 20 firms, DFM said in a statement.

“The appropriate implementation of best practices of corporate governance, disclosure and transparency as well as environmental and social commitment is essential to boost UAE markets’ competitiveness, attract further investments and sustain growth noting that investment institutions across the world are increasingly factoring these matters in investment decision process,” said DFM chairperson Essa Kazim.

The Index will be reconstituted once a year in November when the top 20 stocks are automatically added to it.

Screening is done by Dubai-based Hawkamah Institute for Corporate Governance and S&P.

The companies in the selection universe are subject to an assessment process that incorporates ESG criteria against which the company’s disclosures practices are evaluated.

There are two categories, the first focused on environment and social indicators and the second on corporate governance.

The evaluation process uses information related to companies’ disclosure of ESG indicators available in the public domain, such as annual reports and press releases.

The Index provides five years back tracking for access of the companies’ performance since 2015. It follows the release of a guide in early 2020, that regulates joint-stock companies’ corporate governance and social and environmental responsibility requirements.

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