Josette Rizk, Client Director, Institutional Sales, Invesco Middle East and Africa Invesco
DOHA: A major global study by Invesco has found environmental, social and governance (ESG) adoption rapidly gaining traction among global sovereign investors and Central Banks. The Invesco Global Sovereign Asset Management Study, which surveyed 139 global sovereign investors and Central Bank reserve managers, showed over half (60 percent) of sovereigns now incorporate a top-down ESG policy – up from 46 percent in 2017. Middle East sovereigns in particular have accelerated their pace of integrating ESG considerations into their investment processes. The study found that more than two-thirds (67 percent) of sovereign wealth funds in the Middle East have an ESG policy, up from 30 percent in 2017.
The study revealed that there is a broad view among sovereign wealth funds globally that ESG can be integrated into most asset classes. While equities have been the initial starting point for ESG implementation, this year’s study found of the sovereign wealth funds in the Middle East that incorporate ESG at the asset class level, 100 percent are now applying ESG considerations into their alternative asset portfolios including real estate, infrastructure and private equity. This is in contrast to sovereigns in other regions where ESG investing has expanded more towards fixed income asset classes.
Monitoring is also seen as a big challenge, reflecting the limited resources and nascent reporting infrastructure.
A major trend highlighted by the 2019 study is the shift in focus toward “E” environment initiatives. Asset owners have, in the past, focused on “G” governance factors such as board composition and the ability to flag controversies.
Josette Rizk, Client Director, Institutional Sales, Invesco Middle East and Africa, Invesco, commented: “Over the past two years we have seen an uptick among sovereign investors towards adopting and integrating ESG factors into their overall investment policies.’’
