Doha: Qatar’s finance industry is witnessing a rising investor demand for financial products that are focused on environmental, social and governance (ESG) perspectives and other sustainable investment funds that incorporate ESG factors, according to an official.
Addressing an ESG session during the 4th Islamic Financial Services Board (IFSB) Innovation Forum in Doha recently, Chief Investment Officer at Al Rayan Investment Haithem Katerji said there is greater ESG awareness now in Qatar, particularly with the large and government institutions, as seen with the volume of ESG capital or investments they are committing to.
“In Qatar, we are seeing more awareness, especially at the large institutions and the government institutions, such as the Qatar Investment Authority, QatarEnergy, and others. They are much more aware of the importance of ESG and sustainability. There are initiatives and we are seeing that in the volume of capital that they are giving,” said Katerji.
He added: “We are launching several projects that depict ESG, which we believe that the country needs. And investors are always more aware of that. And they are willing to invest in it, even with the competition. We are seeing a lot of demand for such products, which means the yields will be lower for investors. I do believe that there is a niche for ESG products in Qatar.
The banks are committed, and we are seeing more and more initiatives towards that”.
Al Rayan Investment, a leading Qatari investment bank and a subsidiary of Masraf Al Rayan, is currently working on implementing ESG products or sustainable projects that will impact the society, said Katerji.
“We have already started with the initiatives. Masraf Al Rayan was one of the institutions in Qatar which started the initiative of green investing. In addition, we are in the process of introducing a new ESG investment,” he added.
Speaking more broadly on ESG implementation, Katerji noted that while ESG is excellent, “it has to be driven by regulations, not by initiatives. Today, everything is driven by initiatives,” he said.
Hussain Abdalla, Co-Chief Executive Officer at Q Invest, reiterated the need for partnerships in ESG implementation, particularly between financial institutions and the private sector. “The way forward is allocating capital to establish foundations to develop the ESG compliance in the country. Otherwise, the private sector will be getting the head and cost, and it’s a bit challenging for the private sector to comply with ESG without additional subsidy on the cost,” he added.
During the event, Diako Makhmalbaf, Director of ESG Solutions Menat at HSBC reiterated the Glasgow Financial Alliance for Net-Zero, which is the world’s largest coalition of financial institutions committed to transitioning the global economy to net-zero greenhouse gas emissions. The Alliance includes commitments by over 500 financial institutions globally from over 45 countries with more than $130 trillion assets. “What we’ve seen in the last 18 months is a particular focus by investors on ESG dues for companies. The more IPOs come through especially in this region, with some of the biggest IPO markets in the world. ESG questions are coming, from not just global investors, but from regional investors as well,” Makhmalbaf said.
Hussam Sultan, Regional Head of ESG Solutions at S & P ESG added: “There are plenty of commitments in the market including financial institutions and governments. Everyone is committing. Most of them are 2050, in the case of some countries 2070. So probably the majority of us won’t be there at that time, but initiatives have to start now. Banks and financial institutions are probably the most influential after governments and regulators. Because they finance, assess and influence companies indirectly. So how can financial institutions help companies by assessing them, whether it’s their carbon footprint, ESG scoring, or impact with environment. And this is something that I’m working with my colleagues now, how data can be used by financial institutions to leverage and implement better products that will have way better impact. These are the next stage of product development. All of that is now well in progress and financial institutions can get involved in that, because this is the way forward.”
