The Qatar Stock Exchange (QSE) is in talks with an asset manager to launch an ESG (environment, social and governance) fund that will eventually incentivise companies to better embrace the sustainability framework, as Doha strives to become an investment destination of choice for ESG sensitive investors globally.
"We are now working on potentially launching a fund here in Qatar to incentivise everybody to pay more attention to ESG aspects," QSE director (Products and Market Development) Mohsin Mujtaba said without divulging more details.
He said for the last six years, ever since the ESG guidelines was launched, the focus has been more on the corporate side, encouraging them to disclose more.
As much as 30% of the listed companies are actively reporting ESG data and 43% of them are rated by global data providers, he said, adding 90% of the market-capitalisation is rated, which according to him is "a good achievement" in short span of time.
"It is becoming difficult for the companies to sit on the sidelines and say we will wait unless there is standard guideline," he said, adding ESG is the future of investing in Qatar.
"We do recognise that we will not be the largest market in the region, but we want to be the investment destination of choice for ESG sensitive investments globally," Mujtaba told a Bloomberg's Middle East ESG Series.
From a regulatory point of view, he said the bourse has initiated talks with large asset owners who are fully behind the ESG index, which was launched last year in collaboration with MSCI Inc, a leading provider of critical decision support tools and services for the global investment community.
The joint index was designed to identify the top 20 securities within the MSCI Qatar IMI Index that demonstrate the best ESG profile. Responding to the growing demand for sustainable investment tools from investors, the MQ 20 ESG Index is the first ESG index on the Qatar equity market and marks the first co-operation between QSE and MSCI in equity indices.
"We are now working with asset owners to see how much capital can be invested locally into companies with the ESG filter," Mujtaba said.
Stressing that the ESG should be more seen as an risk management tool than a mere reporting framework for investor relations purposes; he said such a strategy would help companies adopt ESG into their culture to better manage the risks of portfolio with sustainability factors.
Mujtaba said at present, ESG reporting is voluntary (otherwise 100% of the listed companies would have reported compared to 30%), but "at some point, we are getting to a situation where there are conversations now happening with the regulator on when to make it mandatory."
In 2016, the QSE joined the United Nations initiative on sustainable development (SSEI). Since then, it has undertaken the promotion of ESG standards, which are concerned with environment protection and support the role of companies in the fields of social responsibility and governance.
In 2017, the bourse had introduced the ESG Guidance in December to assist all listed entities wishing to incorporate ESG reporting into their existing reporting processes. In 2018, the bourse launched the first sustainability platform in the region to encourage listed companies to disclose their reports on sustainable development (ESG).
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