Sustainable investing essential to value creation, but barriers remain

Sustainable investing is a high priority today and will continue to be in 2030 across the private and public sectors, but it faces various barriers, according to a study conducted by Bloomberg Media. The report, launched on Wednesday and sponsored by Mubadala Investment Company, found 79 per cent of respondents globally place sustainable investing as a high priority with that figure rising to 86 per cent in the United Arab Emirates.

The Sustainable Future Study polled over 800 global business decision makers from the UK, China, France, the US and the UAE. It examines the Environment, Social and Governance (ESG) investment landscape and where it is heading by the end of the decade. It shows that ESG is no longer a ‘nice-to-do’, but an integral part of investment decision making, driving a sustainable future, shareholder value, and overall returns. In the UAE 69 per cent of respondents agreed that governments and companies who choose not to invest with ESG in mind will be left behind.

Globally, 86 per cent of all respondents feel that investing is a powerful driver of a more sustainable future while over half (55 per cent) see the Environmental aspect in ESG contributing the most to a company’s shareholder value.

In contrast to a common view that ESG inhibits value creation, this report finds that 85 per cent believe that investing with ESG in mind will improve overall returns, suggesting its growing importance for investment decision making and the interrelationship between profit and impact. This is clearly a key motivating factor for investment, with half of respondents in China weighing ESG factors in investment decisions due to higher returns; two in five UAE respondents are motivated in the same way. More than half in France and 46 per cent in the UK, however, believe the greatest benefit of ESG investing is that it presents greater opportunity for disruptive change.

Ahmed Saeed Al Calily, Chief Strategy and Risk Officer, Mubadala said “More and more investors are recognizing the integral role responsible investment is contributing to a sustainable future, shareholder value and returns. As a business, we strongly believe that generating financial returns and delivering a positive impact are not mutually exclusive but can powerfully combine to create tangible and lasting change.” Despite the endorsement for ESG from respondents, the report identifies key barriers to considering ESG in investment decisions with a lack of defined standards cited as the top barrier by 35 per cent of respondents, followed by high fees and a lack of experts at 33 per cent and 32 per cent respectively. In the UAE, the barriers are weighted differently, with liquidity (46 per cent) and performance (39 per cent) cited as the highest challenges.

Al Calily added: “While there’s growing appetite for sustainable investments, ESG’s potential can only be fully realized with more standardization. There is a clear need for greater coordination between the public and private sectors across the world to drive harmonization. This will help with comparative analysis, investment screening and decision making, and help drive investments in global solutions.” The report also explores investment areas and allocations, finding that Renewables and Clean Energy are the most favored at 39 per cent, followed at a distance by waste reduction and financial services.

National visions: National visions around sustainable development support long-term cable industry growth in MENA despite global uncertainty, according to Mohammad Almutawa, CEO of Ducab Group.

The sole MENA representative at the 2022 CRU Wire & Cable Conference leadership panel in London, Almutawa, noted the world continues to rely on wire and cable products to facilitate digital transformation and energy transition.

Almutawa stated that GCC countries, in particular, have set ambitious targets to switch to clean energy as part of their national visions. For example, Dubai in the UAE plans to have 25% of its electricity produced through solar by 2030, while Oman has a 30% renewable energy production target by the same period. By 2030, GCC countries are on track to save the equivalent of 354 million barrels of oil by switching to renewables, Almutawa added.

This shift will result in accelerated demand for cable and wire solutions. “There is currently more than $3.9 trillion worth of projects either planned or yet to be awarded in the MENA region,” Almutawa observed. He added that a growing population, national strategies around sustainability and energy transition, and energy independence are factors behind the increase in investments in clean energy projects across the region.

As one of the largest manufacturing businesses in the UAE and a strong supporter of the “Made in the Emirates” brand, Ducab has supplied cable solutions to flagship projects in the UAE such as the Burj Khalifa, Dubai Metro, Emirates Palace, and Yas Marina Circuit.

WAM