Dubai Financial Market (DFM) has launched the UAE Index for Environment, Social and Governance (ESG) to encourage listed companies in the UAE to expand embracing ESG best practices.

The S&P/Hawkamah UAE ESG Index is developed in cooperation with S&P Dow Jones Indices and the Hawkamah Institute for Corporate Governance in the UAE (Hawkamah). It is supported and approved by the UAE Securities and Commodities Authority (SCA).

“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 decisions process,” Essa Kazim, Chairman of the DFM said.

The inaugural index sample consists of 20 listed companies and provides 5 years back tracking, enabling market participants to access index performance since 2015.

The index sample is reconstituted once a year in November and the top 20 stocks are automatically added to the index. The reconstitution process uses data gathered by Hawkamah.

“All companies in the selection universe are subject to an assessment process which incorporates ESG criteria against which the company’s disclosure practices are evaluated; the Transparency & Disclosure methodology,” DFM said in a statement.

“There are two categories, one focusing on environment & social indicators and the other focusing on corporate governance indicators. The evaluation process seeks information relating to companies’ disclosure of the ESG indicators available in the public domain, such as a company’s annual report, Web site, press releases, and/or the disclosures made on stock exchanges. The final aim is to determine whether a company has made transparent disclosures in such documents on any of the indicators that are part of the ESG assessment system,” it added.

(Writing by Gerard Aoun, editing by Seban Scaria)

(gerard.aoun@refinitiv.com)

#DFM #UAE

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