Before you invest, take the time to understand how a sustainable investment is measured. Ask yourself if it aligns with your objectives and financial goals.
Here we look at:
Approaches to investing sustainably
There are different approaches to investing sustainably. Each have their own objectives.
Environmental, social and governance (ESG) investing is one such approach. ESG refers to the 3 key criteria that are used to measure the corporate governance, sustainability and ethical impact of a company’s operations:
Ethical investing is different from ESG. This approach actively avoids companies or industries that have a negative impact on society or the environment.
Other types of sustainable investing also invest in assets – not just companies – that do not necessarily form part of a sustainable investment strategy.
Some investors put their money into sustainable investments to help them meet their financial objectives.
ESG issues can both positively and negatively impact share prices. Understanding these factors when investing could increase the resilience of your investments.
When deciding whether sustainable investing is right for you, it's important to consider that:
Remember, the value of your investments can fall as well as rise, and you could get back less than you invest. All investments should be seen as a medium to long-term commitment. This means you should be prepared to invest for at least 5 years.
The main regulatory bodies for financial services in the UAE are the Securities and Commodities Authority (SCA) and the Central Bank of the UAE (CBUAE).
In 2020, the SCA made annual ESG reporting mandatory for listed companies on the Abu Dhabi Securities Exchange or the Dubai Financial Market.
As well as issuing annual sustainability reports, companies must comply with the standards of the Global Reporting Initiative, the Abu Dhabi Securities Exchange, and the Dubai Financial Market.
More recently, in 2023, the UAE Sustainable Finance Working Group (SFWG) launched the 'Principles for the Effective Management of Climate-related Financial Risks'.
Members of the SFWG include government ministries, financial services regulators (such as CBUAE and SCA), and UAE exchanges.
The Principles outline minimum standards for financial firms in the UAE to integrate and disclose ESG-related reporting into their operations.
For more information, see the SCA Master Plan for Sustainable Capital Markets.
The SFWG was established in 2019 to support the development of sustainable finance in the UAE and to:
Today, we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers to reduce their emissions and to reduce our own. For more information visit www.hsbc.com/sustainability.
This article was last updated: 10/06/2024, 12:19 PM
