NAVIGATING THE FUTURE: ADVANCING GREEN & SUSTAINABLE FINANCE

Reflecting on the past years, financial institutions in the Middle East and North Africa (MENA) region have made significant strides in embracing environmental, social, and governance (ESG) principles as a crucial part of their commitment to sustainability. Recognizing the growing importance of ESG reporting and the need for a comprehensive approach, these institutions have shifted their focus from defining ESG strategies to implementing them, with data governance playing a pivotal role.

A report titled "Middle East Banks drive growth in ESG finance, face calls for ESG strategy," published by Arthur D. Little (ADL), provides a tailored and scalable solution to effectively manage complex ESG information in the region. This retrospective analysis examines the impact of recent disruptions and explores opportunities for banks to strengthen and expand their ESG strategies. In an impressive development, the MENA region had witnessed a remarkable surge in green and sustainable finance, generating $24.55 billion in 2021 compared to $3.8 billion in 2020. This extraordinary 532% year-over-year growth demonstrated the significant momentum in the entire region.

Andreas Buelow, Partner at Arthur D. Little, remarked, "ESG has become the new normal for financial institutions. A clear indication of this lies in the products and services offered by banks, which now reflected their sustainable aspirations. Countries in the Middle East and North Africa are not merely keeping pace with global growth in green issuances but are actually surpassing it."

DRIVING ESG TRANSFORMATION: IMPLEMENTING SUSTAINABLE STRATEGIES

The ADL Viewpoint proposed a two-part scalable solution to address the challenges posed by complex data and enable banks to effectively manage ESG information. The first step involves creating an ESG data catalog to ensure transparency without disrupting existing systems. The second step entails establishing a governance framework that ensures quality control in a scalable and structured manner.

Banks face unique challenges as they put their ESG strategies into practice. A comprehensive ESG strategy encompasses various external and internal applications, aiding financial institutions in their pursuit of a sustainable future. Recognizing the pivotal role of data governance in a fully developed strategy, financial institutions need a framework centered around an ESG data catalog with the following three key features:

1. Prioritizing data transparency and quality without disrupting the existing data landscape.

2. Anticipating future ESG-related requirements.

3. Assisting in managing complex data demands in an evolving regulatory environment.

Thus far, financial institutions in the MENA region continue to embrace ESG, which is gathering momentum and gaining widespread acceptance.