Riyadh: Tassnief has assigned initial Environmental, Social and Governance (ESG) rating of “ESG 3+” to Maharah for Human Resources Company (‘Maharah’ or ‘the Company’). The outlook on the rating is “Stable”. The Environmental dimension is assigned a rating of “ESG 3”, the Social dimension is assigned a rating of “ESG 3+” and the Governance dimension is assigned a rating of “ESG 3+”. The assigned ESG rating of ‘‘ESG3+’’ indicates low exposure to ESG risk and alignment of ESG in strategy is of good standards.

Tassnief assigns ESG ratings on a scale of “ESG 1” to “ESG 10”. The highest rating, “ESG 1” indicates that exposure to ESG risk is very low and alignment of ESG in strategy is of excellent standard, and the lowest rating, “ESG 10” indicates that the exposure to ESG risk is very high and alignment of ESG in strategy is of weak standard. The ESG rating is derived from a weighted average of sub-scores for Environmental dimension (allocated a weight of 30%), Social dimension (allocated a weight of 30%), and Governance dimension (allocated a weight of 40%). The rating for each dimension is derived from a weighted average of the sector risk (allocated a weight of 40%), and the entity rating (allocated a weight of 60%).

 

Dimension

Entity Specific Assessment

Sector Risk Adjustment

Overall Rating

Environmental Dimension

ESG 4++

Low

ESG 3

Social Dimension

ESG 2

Moderate

ESG 3+

Governance Dimension

ESG 2

Moderate

ESG 3+

Rating Rationale: The Environmental dimension has an overall rating of “ESG 3”. The assigned rating incorporates low sector risk with respect to the Environmental dimension given that core business is based on human capital. Standalone rating of “ESG 4++” on the environment dimension reflects operational sustainability through energy-efficient systems, transition to paperless work, mapping of key environmental risk and a clearly defined road map. However, assessment is constrained by absence of data for key areas.

The Social dimension has an overall rating of “ESG 3+”. It is characterized by moderate exposure, as manpower firms rely on social factors like labor rights, diversity & inclusion, worker well-being, human rights and customer experience for business sustainability. Rating of “ESG 2” on the social dimension reflects strong Saudization levels, employee development programs, improving turnover, local supplier engagement, and excellent health and safety performance. Areas of improvement on the social front include female representation particularly in leadership, high employee turnover despite improvement on a timeline basis, and lack of disclosures regarding compliance with shelter standards and well-being of workers.

The Governance dimension has an overall rating of “ESG 3+”. The rating draws comfort from moderate sector risk on account of strong laws for corporate governance in Saudi Arabia. Rating of “ESG 2” on the governance dimension incorporates comprehensive ESG strategy, robust governance framework aligned with CMA regulations with strong board independence, though lacking a female board representation. Disclosures are comprehensive given alignment with Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB). However, ESG report lacks assurance by an external party and further room for improvement remains in terms of disclosures.

Sustainability governance is embedded across multiple levels of the organization. A comprehensive ESG strategy has been developed, which supports the Company’s corporate objectives, and is communicated across the organization. BoD holds ultimate responsibility for guiding sustainability direction. The Board conducts an annual review of ESG strategy implementation and ensures that sustainability priorities remain integrated within Company’s broader strategic objectives. ESG Strategy has been designed to align with the United Nations Sustainable Development Goals with clearly defined roadmap for implementation over the strategy period. Maharah has developed a detailed ESG Operating Model which has been implemented.

About the Company: Maharah is a Saudi Joint Stock Company registered in the Kingdom of Saudi Arabia under the commercial registration number 1010364538 dated February 17, 2013. Maharah is engaged in provision of manpower outsourcing and support services across various sectors. It offers professional, skilled, and ordinary manpower solutions. Maharah is listed on Tadawul.

For further information on this rating announcement, please contact the senior rating analyst Mr. Talha Iqbal email at RS@tassnief.com.

RELATED CRITERIA AND METHODOLOGY

Rating Methodology for Environmental, Social and Governance Rating can be found on the website: www.tassnief.com