S&P/Hawkamah Pan Arab ESG Index Ranks MENA Firms on Nearly 200 ESG Issues Including
Carbon Emissions, Water and Energy Consumption, Employee Health and Safety, Community Investment, Charitable Giving, Financial Reporting and Auditing, Board Independence and Executive Remuneration
DUBAI, February 1 2011 - Standard & Poor's, the world's leading index provider, and Hawkamah, the Institute for Corporate Governance, today announced the launch of the first tradeable index for Middle East and North African (MENA) equity markets that will rank and track the performance, transparency and disclosure of regional companies on Environmental, Social and Corporate Governance (ESG) issues.
The S&P/Hawkamah Pan Arab ESG Index will include the top 50 MENA companies based on their performance on nearly 200 ESG metrics, when compared to their regional peers. Constituents will be drawn from a universe of the 150 largest and most liquid companies listed on the national stock exchanges of 11 markets: Bahrain, Egypt, Jordan, Lebanon, Kuwait, Morocco, Oman, Qatar, Kingdom of Saudi Arabia, Tunisia and the United Arab Emirates. The new index, which complements other ESG indices launched by Standard & Poor's in India and Egypt, was partly funded by the International Finance Corporation (IFC).
"It is now widely recognized that ESG issues can have long-term consequences for a company's financial performance, and linking stock market performance to ESG is perhaps the most effective way to highlight the concept of ESG," said Alka Banerjee, Vice President of S&P Indices. "For the first time, the ESG performance of companies in the MENA region has been extensively researched, quantified and translated into a series of scores that will be used as the basis for an Index that will help raise awareness of a company's impact on people, planet and profit. The S&P/Hawkamah Pan Arab ESG Index is unique in that it uses a company's ESG score to determine its weight in the Index, ensuring performance is based on ESG factors rather than sheer market size."
Speaking on the significance of the new index, Dr. Nasser Saidi, Executive Director of Hawkamah, said: "The launch of the Index is a ground-breaking development for the MENA region. In response to changing economic conditions and to the practices that played a role in sparking the global financial crisis, investors are increasingly focusing on long-term risks in their investments, and ESG factors play a significant role in making those assessments. The Index serves the dual purpose of offering a tool for investors for identifying the regional companies that perform well on ESG parameters, while providing an incentive to MENA companies to pursue sustainable business practices through improved environmental and socially responsible operations, as well as enhanced corporate governance systems. Hawkamah stands ready to work with the region's stock markets and companies to improve the region's ESG reporting practices. I would also like to thank IFC, our long-term partner in promoting good corporate governance, for their support, without which the Index would not have seen the light."
"There is no doubt the S&P/Hawkamah Pan Arab ESG Index will be an important tool for investors in the Middle East and North Africa to determine which companies have sustainable futures, and will prove an incentive for businesses to improve their environmental, social and governance practices," said Dimitris Tsitsiragos, IFC Director Middle East, North Africa and Southern Europe.
Top 10 MENA Companies by Weight
Country | Company | Index Weight (%) | GICS Sector |
Egypt | Egyptian Company for Mobile Services (MobiNil) | 3.06% | Telecommunication Services |
Saudi Arabia | SAVOLA Group | 3.03% | Consumer Staples |
Oman | Oman Telecommunications Company | 2.96% | Telecommunication Services |
U.A.E. | DP World Ltd. | 2.96% | Industrials |
U.A.E. | Emirates Integrated Telecommunications Company | 2.77% | Telecommunication Services |
Jordan | Arab Potash Co | 2.63% | Materials |
Egypt | Telecom Egypt | 2.62% | Telecommunication Services |
U.A.E. | National Bank of Abu Dhabi | 2.57% | Financials |
Egypt | Commercial International Bank (Egypt) S.A.E. | 2.51% | Financials |
Qatar | Qatar Telecom | 2.43% | Telecommunication Services |
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About S&P Indices
S&P Indices, the world's leading index provider, maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1.25 trillion is directly indexed to Standard & Poor's family of indices, which includes the S&P 500, the world's most followed stock market index, the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, the S&P Global BMI, an index with approximately 11,000 constituents, the S&P GSCI, the industry's most closely watched commodities index, and the S&P National AMT-Free Municipal Bond Index, the premier investable index for U.S. municipal bonds. For more information, please visit www.standardandpoors.com/indices.
Standard & Poor's does not sponsor, endorse, sell or promote any S&P index-based investment product. It is not possible to invest directly in an index. This document does not constitute an offer of services in jurisdictions where Standard & Poor's or its affiliates do not have the necessary licenses. Standard & Poor's receives compensation in connection with licensing its indices to third parties.
About Hawkamah
Hawkamah, The Institute for Corporate Governance is an international association of corporate governance practitioners, regulators, and institutions advancing home grown yet globally integrated corporate governance best practices in the region. Hawkamah's mission is to promote corporate sector reform and good governance, and assist the countries of the region in developing and implementing sustainable corporate governance strategies adapted to national requirements and objectives. By promoting its core values of transparency, accountability, fairness, disclosure, and responsibility, Hawkamah works on policy and practical aspects of corporate governance reform in the region. For more information, please visit www.hawkamah.org.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit www.ifc.org.
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Further details on the S&P/Hawkamah Pan Arab ESG Index, including an index methodology and fact sheet, is available at www.standardandpoors.com
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© Press Release 2011
