ADIO develops ESG policy to maximise investor benefits

The organisation will consider key factors like sustainability, business integrity and Emiratisation when making investments

The Abu Dhabi Investment Office formed a public-private sector working group last year to consider ESG challenges and develop a roadmap for businesses to collaborate on key ESG initiatives. Photo: Getty Images

The Abu Dhabi Investment Office has developed a policy to maximise the environmental, social and governance (ESG) benefits of its incentives and public-private partnership programmes.

The policy will outline how ADIO integrates ESG standards into decisions on the projects and companies it invests in, the organisation said in a statement on Wednesday.

The policy draws on global benchmarks such as the UN Sustainable Development Goals and the Paris Agreement to focus on six key ESG factors: environmental risk management and sustainability, Emiratisation, worker and public safety, social development, business integrity and human rights.

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“The integration of ESG standards and values into business and investment decisions helps to improve company performance, reduce risk and drive growth,” Tariq Bin Hendi, director general of ADIO, said.

“By formally integrating ESG principles into ADIO’s decision[s] and investment process, we aim to further support the development of Abu Dhabi’s private sector.”

The Covid-19 pandemic has served as a wake-up call to many stakeholders about the importance of environmental, social and governance factors. In Europe last year, 505 new ESG funds were launched, more than double the 250 that were started in 2019, according to Morningstar.

Flows into ESG funds in Europe ballooned to €233 billion, up from €126bn in the prior year. The amount of assets in European sustainable funds grew to €1.1 trillion by year-end, a 52 per cent increase.

ADIO's new ESG policy will apply to partners in its Innovation Programme and those involved in PPP transactions, according to the statement.

The government body tasked with overseeing foreign direct investment and private sector development in the emirate will encourage companies that have sustainability principles embedded into their management and operations, and will initiate discussions with those that have not yet incorporated ESG standards, ADIO said.

The organisation formed a public-private sector working group last year to consider ESG challenges and develop a roadmap for Abu Dhabi businesses to collaborate on key ESG initiatives. The working group comprised the Abu Dhabi Department of Economic Development and other companies in the emirate.