Pension funds in Arab countries have started integrating environmental, social, governance (ESG) and sustainable development issues into their investment decisions, according to a report by the Arab Monetary Fund (AMF) and UN Development Programme.
However, more progress needs to be made if pension funds are to achieve their potential to support the attainment of the sustainable development goals, the AMF and UNDP said on Tuesday.
The SDGs were adopted by the UN in 2015 as a universal call to action to end poverty, tackle climate change and ensure that all people enjoy peace and prosperity by 2030.
“Despite important progress by some funds, if Arab pension funds are to fully play their part in achieving the SDGs while delivering their core mission to members, there is a need to move beyond the current initial focus on ESG issues and towards a stronger alignment with ESG across a breadth of investment decisions,” said Khalida Bouzar, director of the UNDP regional bureau for Arab states.
Assets managed by the world’s sovereign wealth funds and public pension funds reached a record high of $31.9 trillion in 2021, boosted by a rally in the US stock market and rising oil prices, said a report last month by industry tracker Global SWF. Assets managed by public pension funds climbed 8.7 per cent to $21.4tn, the annual report showed.
Meanwhile, investments by sovereign wealth funds in the ESG space surged to $22.7 billion at the end of last year, from $7.2bn in 2020, according to Finbold.com and data from Global SWF.
While many Arab pension funds have taken important steps to align their investments with ESG principles, others are only at the start of the journey, the report said.
Most funds surveyed cited familiarity with ESG factors and SDGs, while fewer funds had advanced towards deeper levels of ESG alignment.
The report recommended a number of steps that can be taken by governments and regulators, pension funds, global and regional organisations and pension fund advisers to deepen the integration of ESG factors in investment decisions and link them more closely to SDGs in the Arab region.
These include the adoption of internationally recognised reporting standards, development of internal capacities to enhance impact management systems and improving transparency and disclosure.
“Given rising interests from policymakers, [the] Arab pension funds industry will see more development of ESG/sustainable labels in the coming future to channel investments into assets with high ESG value,” said Abdulrahman Al Hamidy, director general chairman of the AMF board.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Water waste
In the UAE’s arid climate, small shrubs, bushes and flower beds usually require about six litres of water per square metre, daily. That increases to 12 litres per square metre a day for small trees, and 300 litres for palm trees.
Horticulturists suggest the best time for watering is before 8am or after 6pm, when water won't be dried up by the sun.
A global report published by the Water Resources Institute in August, ranked the UAE 10th out of 164 nations where water supplies are most stretched.
The Emirates is the world’s third largest per capita water consumer after the US and Canada.
