Tadawul’s launch of ESG guidelines ‘step forward’ to advance practices in Saudi Arabia: Al-Rumaih

Mohammed Al-Rumaih, CEO of Saudi Exchange (Tadawul)

The Saudi Exchange remains committed to raising awareness of Environmental, Social and Governance (ESG) and championing sustainable growth in the Saudi capital market, Mohammed Al-Rumaih, CEO of the Saudi Exchange (Tadawul), told Argaam in an exclusive.

Tadawul will continue to help issuers and investors deepen their understanding of ESG best practices. It will actively support listed companies through various activities that build on concepts in our disclosure guidelines.

Moreover, Tadawul’s recent launch of ESG guidelines is a significant step forward to support the advancement of ESG in Saudi Arabia, Al-Rumiah explained, noting that the guidelines align with international standards and will encourage companies to voluntarily disclose their ESG performance.

*Why has Saudi Exchange launched an ESG disclosure guidelines?

- Saudi Exchange remains committed to raising awareness of ESG and championing sustainable growth in the Saudi capital market.

We want to partner with listed companies to support their individual ESG journey’s and provide resources to help them navigate the ESG landscape.

Several listed companies have participated and launched a number of initiatives in the areas of renewable energy, water and electricity management and carbon usage. An indication of Saudi company’s shift towards renewable energy and focus on climate change
 

As Saudi Exchange is central to the transformation of Saudi Arabia's economy, we want to ensure we are helping to enable growth that is not just financial. We want to facilitate a financial ecosystem that rewards companies who recognize value beyond balance sheets, and a core component of this is our focus on supporting ESG in our market and across the region.

The recently launched disclosure guidelines will help to build awareness of ESG, equip listed companies to better navigate the ever-changing ESG landscape, introduce a selection of reporting options companies can follow to measure their progress and ultimately unlock the benefits from a sustainable approach to corporate growth.

*What is the Saudi Exchange doing to ensure that companies actually make use of these disclosure guidelines?

- Sustainability has been at the heart of Vision 2030 since its inception. Saudi Arabia is now ushering in a new era as the Kingdom aims to reach Net Zero by 2060. This announcement is in line with wider Vision 2030 ambitions, and a number of G20 initiatives, to accelerate the energy transition, achieve sustainability goals, and drive a new wave of investment.

Moving forward, the Saudi Exchange will continue to help issuers and investors deepen their understanding of ESG best practices.
 

We will actively support listed companies through various activities that build on concepts in our disclosure guidelines, including supporting them in improving their ESG profiles and hosting educational workshops and other awareness-raising initiatives to encourage systematic adoption of ESG.

We will also advise companies on how to improve their ESG disclosures in order to facilitate their inclusion in global ESG indices.

The guidelines were developed in line with the UN SSE model guidance and will be continually updated to account for changes in the ESG landscape to ensure they remain relevant and can continue to act as a catalyst supporting the sustainable and inclusive growth of the Saudi capital market.

*How can Saudi Arabia conform to ESG standards when local norms are not always directly aligned with international standards and best practice?

- As the world’s second largest oil producer, a critical player in the energy supply chain and a G20 economy, Saudi Arabia is committed to catalyzing the collective fight against climate change.

- Saudi Arabia is undergoing a rapid transformation under Vision 2030 to become a truly global nation with a financial ecosystem that connects opportunities in the Middle East to businesses and investors in the rest of the world.
 

ESG is instrumental to business and investment decisions globally and of critical importance to Saudi Arabia’s ambition to develop a more sustainable economy.

- Notably, Saudi Arabia’s Public Investment Fund (PIF) has incorporated ESG principles into some of its $450 billion of investments. Earlier this year, the fund announced a plan to contribute more than $300 billion to the Kingdom’s non-oil gross domestic product by 2025 and identified several new sectors for investment, including renewable energy.  

The country has also taken action in recent years to transition to a more ESG-oriented future, especially as it relates to environmental sustainability.
 

Most recently, HRH Crown Prince Mohammed Bin Salman announced the Saudi Green Initiative and Middle East Green Initiative designed to reduce carbon emissions in the region and generate 50 percent of the country’s energy from renewables by 2030. The initiative is part of the Vision 2030 plan to reduce KSA’s reliance on oil revenues.

The Kingdom launched the concept of a circular carbon economy during its Presidency of the G20 in 2020. The Kingdom’s plan for a circular carbon economy was subsequently endorsed by the G20 as an integrated and comprehensive framework to address the challenges of greenhouse gas emissions and manage them with various available technologies.

Importantly, with a large volume of assets now guided by sustainable investment practices, the Saudi Exchange also has a responsibility to all its market participants and stakeholders to highlight the importance of ESG and the opportunities ESG presents.
 

In fact, the Exchange’s recent launch of ESG guidelines is a significant step forward to support the advancement of ESG in Saudi Arabia.

The guidelines align with international standards and expectations and will encourage companies to voluntarily disclose their ESG performance, offering them structure and support on their journey forward.

*Women in Saudi Arabia have played a big role in the transformation of the country under Vision 2030. How do you see ESG supporting that role and what has Saudi Exchange been doing in this regard?

- A central element of ESG – and one that has experienced significant improvement in recent years – is Diversity, Equity and Inclusion (DEI). A more diverse workforce encourages partnership, fresh thinking and unique perspectives, which we believe will improve the quality of our work.

Female participation in workplace in Saudi Arabia has increased to 33.2% of the total Saudi workforce, an increase from 19.4% in 2017. This has resulted in achieving one of the targets of Vision 2030 10 years ahead of the target date.

The percentage of female employees at our company is increasing every year. Today, women make up 24 percent of our workforce and hold 25 percent of executive positions.

As a G20 member, creating an economy that relies on a more diverse workforce is crucial to sustain its leading position among emerging markets’ countries and globally

We are led by some of the most accomplished women in Saudi Arabia, including our Chair, Sarah Al-Suhaimi, who has demonstrated the importance of having strong women leaders in our workforce with her unwavering leadership and guidance.

In 2018, we became the first Saudi company to sign the UN’s Women’s Empowerment Principles, which help ensure women play a leading role in capital markets and at publicly listed companies.