On the road to ESG investment in Qatar
In the autumn of 2021, global leaders convened in Glasgow for the COP26 conference to unify the globe on a shared course to combat climate change; the most pressing and crucial issue confronting emerging and industrialized economies and all forms of life at large. Today, the emphasis is increasingly on adopting mitigation and adaptation methods that include domestic and cross-border collaboration. However, any success in averting the adverse effects of climate change rests on finance, with significant investments needed in low-carbon technologies and sustainable infrastructure to support the green transition. Therefore, global agencies and nations are calling to fill the investment gap, mainly through the private sector.
The global pandemic has brought to the fore the lingering gaps in environmental, social, and corporate governance (ESG) finance and the need to adopt sustainable investment strategies that allow investors to achieve a balance between profit and social responsibility. For many, this meant betting on green initiatives to shore up their ethical credentials with new, sustainable business models.
According to the current trends revealed by the Global Sustainable Investment Alliance, these investments have become increasingly mainstream, accounting for more than USD 35 trillion in the five largest global markets, a 15% growth between 2018 and 2020, and 36% of all professionally managed assets across regions the organization cover.
However, many opportunities to advance sustainable investments remain untapped. According to the United Nations Conference on Trade and Development (UNCTAD), despite a solid global FDI rebound in 2021, the recovery of Social Development Goals (SDGs) relevant investments in developing economies remains weak. The number of SDGs-relevant investment projects in the developing world rose by only 11%, far less than desired. These latest figures reiterate the importance of shifting towards sustainable investment and pinpoints the untapped opportunities for firms to capitalize on within the ESG standards.
Qatar on the path to ESG-investment growth:
Long before the adoption of SDGs and the pandemic outbreak, Qatar had identified climate sustainability as a critical focus of its growth strategy. The national strategy documents evidence the country’s commitment to climate change; both Qatar National Vision 2030 and National Development Strategy 1 and 2 emphasize the importance of environmental protection and combating climate change by improving preparedness, building resilience, and enhancing the society adaptation. Qatar further reaffirmed its commitment of combating climate change through the publication of The National Climate Change Action Plan (NCCAP) in 2021, developed in coordination with more than 50 entities within the country. Through consolidated efforts manifested in different institutions, the introduction of new rules and regulations, and green projects, Qatar continues to gather momentum towards ESG-investing to accelerate and support efforts directed at reducing and adapting to the harmful effects of climate change.
The country’s Planning and Statistics Authority (PSA) has been collating and disseminating data on sustainable development indicators since 2009. The state is also rapidly developing ESG frameworks to promote sustainability and facilitate greenfield investment, particularly in sustainable financing. Successful examples of these efforts include the Qatar Stock Exchange joining the United Nations Sustainable Stock Exchanges Initiative (SSEI), and the launch of the ESG Guidance, the first sustainability platform, and the first ESG tradable index.
Complementing these initiatives, Invest Qatar, the national brand with its network, connects international investors’ fit-for-future investments, and further attracts sustainability-friendly FDI to the country. Some significant sustainability-focused partnerships include Wadi Water for AgriTech innovation; Gaussin, a technology company that designs, assembles, and offers zero-emission, smart and connected vehicles for freight transportation and people mobility; Aspiration, a global leader in providing sustainability as a service supporting and building the world’s first net-zero free zones in line with the Qatar Free Zones Authority (QFZA); and Honeywell, a conglomerate focusing on providing technology solutions across energy and engineering sector’s in Qatar. These ESG-focused investments demonstrate the lucrative opportunities the country offers to investors looking for investment opportunities and businesses keen on expanding their overseas operations.
As shown in Invest Qatar’s ESG Report, these initiatives open a large window of opportunity of at least USD 75 billion by 2030 for sustainable investments, which have already started pouring into the country. Qatar’s supply of sustainable finance has improved by Qatar National Bank’s (QNB) first-ever USD 600 million green bond issuance in 2020 and could soon reach new heights with the launch of the first-ever sovereign green bond in the Gulf region. Qatar aims to align strategic sectors with its sustainable development aspirations while also generating opportunities for sustainability-conscious investors. Some examples include hosting the first-ever carbon-neutral FIFA World Cup in 2022, setting targets to reduce the carbon intensity of its liquefied natural gas facilities by 25% by 2030, growing solar energy capacity to 2-4 gigawatts by 2030, developing the sustainable city concepts of Lusail and Msheireb Downtown, having one of the largest green ports in the world (Hamad Port), and introducing eco-friendly transportation systems.
Qatar has a compelling national interest in championing and promoting faster and ambitious domestic, regional, and global action against climate change. ESG-based investments in the country carry a golden opportunity in terms of financial returns and contributions to sustainability and climate-related objectives.