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Saudi Exchange signs MoU with government entities to develop ESG taxonomy

The Saudi Exchange Company has signed an MoU with the Saudi Capital Market Authority (CMA) and the Ministry of Economic Planning to drive the Kingdom’s sustainable development and advance ESG industry standards. It is also aimed to promote ESG awareness among investors.

The MoU, which was signed on the sidelines of the second annual Saudi Capital Market forum on the 13th February 2023, will see the parties collaborate to develop an ESG taxonomy as well as a national ESG disclosure framework for listed companies, infrastructure companies and capital market institutions.

“The development of a comprehensive ESG ecosystem will further stimulate growth of the private sector in Saudi Arabia, contributing to our target of 65% of GDP and meeting net-zero emissions by 2060, and helping to secure the Kingdom’s place among sustainable development leaders in line with the national transformation program objectives under Saudi Vision 2030,” Faisal Fadhil Alibrahim, the Saudi minister of economy and planning, commented.

Noting the growth of ESG practices among listed Saudi companies in previous years, Mohammed El Kuwaiz, the chairman of the CMA, shared that the MoU will see the three parties come together to support companies to adopt best international ESG practices.

Separately, the Saudi Tadawul Group, the parent company of the Saudi Exchange, signed an MoU with Clarity AI Information Technology to enable investors internationally to practice ESG screening and reporting based on existing and upcoming national benchmarks. The MoU aims to enhance disclosure practices and frameworks throughout the region.

The ESG-related MoUs are part of a notable push from the GCC region toward the promotion of sustainability disclosure as well as harmonization efforts.

Earlier this year in January, the GCC Exchange Committee, which is chaired by the Saudi Exchange, released voluntary unified ESG disclosure metrics aligned with the World Federation of Exchanges and the Sustainable Stock Exchange initiative.

The voluntary metrics have been jointly launched by the six members of the exchange committee, namely Abu Dhabi Securities Exchange, Bahrain Bourse, Boursa Kuwait, Dubai Financial Market, Muscat Stock Exchange and Qatar Stock Exchange.

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