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OPEC Fund Director-General Dr Abdulhamid Alkhalifa outlines the organization’s journey and ascribes intrinsic value to ESG…
ESG:
s the pandemic continues and many commentators turn to talk of ‘building back better’, ESG is a more relevant topic than ever before. Any positives coming out of the current crisis are likely to be skewed toward ESG-related gains, as investors and the public alike anticipate a ‘re-boot’ of the global economy to meet objectives other than absolute growth. Economies based more on notions of financial, environmental, physical and mental wellbeing will be the new goals, with a focus on health, relationships, access to public spaces and a sense of security. As the only globally-mandated
development institution to provide financing from member countries to non-member countries, the OPEC Fund has been looking at ESG through the lens of sustainable, equitable, long-term partnerships with those we lend to for several decades. We believe this has led to a well-rounded approach. In line with the philosophy of impact investing, the OPEC Fund believes that if the goal is to improve ESG outcomes, then financing development operations in emerging and frontier markets should be at the very top of the business agenda. Our organization’s mandate
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AN HOLISTIC APPROACH A
means that environmental, social and governance returns are as important as financial gains. We direct our lending toward projects and operations that support sustainable and inclusive growth; assist with mitigating risks from climate change, environmental degradation and social issues; and foster transparency and long-termism in financial and economic activity. We also build human and institutional capacity in project areas by prioritizing local labor and establishing training and development facilities. Ultimately, our approach to investing is underpinned by ascribing an intrinsic value to ESG. The OPEC Fund provides financing for
developing countries that, by definition, have higher poverty levels and lower health and education provisions, and invariably weaker environmental and governance standards, when compared with developed countries. It is in this sense that our investments see the highest returns in terms of ESG improvements: more robust health and education outcomes, for example, and improved gender equality, along with increased openness and stronger institutions.
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