My next guest advises regulators and financial institutions on ESG — how to be compliant and fulfil the ever-growing regulations that are out there. Joining me is Waseem Hoeneini, Founder and Managing Partner of WMSJ. Thank you so much for joining us today.
Thank you very much for having me. It is a pleasure and honour to be on Fintech TV.
ESG is growing in importance globally. How are regulators and financial institutions thinking about it in this part of the world?
The most driving demand today is the investor need to understand how the environment, social, and governance factors are impacting businesses. They want to understand how to evaluate and assess the financial risks and opportunities associated with sustainability — including climate change, water, and nature — and how these are impacting the ability of businesses to maintain, continue, and drive growth in their financial performance and ability to access cash. With that demand from investors, regulators and standard setters are requiring more frameworks and standards to be aligned — creating taxonomies to bring everyone together, from financial institutions to listed and unlisted companies, to disclose with proper standards where investors can properly assess.
How does the conversation differ between a financial institution and a regulator?
It really comes down to who is the end user. Regulators want to look at the entire business and the entire economy — mainly listed but also unlisted companies — to see on the macro picture how sustainability risks and opportunities are impacting the business. Financial institutions, on the other hand, are the ones financing. Their assets under management are the real driver for their business. They want to assess how their value chain can incorporate this risk and opportunity — how climate risk, nature, water, and governance are impacting the credit ability of their downstream. Everyone in this domain is important and everyone looks at it from a different lens.
Are you seeing ESG being accepted as a driver of returns rather than just a cost?
Investors are demanding that what used to be discussed only in the boardroom — scenarios, risk and opportunity impacts — is now reflected in the financial statements. Under IFRS sustainability disclosure standards, it should be part of the financial statements. Investors want to see how sustainability-related risks and opportunities are impacting the financials of the organisation and the cost of capital. There are multiple drivers for investors. Some want to understand exposure to risk. Some want to assess ESG ratings with different parameters. We are also seeing growth in sustainability-linked financing — green finance, blue finance, blended finance — to support the region, which is impacted by water, climate change, and nature. Governments in the region are putting actions and regulations around climate change reporting requirements because this is what is impacting the macroeconomy and access to external investors and capital outside the region.
What is your take on the activity of exchanges and trading across the region?
This is a great platform where all the exchanges, investors, and multiple stakeholders are sitting in the same room. What we are seeing — from Tabadul to the broader Arab Federation and beyond — is the creation of passports, taxonomies, and uniform reporting structures. The alignment is important to facilitate capital movement — cross-border between countries, between members, and to bring investors from outside and build assets in the region.
What is your one takeaway for viewers about Arab capital markets?
The region is going in the right direction. Most Arab stock exchanges are moving to have clear reporting requirements and governance requirements aligned with climate change. Green, blue, and sustainability-linked financing will attract more investors to the region. We are in the right place and we are going to the right future.
Thank you very much.
Thank you very much for Fintech TV as well. Pleasure.
