ESG Integration by Middle East Royal Family Offices

Middle East family offices are becoming major players in sustainable investing, emphasizing ESG integration. With billions in assets under their management, these influential entities are aligning their investment strategies with sustainability principles.

The global ESG investing market was valued at $42.3 trillion in 2022. In the Middle East, this market is expected to grow at a CAGR of 12.2% from 2020 to 2025. Key ESG investment themes in the region include climate change, water, energy, labor, gender, and sustainability.

Middle East Royal family offices oversee assets worth over $6 trillion, and a survey found that 70% of these offices now consider ESG factors in their investment decisions.

The Abu Dhabi Investment Authority (ADIA) aims to invest $1 trillion in sustainable assets by 2050, while the Qatar Investment Authority (QIA) has a target to reduce greenhouse gas emissions by 25% by 2025.

Additionally, the Saudi Arabia Public Investment Fund (PIF) has launched a $10 billion sustainable infrastructure fund. These figures highlight the growing importance of ESG investing in the Middle East and the significant commitments being made by key players in the region.

The global ESG investment market is expected to reach $53 trillion by 2025.

Evolving Landscape of ESG investing for Royal Family Offices

1. Rapid Growth in ESG Assets:

• The total global ESG-focused assets under management (AUM) reached $42.3 trillion in 2022, representing a significant increase from $22.8 trillion in 2016.
• Royal Family offices are increasingly allocating substantial portions of their portfolios to ESG investments, with estimates suggesting that ESG investments represent around 35% of family office portfolios, amounting to billions of dollars.

2. Climate Change and Clean Energy Investments:

• Global clean energy investments amounted to approximately $413.5 billion in 2022.
• Family offices are actively investing in renewable energy projects, with estimates indicating that investments in clean energy from family offices reached billions of dollars globally.

3. Social Impact Investments:

• Social impact investments are gaining traction, with estimates suggesting that the global impact investing market reached $916 billion in AUM in 2022.
• Family offices are directing significant capital towards social impact initiatives, with millions or billions of dollars invested in areas such as affordable housing, #education , #healthcare , and #povertyalleviation.

4. Integration of ESG Data and Metrics:

• ESG data and metrics are becoming essential tools for family offices in assessing the sustainability performance of companies.