S&P to launch corporate governance indices

April 15th, 2008 - 8:48 pm ICT by admin  

Dubai, April 15 (IANS) World’s leading index provider Standard and Poor’s (S&P) and United Arab Emirates (UAE)-based corporate governance institute Hawkamah have formed a new partnership to create a series of environment corporate governance and sustainability (ESG) indices for equity markets in the Middle East and North Africa (MENA) region. “Advancing corporate governance and sustainability parameters in the region require a multi-faceted approach where we recognize that each of the MENA countries has reached variable phases,” Hawkamah executive director Nasser Saidi said at a press conference here Tuesday.

The new indices will be modelled on the S&P ESG India index, which was launched last year by S&P, CRISIL and KLD Research Analytics with partial financial support from the International Finance Corporation (IFC).

“We will be consulting and cooperating with all relevant authorities in undertaking this work. Our aim is to raise the bar for corporate governance on major issues for the region including the environment, social and corporate governance responsibility,” Saidi said.

The S&P-Hawkamah ESG MENA indices will focus on the best performing stocks as measured by their high level of concern for the interests of both internal and external stakeholders, he added.

These would include shareholders, employees, customers, the larger community within which the company operates and the environment.

The indices will employ a unique and innovative methodology that will quantify a company’s ESG practices and translate these into a scoring system, which will then be used to rank each company against peers in the MENA markets.

“The S&P ESG methodology is unique in that it uses the scores that companies receive on ESG parameters as index constituent weights,” S&P’s managing director for index services Robert Shakotko said.

“This ensures index performance is based on a company’s investment in ESG parameters rather than its sheer market size.”

S&P and Hawkamah will form a joint task force to develop the framework for the new indices over the next 12 months.

Launched in 2006, Hawkamah is an international association of corporate governance practitioners, regulators and institutions whose primary mandate is to develop corporate governance best practices in the Middle East region.

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