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LIBF MENA’s White Paper Explores how Technology can Measure ESG Exposures

With stricter ESG regulation on the way, The London Institute of Banking & Finance MENA (LIBF MENA) has outlined how technology could resolve issues in obtaining ESG data. 

The organisation, which provides financial education to banks and other organisations in the Middle East and North Africa (MENA), has released ‘How FinTech can help firms measure their ESG exposures‘. The white paper looks to explore how different technology can support MENA firms to measure their ESG impact in time for stricter regulation.

It also outlines how far stricter ESG measures must be put into place in the near future. Despite this, companies are not currently equipped to comply with ESG reporting standards. Consultants McKinsey likened existing carbon accounting systems to cost accounting systems of 40 years ago.

LIBF MENA’s report suggests that the lack of standards has slowed the progress of carbon accounting systems. It also explains that climate change cannot be modelled with historical data, another obstacle in the way of quick advancement.

Although strict standards are not currently in place, efforts have begun to be made globally. LIBF MENA discusses the announcement of the ‘International Sustainability Standards Board’ by the International Financial Reporting Standards Foundation. The board aims to provide global baseline standards for sustainability-related disclosure.

The European Financial Reporting Advisory Group (EFRAG) is also shown to be developing reporting standards in the analysis. EFRAG aims to introduce common mandatory requirements which allow for ESG comparison across sectors. Progress is also being made throughout MENA. The UAE has a national drive to achieve net zero emissions by 2050.

The role of technology

While standards are gradually improving, the report highlights the significant role that technology can play for companies. Geo-analytic firm, Kayrros, uses satellites, artificial intelligence (AI) and machine learning (ML) to provide data on environmental issues.

The report specifically discusses Kayrros’ satellite spectral imaging which is used to measure and track emissions in areas. There appears to be an expectation that such technology could be used by both companies and regulators. These bodies can use the data offered to the average methane footprint per oil barrel in different regions.

LIBF MENA also explains how AI and ML will play significant roles in gathering and analysing the data collected. This technology could play an important part in supporting companies to comply with upcoming stricter ESG regulations. It can also help to better understand and combat the impact of deforestation and other human activity on the planet’s atmosphere.

Kareem Refaay, ESG white paper
Kareem Refaay, managing director, LIBF MENA

Kareem Refaay, managing director of The London Institute of Banking & Finance MENA, explained the need for companies to act. He said: “There are positive business opportunities in the Middle East for corporations that are moving quickly to align their ESG priorities with the broader vision of their governments.”

Refaay continued: “Corporates and entities in the region are embracing ESG not driven by the rationale of simply achieving energy efficiencies and cost savings, but the belief in the approach that embedding an ESG strategy will create value, including, but not limited to, environmental sustainability, staff welfare and engagement, as well as broader societal wellbeing.”


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