ABU DHABI // Adopting a strategic corporate social responsibility initiative that looks beyond philanthropy will help companies in the GCC achieve a place in the global market, experts said.
“Awareness of the importance of corporate social responsibility has been growing in the GCC over the last 10 years,” said Nasser Al Issa, chief sustainable officer at Saudi Generations.
“But there is a clear gap between what is happening in the GCC compared to advanced countries, particularly in Europe and in North America. These gaps are in knowledge, innovation, research, training and education, and web applications, among others.”
He was speaking on the sidelines of the second Global Corporate Social Responsibility (CSR) Conference in Abu Dhabi yesterday. The theme of the conference is “The New Role of Sharing Values”, to promote the need to share best practices, opportunities, knowledge and technology.
It was held under the patronage of Sheikha Fatima bint Mubarak, chairwoman of the General Women’s Union, supreme chairwoman of the Family Development Foundation and president of the Supreme Council for Motherhood and Childhood.
"Government and semi-government authorities in the region can work on a strategy to develop on a local CSR guide and a reporting system," Mr Al Issa said. "Once you develop a CSR programme, it has to grow, be sustainable and adapt to the local needs and culture."
The GCC has the potential to be a global leader in CSR and sustainability, he said. “The money is there and we have the expertise. The UAE is the best in the GCC in terms of CSR. I’m particularly impressed with the initiatives of the Emirates Foundation.”
Another CSR expert agreed.
“A number of UAE companies are very progressive, are leaders in their field and can be a role model in the region,” said Nikos Avlonas, founder of the Centre of Sustainability and Excellence, a global advisory and training organisation specialising in sustainability.
Progress has been made in the GCC as there has been a shift from traditional to strategic CSR, he said. “It is a slow progress but most companies fail to make it more strategic in the social part, because it is under the public relations department which wants publicity,” Mr Avlonas said.
Philanthropy in itself is not enough to make a difference, he said.
“Philanthropy is good to do but CSR is even better,” he said. “Companies in the region should move from the traditional CSR programmes to a more strategic CSR, and quantify and design metrics for measuring the impacts.”
At the moment, most companies are quantifying environmental impacts but not social issues.
“Social Return on Investment is a great methodology to quantify data and quantify the social value,” he said. “I think it can help close this big gap.”
Sultan Mohammed Al Shehhi, project manager at the Emirates Red Crescent, said it was looking at greater participation of companies with the society. “But it’s not all about funding. It’s about what they can do for this country,” he said. “They should feel the need to give back to the community.”
Sheikh Nahyan bin Mubarak, Minister of Culture, Youth and Community Development, who inaugurated the conference, praised Sheikha Fatima’s support for the event, which he said would greatly benefit the UAE and the region.
He also praised the leadership of the President, Sheikh Khalifa, which stresses social responsibility in protecting the environment and developing society.
Sheikh Nahyan thanked Sheikh Hamdan bin Zayed, the Ruler’s Representative in the Western Region and chairman of the Emirates Red Crescent, for promoting social responsibility in the UAE.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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