With sustainable investing becoming more prevalent, more investors are factoring environmental, social and governance (ESG) data into their decision-making.
This year, we expect to see continued issues from the pandemic and its associated economic and societal implications.
For investors trying to position and navigate their portfolios through the uncertainty, considering ESG can provide a valuable perspective on the material factors affecting companies in 2021.
It is important to note that ESG factors are neither static nor exhaustive, but rather they highlight challenges companies might face and which investors may want to understand.
Environmental factors
The pandemic may have moved environmental awareness down the global agenda as they focused on more pressing issues. However, climate breakdown has continued relentlessly and will likely regain pace as output recovers.
With hopes of a vaccine being distributed soon, we expect more attention to return to environmental factors, notably in carbon emissions and biodiversity.
Social factors
Social factors have generally not received the same attention as environmental and governance ones. The comprehensive and pervasive effects of the pandemic across industries and countries seem to have made social factors more universal and a priority for investors.
How companies managed their relationships – with employees, suppliers, customers and in its communities – became immediately evident and comparable. We expect, as the economy attempts to recover, attention to grow next year in two areas in particular: employee safety and labour management.
Governance factors
Even before the rise of using ESG factors, governance has been a long-standing, non-financial consideration for many investors. It covers a broad range of corporate activities such as board and management structures, shareholder rights management, remuneration and incentives, board diversity, corporate policies and standards, information disclosure and ethical behaviours.
With hopes of a vaccine being distributed soon, we expect more attention to return to environmental factors, notably in carbon emissions and biodiversity
Last year, we saw widespread calls for more gender and racial equity along with social justice and reversal of globalisation. While these issues will continue into, and beyond, 2021, two aspects are material for investors – the robustness of corporate governance and alignment of executive remuneration.
Using ESG to select quality investments
The reality is investors consider a variety of factors when deciding whether to select, or hold, an investment. Adding ESG factors can enhance existing investment processes by including non-financial information – hopefully to make more informed investment decisions.
Traditionally, investors’ primary data points have been financial ones, with sources such as annual reports, management presentations and earnings statements. Several traditional performance indicators may be disrupted this year, therefore, relying solely on this information may limit the ability to select companies that will perform better in such challenging conditions.
The core premise is that by considering ESG factors, an investor can take account of a broader set of data to make a better judgement about the financial performance and longer-term value of a company. However, not all factors are equally relevant to all companies.
Given the wide range of ESG issues a company may face, an investor should narrow them to a set that is most relevant and translates into financial performance, impacting either free cash flow or eventually the cost of external financing. This materiality is important to identify which of these factors will influence, positively or negatively, a firm’s business model and value drivers.
Having determined the material ESG factors, investors can identify where a company can be at risk or have an advantage relative to its peers. For example, organisational practices and culture can affect a licence to operate or make a company more or less prone to scandals or fines.
By introducing leading environmental sustainability practices, greater operational effectiveness can be achieved. Or greater connection with employees and customers can be made through a company’s market positioning and activities.
Additionally, investors also have various options in how they assess and integrate ESG considerations into investment practices. While “ESG investing” is generally discussed as a homogeneous practice, there are substantial differences in investors’ approaches. At the broadest, two methods emerge – screening or incorporation.
Screening on ESG factors relies primarily on using either a single metric or a rating, which are a composite assessment of the relevant data points, calculated through weighing mechanisms. Investors can use the ratings from various agencies (such as MSCI, Sustainalytics, FTSE Russell or Refinitiv) or develop their in-house rating systems.
Incorporation, on the other hand, is a more nuanced approach, where investors include ESG factors into their investment assessment, discussion and decision-making. This can mean using ratings as part of the process, but they also tend to delve into the accompanying qualitative research reports and underlying data to the factors. With an incorporation approach, ESG becomes one of the factors to inform decision-making rather than a rigid, filtering one.
If investors can use ESG insights to understand better the complexities of associated risks and opportunities in how companies operate, they can position their portfolios accordingly. Additionally, more widespread use of such considerations and requirements to report such data may help encourage companies to make a positive change in how they operate on these factors.
In what looks like being a low-return era for investors, ESG integration provides additional tools for investors to select companies and build portfolios with the aim of generating long-term returns for 2021 and beyond.
Damian Payiatakis is the head of sustainable and impact investing at Barclays
COPA DEL REY
Semi-final, first leg
Barcelona 1 (Malcom 57')
Real Madrid (Vazquez 6')
Second leg, February 27
STAR%20WARS%20JEDI%3A%20SURVIVOR
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West Asia Premiership
Dubai Hurricanes 58-10 Dubai Knights Eagles
Dubai Tigers 5-39 Bahrain
Jebel Ali Dragons 16-56 Abu Dhabi Harlequins
The specs
Engine: 3.8-litre twin-turbo flat-six
Power: 650hp at 6,750rpm
Torque: 800Nm from 2,500-4,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 11.12L/100km
Price: From Dh796,600
On sale: now
Fast%20X
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Engine: 5.6-litre V8
Transmission: seven-speed automatic
Power: 400hp
Torque: 560Nm
Price: Dh234,000 - Dh329,000
On sale: now
MATCH INFO
Newcastle United 3
Gayle (23'), Perez (59', 63')
Chelsea 0
Did you know?
Brunch has been around, is some form or another, for more than a century. The word was first mentioned in print in an 1895 edition of Hunter’s Weekly, after making the rounds among university students in Britain. The article, entitled Brunch: A Plea, argued the case for a later, more sociable weekend meal. “By eliminating the need to get up early on Sunday, brunch would make life brighter for Saturday night carousers. It would promote human happiness in other ways as well,” the piece read. “It is talk-compelling. It puts you in a good temper, it makes you satisfied with yourself and your fellow beings, it sweeps away the worries and cobwebs of the week.” More than 100 years later, author Guy Beringer’s words still ring true, especially in the UAE, where brunches are often used to mark special, sociable occasions.
PROFILE OF CURE.FIT
Started: July 2016
Founders: Mukesh Bansal and Ankit Nagori
Based: Bangalore, India
Sector: Health & wellness
Size: 500 employees
Investment: $250 million
Investors: Accel, Oaktree Capital (US); Chiratae Ventures, Epiq Capital, Innoven Capital, Kalaari Capital, Kotak Mahindra Bank, Piramal Group’s Anand Piramal, Pratithi Investment Trust, Ratan Tata (India); and Unilever Ventures (Unilever’s global venture capital arm)
5 of the most-popular Airbnb locations in Dubai
Bobby Grudziecki, chief operating officer of Frank Porter, identifies the five most popular areas in Dubai for those looking to make the most out of their properties and the rates owners can secure:
• Dubai Marina
The Marina and Jumeirah Beach Residence are popular locations, says Mr Grudziecki, due to their closeness to the beach, restaurants and hotels.
Frank Porter’s average Airbnb rent:
One bedroom: Dh482 to Dh739
Two bedroom: Dh627 to Dh960
Three bedroom: Dh721 to Dh1,104
• Downtown
Within walking distance of the Dubai Mall, Burj Khalifa and the famous fountains, this location combines business and leisure. “Sure it’s for tourists,” says Mr Grudziecki. “Though Downtown [still caters to business people] because it’s close to Dubai International Financial Centre."
Frank Porter’s average Airbnb rent:
One bedroom: Dh497 to Dh772
Two bedroom: Dh646 to Dh1,003
Three bedroom: Dh743 to Dh1,154
• City Walk
The rising star of the Dubai property market, this area is lined with pristine sidewalks, boutiques and cafes and close to the new entertainment venue Coca Cola Arena. “Downtown and Marina are pretty much the same prices,” Mr Grudziecki says, “but City Walk is higher.”
Frank Porter’s average Airbnb rent:
One bedroom: Dh524 to Dh809
Two bedroom: Dh682 to Dh1,052
Three bedroom: Dh784 to Dh1,210
• Jumeirah Lake Towers
Dubai Marina’s little brother JLT resides on the other side of Sheikh Zayed road but is still close enough to beachside outlets and attractions. The big selling point for Airbnb renters, however, is that “it’s cheaper than Dubai Marina”, Mr Grudziecki says.
Frank Porter’s average Airbnb rent:
One bedroom: Dh422 to Dh629
Two bedroom: Dh549 to Dh818
Three bedroom: Dh631 to Dh941
• Palm Jumeirah
Palm Jumeirah's proximity to luxury resorts is attractive, especially for big families, says Mr Grudziecki, as Airbnb renters can secure competitive rates on one of the world’s most famous tourist destinations.
Frank Porter’s average Airbnb rent:
One bedroom: Dh503 to Dh770
Two bedroom: Dh654 to Dh1,002
Three bedroom: Dh752 to Dh1,152
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UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports
Profile of Tarabut Gateway
Founder: Abdulla Almoayed
Based: UAE
Founded: 2017
Number of employees: 35
Sector: FinTech
Raised: $13 million
Backers: Berlin-based venture capital company Target Global, Kingsway, CE Ventures, Entrée Capital, Zamil Investment Group, Global Ventures, Almoayed Technologies and Mad’a Investment.
MATCH INFO
Qalandars 109-3 (10ovs)
Salt 30, Malan 24, Trego 23, Jayasuriya 2-14
Bangla Tigers (9.4ovs)
Fletcher 52, Rossouw 31
Bangla Tigers win by six wickets
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
yallacompare profile
Date of launch: 2014
Founder: Jon Richards, founder and chief executive; Samer Chebab, co-founder and chief operating officer, and Jonathan Rawlings, co-founder and chief financial officer
Based: Media City, Dubai
Sector: Financial services
Size: 120 employees
Investors: 2014: $500,000 in a seed round led by Mulverhill Associates; 2015: $3m in Series A funding led by STC Ventures (managed by Iris Capital), Wamda and Dubai Silicon Oasis Authority; 2019: $8m in Series B funding with the same investors as Series A along with Precinct Partners, Saned and Argo Ventures (the VC arm of multinational insurer Argo Group)
MATCH SCHEDULE
Uefa Champions League semi-final, first leg
Tuesday, April 24 (10.45pm)
Liverpool v Roma
Wednesday, April 25
Bayern Munich v Real Madrid (10.45pm)
Europa League semi-final, first leg
Thursday, April 26
Arsenal v Atletico Madrid (11.05pm)
Marseille v Salzburg (11.05pm)
Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
The specs: 2019 Audi A7 Sportback
Price, base: Dh315,000
Engine: 3.0-litre V6
Transmission: Seven-speed automatic
Power: 335hp @ 5,000rpm
Torque: 500Nm @ 1,370rpm
Fuel economy 5.9L / 100km
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
Details
Through Her Lens: The stories behind the photography of Eva Sereny
Forewords by Jacqueline Bisset and Charlotte Rampling, ACC Art Books
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MATCH INFO
Manchester United 1 (Fernandes pen 2') Tottenham Hotspur 6 (Ndombele 4', Son 7' & 37' Kane (30' & pen 79, Aurier 51')
Man of the match Son Heung-min (Tottenham)
