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S&P launches ESG index for Egypt

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Standard & Poor’s has launched an index designed to track the performance of companies listed on the Egyptian Stock Exchange that demonstrate leadership on environmental, social and corporate governance issues.

Developed in collaboration with the Egyptian Institute of Directors, the Egyptian Stock Exchange and Crisil, the index is designed to raise the profile of EGX-listed companies that perform well on environmental, social and corporate governance indicators when compared to their peers.

It is expected to raise the level and quality of disclosure on ESG issues in Egypt for investors.

The S&P/EGX ESG Index, launched by H.E. Dr. Ahmed Nazif, Prime Minister of the Arab Republic of Egypt at the Third Annual Conference on Corporate Social Responsibility in Cairo, includes 30 stocks drawn from a universe of the top 100 Egyptian companies by total market capitalization which have passed a two-stage, score-weighted screening process.

“By linking ESG to share price performance, the S&P/EGX ESG Index will enable investors to take a leading role in driving firms to enhance transparency and disclosure and ultimately improve reporting standards in Egypt,” says Robert Shakotko, managing director of S&P Indices. “For the first time, environmental, social and corporate governance factors have been extensively quantified and translated into a series of scores, and the members of the Index are representative of the Egyptian equity market based on their size and liquidity.”

A number of Mena firms have started to report on environmental, social and governance issues in line with global standards such as the United Nations Global Reporting Initiative and Global Compact, against which the index will be mapped.

Based on historical analysis, the average ESG score of the 100 largest Egyptian companies has improved by nearly 40 per cent since 2006, and members of the S&P/EGX ESG Index have improved their score by approximately 80 per cent.

The top ten index constituents at launch are CIB-Commercial International Bank, Orascom Construction Industries, El Ezz Steel, Telecom Egypt, Talaat Moustafa Group, EFG Hermes, Lecico Egypt, El Ezz Aldekhela Steel Alexandria, Orascom Telecom and Sidi Kerir Petrochemicals.
 

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