Posted on: 14th April 2025

The Rise of ESG Investing in Saudi Arabia

Over the past few years, you've probably heard the term ESG investing pop up more often.

ESG stands for Environmental, Social, and Governance, and it's changing how people and institutions think about money. It's no longer just about financial return — it's about making a positive impact.

In Saudi Arabia, ESG investing is gaining real momentum. Driven by Vision 2030, a shift toward more sustainable, ethical , and transparent business practices is growing.

In this article, we'll explore what's behind this change, where the opportunities lie, and what it means for the future of finance in the Kingdom.

Vision 2030: Setting the Stage for ESG

Saudi Arabia's Vision 2030 is all about transforming the economy, reducing reliance on oil, and building a more diverse and sustainable future. ESG investing fits in perfectly with this vision.

At its core, ESG encourages companies to think beyond profits — to consider their impact on the planet, how they treat people, and how they run their businesses. This mindset is becoming a key part of the Kingdom's efforts to attract international investors and grow new sectors.

A Clearer Framework for Companies

To support this shift, Saudi regulators are taking action. The Saudi Exchange has introduced ESG Disclosure Guidelines to help companies report on their sustainability performance more clearly and consistently.

At the same time, the Capital Market Authority (CMA) now expects ESG factors to be included in annual reports and IPO filings.

These steps show that Saudi Arabia isn't just paying lip service to ESG — it's embedding it into the financial system.

ESG Investment Products Are Taking Off

Another exciting development is the rise of ESG-linked financial products.

In recent years, we've seen a big increase in the number of green bonds and sustainability-linked Sukuk issued in Saudi Arabia. In fact, the market grew from around $1 billion in 2019 to nearly $8 billion by 2023.

We've also seen the launch of Saudi's first ESG exchange-traded fund (ETF), created by Yaqeen Capital. This move gives everyday investors a chance to back companies with strong ESG credentials — not just big institutions.

The Public Investment Fund is Leading by Example

The Public Investment Fund (PIF), one of the most influential forces in the Kingdom's economy, also plays a major role in advancing ESG.

The PIF is a founding member of the One Planet Sovereign Wealth Fund Initiative, which encourages sustainable investing by sovereign wealth funds.

It's also spearheading renewable energy projects to help Saudi Arabia meet 70% of its national clean energy targets by 2030.

This kind of leadership sets the tone for the rest of the country's financial and business community.

Companies Are Getting on Board

More and more Saudi companies are starting to embed ESG into their daily operations. This includes conducting ESG audits, setting clear sustainability goals, and publicly reporting on their progress.

A growing number of firms are ranked by tools like the ESG Saudi Arabia Index, which measures their performance across key environmental, social, and governance criteria.

For companies that score well, it's a valuable badge of honour — and a signal to investors that they take these issues seriously.

Challenges Still Remain

Of course, the shift to ESG isn't without its challenges. At the moment, only about 30% of top companies in Saudi Arabia publish sustainability reports. Even when they do, the quality and consistency of those reports can vary a lot.

There's also a lack of a unified national ESG framework, which makes it harder for investors to compare one company to another. Plus, this is still a new area for many businesses — and understanding what ESG really means in practice can take time.

Looking Ahead: Opportunities for Growth

Despite these challenges, the future of ESG in Saudi Arabia looks bright.

The government is working on clearer reporting standards, and there's strong demand from international investors who care deeply about ESG.

We're also seeing more innovation in this space, especially in fintech and sustainability data analytics, which can help simplify ESG reporting and make it more transparent.

As more Saudi firms embrace ESG principles, they'll attract capital and build stronger, more resilient businesses that are better prepared for tomorrow's challenges.

Final Thoughts

The rise of ESG investing in Saudi Arabia is more than just a trend — it's part of a much bigger transformation.

From regulatory reforms and green finance to responsible corporate leadership, ESG is becoming a core part of how the Kingdom is building its future.

For financial service providers like us, it's an exciting time. We have a unique opportunity to support our clients as they navigate this shift, make smarter investments , and create lasting value for shareholders, society, and the environment.

If you'd like to learn more about ESG investing or how your business can benefit from it, speak to Holborn and Let's shape a more sustainable future together.