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  • E. The Principles

    • Principle 1

      1-Reporting Entities should put in place adequate policies, procedures and systems allowing them to report on sustainability- related matters.
        1-1Systems: Reporting Entities should put in place the internal reporting systems for monitoring, and reporting on, material sustainability-related risks, and the processes to ensure that data gaps are addressed within their data governance framework.1
        1-2Internal communication: Reporting Entities should ensure timely reports of data, information and analysis to the board of directors and senior management to enable and underpin robust decision-making internally.
        1-3Reporting: Reporting Entities should provide timely reports of data and sustainability-related information to the public.

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      1 The details related to the application of this Principle 1 are also cross-referred to in the UAE SFWG’s “Principles for the effective management of climate-related financial risks”, in particular in Principle 5 on Monitoring and reporting of climate- related financial risks.

    • Principle 2

      2-In disclosing information about their sustainability-related risks and opportunities, Reporting Entities should consider including the following factors.
        2-1Transparency: Reporting Entities should disclose relevant information about their sustainability policies, practices, and performance to the public, including investors, customers, and stakeholders.
        2-2Materiality: Reporting Entities should focus on disclosing all material sustainability risks and opportunities that are relevant to their business and that have or could have a significant impact on their financial performance. Information is deemed as material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that investors or other stakeholders make.
        2-3Relevance: Reporting Entities should ensure that their sustainability disclosures are relevant and useful to stakeholders, including investors, customers, and regulators, by providing context, analysis, and insights that help them understand the risks and opportunities associated with sustainability issues.
        2-4Comprehensiveness: The disclosure should facilitate comprehensive insight into Reporting Entities exposures to potential sustainability-related impacts; the potential nature and size of such impacts; the organisation’s governance, strategy, and processes for managing such risks, and its performance with respect to managing the related risks and opportunities.
        2-5Consistency and comparability: Reporting Entities should use consistent and comparable sustainability metrics and reporting standards. The disclosures should be presented using consistent formats, language, and metrics from period to period to allow for assessment over time.
        2-6Clarity: the information and data presented should be easy to read and understand by the relevant audience. Necessary definitions, explanations and illustrations should be used to facilitate the comprehension of the data and information presented.
        2-7Frequency and timeliness: Reporting Entities should provide timely and regular updates on their sustainability performance, so that stakeholders can track their progress over time and make informed decisions. When appropriate, the Reporting Entities should be prompt in their issuance of interim reports and statements of interest and relevance to their stakeholders.
        2-8Stakeholder engagement: Reporting Entities should, where relevant, engage with stakeholders, to understand their sustainability concerns and priorities, and use this feedback to improve their sustainability disclosures and performance.
        2-9Verification and assurance: Reporting Entities should aim to use independent, third-party verification and assurance to confirm the accuracy and reliability of their sustainability disclosures, particularly for key performance indicators, metrics and targets.
        2-10Integration: Reporting Entities should integrate their sustainability disclosures into their overall corporate reporting and governance frameworks, including their board discussions and annual reports, financial statements, to ensure that sustainability is adequately embedded in their business strategies and decision-making processes.
        2-11Continual review and improvement: Reporting Entities should strive for continual improvement in their sustainability disclosures and performance, by setting adequate sustainability targets and regularly reviewing and updating their sustainability policies, practices, and reporting.

    • Principle 3

      3-Sustainability-related disclosures should reflect the way in which an entity operates, including in the areas of governance, strategy and risk management, and incorporate relevant metrics and targets. While additional, specific disclosure requirements may apply depending on the type of Reporting Entity, the following minimum disclosures would be expected from the Reporting Entities.
        3-1Governance: Information about the governance processes, controls, and procedures in place to manage sustainability-related risks and opportunities. Disclosures should include information on how the board of directors determines whether sufficient knowledge and skills are available to understand and assess the impact of sustainability-related risks on the Reporting Entity, and how sustainability-related risks and opportunities are taken into account in the board’s oversight, decisions and actions. Disclosures should also cover the role of the senior management in the governance processes for sustainability-related risks and opportunities.
        3-2Strategy: Information about how the Reporting Entity’s strategy incorporates sustainability-related considerations, including risks and opportunities, as well as any relevant transition plans. Information disclosed should include a description of how identified sustainability risks and opportunities are expected to affect the Reporting Entity’s business model and financial results over the short-, medium- and longterm, and the measures the Reporting Entity has undertaken or plans to undertake to manage such risks and take advantage of the potential opportunities.
        3-3Risk management: Information about sustainability-related risks and opportunities and how they are being managed. Information disclosed should include the processes and policies the Reporting Entity uses to identify, assess, measure, mitigate, monitor and report on sustainability-related risk exposures, how those processes are integrated into the overall risk management framework of the Reporting Entity, including capital and liquidity monitoring and, if applicable, how scenario analysis is used to identify sustainability-related risks.
        3-4Metrics and targets: Information about the metrics and targets used to measure, manage and monitor sustainability-related performance.

    • Principle 4

      4-To improve transparency and quality of sustainability-related, product-level disclosures, market participants should consider the following elements when dealing with and offering sustainability-related products.
        4-1Naming: Naming of sustainability-related products should ensure that the name of the product accurately reflects the nature and extent of the product’s sustainability focus, including promoting consistency with the product’s objectives, characteristics and strategies.
        4-2Labelling and classification: Labelling and classification systems used for the purpose of sustainability-related products should be clearly and correctly explained and inconsistent application should be avoided.
        4-3Objectives disclosure: Sustainability- related products should contain clear disclosures in a form appropriate for the product about sustainability-related objectives.
        4-4Strategies disclosure: Disclosures should be made in product offering documents about the strategies of the sustainability-related products to achieve their sustainability goals.
        4-5Risk disclosure: Sustainability-related products should contain disclosures of material risks unique to the product profile and arising from a product’s focus on sustainability.
        4-6Marketing materials: Marketing materials relating to sustainability-related products should be fair, clear and not misleading.
        4-7Monitoring and reporting: Monitoring of compliance and reporting to customers in respect of the sustainability-related product’s compliance with its objectives and characteristics, containing as appropriate and available qualitative and quantitative information, should be put in place.