Hanaa Helmy, founding CEO of the EFG Foundation, is a 2018 UN Global Compact SGD Pioneer for Social Development. Under her leadership, the Foundation has realized impactful integrated sustainable development programmes in the most impoverished villages in Upper Egypt. Hanaa also spearheads ESG strategies at EFG Holding, earning accolades for sustainability and responsible investment.

In a recent conversation with The Global Woman leader Magazine, Hanaa discusses how sustainability challenges are transforming industry risk management and investment strategies, emphasizing the integration of ESG metrics alongside traditional financial indicators to align with global sustainability goals.

In the evolving landscape of financial services, how are current sustainability challenges reshaping the industry's approach to risk management and long-term investment strategies?

Sustainability challenges are significantly reshaping the financial services industry, particularly in terms of risk management and long investment strategies. This transformation is taking shape in several significant ways. Financial institutions are increasingly incorporating ESG factors into their risk management frameworks, regulators are advocating for stricter reporting and management of sustainability-related risks.

Additionally, there is a heightened focus on enhancing climate-risk data analytics capabilities. Regarding long-term investment strategies, investors and customers are increasingly seeking more sustainable options. This shift is evident in the growing preference in renewable energy, green technologies, and projects that facilitates the transition from high-carbon to low-carbon economic activities. Overall, integrating sustainability challenges into risk management and investment strategies goes beyond mere compliance; it’s about capitalizing on new opportunities for growth and innovation. Financial institutions that adeptly address these challenges are likely to be better positioned for long term success.

With sustainability metrics becoming increasingly integral, how can financial institutions balance traditional financial performance indicators with emerging environmental and social governance metrics to create a more comprehensive assessment of organizational success?

To effectively balance traditional financial performance indicators with emerging environmental and social governance (ESG) metrics, financial institutions should implement several key strategies. Firstly, adopting integrated reporting frameworks can help align ESG metrics with financial performance. Conducting materiality assessments to identify pertinent ESG issues relevant to the business and its stakeholders is crucial. Incorporating ESG metrics into a balanced scorecard approach can provide a holistic view of organizational success. Additionally, linking executive compensation to ESG performance ensures that leadership is incentivized to achieve both financial and sustainability objectives.

Transparent communication regarding the impact of ESG initiatives on financial outcomes helps build stakeholder trust. By integrating these approaches, financial institutions can achieve a more comprehensive assessment of organizational success, balancing financial performance with sustainability priorities.

As regulatory frameworks around sustainability become more stringent, how should financial services companies adapt their compliance strategies to not only meet these regulations but also to lead the industry in setting higher standards?

To adapt to increasingly stringent sustainability regulations and lead the industry in setting higher standards, financial services companies need a proactive and strategic approach. This involves embracing new regulations ahead of mandatory deadlines, adopting best practices to exceed those requirements, and integrating ESG consideration into all aspects of the business, from risk management to investment strategies in addition to providing training for employees to ensure that everyone is aligned with these goals. This holistic approach embeds ESG factors throughout the organization, helping to meet and surpass regulatory expectations while promoting sustainability.

Given the rising expectations from investors regarding corporate sustainability, how can financial services firms proactively engage with stakeholders to ensure alignment between investor interests and sustainable business practices?

To proactively engage with stakeholders and ensure alignment between investor interests and sustainable business practices, financial services firms should provide transparent and regular updates on sustainability initiatives and their impact on financial performance, using clear metrics on ESG performance. Engaging in active dialogue with investors to understand their expectations and concerns regarding sustainability is crucial. Moreover, raising awareness and sharing success stories about the benefits of sustainable business practices can help build trust and demonstrate the value of these initiatives.

In the context of global market trends towards sustainable finance, what innovative approaches are being adopted to integrate ESG factors into investment decision-making processes and client advisory services?

In the context of global market trends towards sustainable finance, financial services firms are adopting several innovative approaches to integrate ESG factors into investment decision-making processes and client advisory services. These include incorporating ESG Integration and thematic Investing into their strategies, utilizing advanced data Analytics and monitoring tools, and engaging with stakeholders to ensure comprehensive ESG consideration.  On the client advisory services side, firms ae taking a client-centric approach, raising investor awareness, providing transparent reporting, and offering specialized ESG advisory services. These efforts collectively ensure that ESG factors are deeply embedded in both investment decisions and client interactions, aligning with the growing emphasis on sustainability.

As green finance becomes more mainstream, what do you foresee as the next frontier for sustainable financial products and services, and how should institutions prepare for these emerging opportunities?

As green finance becomes more mainstream, the next frontier for sustainable financial products and services is likely to involve a significant increase in climate-smart investments, promoting financial institutions to build dedicated green funds. Institutions should also invest in digital infrastructure and collaborate with fintech companies to develop innovative green digital financial solutions. Furthermore, banks will need to establish frameworks for assessing and monitoring borrowers’ ESG performance and develop sustainability-linked loans products tailored to different sectors and regions.By preparing in these ways, financial institutions can effectively capitalize on emerging opportunities in the sustainable finance landscape.

Considering global sustainability challenges such as climate change and resource scarcity, how should the financial services industry recalibrate its priorities and operations to contribute more effectively to global sustainability goals?

To effectively contribute to global sustainability goals in the face of challenges like climate change and resource scarcity, the financial services industry should recalibrate its priorities and operations by embedding ESG considerations into their core business strategies. This involves aligning financial performance with sustainability goals, expanding the offering of green bonds and sustainability-linked loans, and promoting impact investing. Additionally, integrating climate risk assessment into risk management frameworks, engaging with stakeholders to incorporate their feedback into sustainability strategies, and providing transparent and comprehensive reporting are essential steps. By adopting these measures, the industry can play a pivotable role in advancing global sustainability efforts.

In summary, financial Institutions should focus on investing in technology, developing expertise, engaging stakeholders, and improving transparency. These efforts will position them as leaders in sustainable finance, enabling them to drive positive environmental and social impact.