Just twenty years ago, environmental and social responsibility were rarely considered fundamental factors in investment decisions. However, the world around us is changing rapidly, and nowadays we are witnessing significant transformations in private wealth management. The trend of so-called “responsible investing”, which follows ESG (Environmental, Social, and Governance) standards, is gradually becoming a fully developed strategy for major corporations and private investors alike. And when we are looking at the Middle East and Africa, the potential for ESG investing in these regions appears particularly promising.
Michael Reza Pacha, a wealth management, global finance expert and Founder of Index & Cie, explains why socially responsible investing is already forming the foundation of the private wealth management industry in the region.
According to recent market data, the ESG investment sector in the Middle East and Africa is ready to hit $5.73 billion by 2030, with an outstanding annual growth rate (CAGR) of 18.1% from 2025 to 2030. “That clearly indicates that the macroregion is treating responsible investing as a proven tool for developing competitiveness and strengthening local economies,” says Michael Reza Pacha.
The future of Wealth Management in the region
Environmental, Social, and Governance investments are becoming heavily popular, partly because market demand is significantly outpacing supply. Social and environmental concerns are now pushing investors to seek assets that reflect their values. However, research shows that around 30% of investors struggle to find a sufficient selection of such products, while 88% of institutional investors believe that asset managers should be more proactive in developing new ESG solutions. In reality, only 45% of investment firms explicitly plan to launch new ‘responsible’ funds, preferring instead to fix existing financial instruments.
According to Michael Reza Pacha, in the Middle East and Africa, where the transition to a more diversified and environmentally responsible economy is getting a move on, this supply-demand imbalance is particularly noticeable. The market is actively looking for ways to combine long-term stability with financial returns.
One of the core drivers of the growth of ESG investments is realisation that resource management is essential for continued economic development. Funding in renewable and green energy and waste management are attracting money that helps to build resilient infrastructure and modernise the region. As experts say, the MENA region is expected to get over $1 trillion in renewable energy investments by the end of 2030, leading the way for new industries and permanent job creation.
At the same time, interest in ESG is also being fuelled by its social impact. More companies are realising that commitments to improving working conditions and supporting charitable and educational initiatives not only enhance loyalty within local communities but also attract international investors looking to support businesses that actively contribute to society. As a result, these companies build stronger reputations, which, in the context of private wealth management, directly influences their market valuation and scalability.
The role of transparent corporate governance should not be overlooked either. Ethical business practices, financial disclosure, and diverse leadership are becoming increasingly important in a region where investors often require additional assurances of reliability. Strengthening corporate governance not only minimises corruption risks but also enhances trust, making companies more attractive to international partners and investment funds. For private wealth managers, corporate transparency is a crucial factor in portfolio selection—companies with stronger governance structures have a higher likelihood of long-term success.
Despite the sector’s rapid expansion, the complex and fragmented regulatory foundation continues to slow the wider adoption of ESG principles. The lack of uniform standards and clear evaluation criteria allows some financial products to be marketed as “green” without genuinely meeting ESG requirements—a practice known as mislabeling. According to surveys, 71% of investors believe that stricter disclosure rules would improve the market’s quality, while asset managers emphasise the need to adapt international ESG standards to regional conditions.
“Nevertheless, this very challenge creates an opportunity for companies that are genuinely committed to responsible business practices. A transparent approach to reporting and a real commitment to ESG principles are increasingly becoming competitive advantages, strengthening trust among both local and global investors,” states Michael Reza Pacha.
What to expect in the wealth management sector?
Firstly, the region will face continued growth in demand for clean energy and sustainable infrastructure projects. The planned investments will exceed $1 trillion in a few years, driving the boost of new industries, job creation, and strategic partnerships. This shift will create a solid base for funds and investment instruments focused on the green transition, including the expansion of hydrogen technologies and smart energy grids.
Greater emphasis on social initiatives, such as improving labour conditions and supporting education, is becoming an increasingly important factor in assessing a company’s investment appeal. A big portion of international investors is already prioritising organisations that deliver not only financial returns but also a positive social impact. These companies benefit from additional capital inflows and stronger reputations, which, in turn, enhance their market value.
Another thing to expect is the improvement of corporate governance. The MENA region has not traditionally been considered an easy environment for overseas investors due to inconsistent regulations and concerns over transparency. However, a growing number of local businesses are adopting ethical practices, responding to the expectations of major institutional investors who seek clearer rules and stronger assurances. The leading role in this matter will be taken by the UAE, Saudi Arabia and Oman. This transformation will improve investor confidence and motivate long-term success prospects for companies.
Finally, the main driver for the sector’s evolution will be the window of opportunity for truly responsible players. In an environment where some projects are only nominally labelled as ‘green’ or ‘socially responsible’, companies that genuinely uphold ESG principles will stand out. Their commitment to transparency and sustainable practices will help build stronger trust among both local and global investors.
