Can ESG Success Boost Profitability in the UAE?

So, there’s been this really interesting survey that highlights how people in the UAE have very high expectations when it comes to businesses being responsible in terms of Environmental, Social, and Governance (ESG) issues. Around 90 percent of people in the UAE rated the importance of large businesses acting responsibly as a 7 out of 10 or higher, and about 88 percent said the same for small and medium businesses. To put that into perspective, globally, the numbers are a bit lower – 81 percent for large businesses and 75 percent for small to medium businesses. This shows that in the UAE, corporations are held to a much higher standard than in many other parts of the world.

The survey was conducted as part of the fourth annual ESG Monitor report by SEC Newgate, a global communications and research group. They surveyed over 14,000 people across 14 different countries, and it brought out some pretty revealing insights.

For example, over 80 percent of people in the UAE believe companies should play a bigger role in society, but there’s an understanding that the balance has to be right. What's particularly optimistic is that a strong majority – 83 percent – believe that doing well on ESG doesn’t have to hurt a company's profitability. Interestingly, two-thirds of respondents think that companies should focus on the interests of all stakeholders, not just shareholders.

People in the UAE really care about broader social and environmental issues too. A staggering 97 percent said they feel the country is on the right track in addressing these concerns. That’s a huge contrast to the global average of just 47 percent. Some of the other standout figures include 87 percent of respondents saying that transitioning to renewable energy is important, and 85 percent believe taking action on climate change is a priority.

There’s also a lot of awareness around the term "ESG" itself in the UAE. Around 39 percent of people here said they have a good understanding of it, which makes the UAE the third-highest country in terms of ESG familiarity, just behind Singapore and Hong Kong.

When it comes to communication, most people (84 percent) in the UAE think that companies need to do a better job of clearly explaining what they’re doing to improve their ESG performance. This is critical because a lot of the public feel that businesses aren’t always transparent about their ESG initiatives.

Elena Gramatica, who is the CEO of SEC Newgate Middle East, pointed out that while ESG is top of mind for many people in the UAE, companies and governments still face a challenge in both communicating and acting on these issues. On a global level, SEC Newgate’s Group CEO, Fiorenzo Tagliabue, emphasised that while companies may meet ESG reporting standards, that’s just the minimum. Businesses need to be ambitious in their approach and transparent about their efforts, or else they risk damaging their reputation.

Basically, people are paying close attention to whether businesses are genuinely making an impact with their ESG initiatives, or just ticking boxes to meet regulations.