Is Sustainability the New Strategy for Middle East Businesses?
Hey, did you hear about the latest PwC Middle East sustainability report? It’s pretty interesting. It turns out that companies in the Middle East are really starting to prioritise sustainability in their corporate strategies. In fact, four out of five executives, or 79 percent, said they now have a formal sustainability strategy in place. And more than half of them, about 52 percent, have fully integrated this strategy throughout their entire organisation.
There's also a notable trend where companies are creating top-level positions specifically for sustainability, like chief sustainability officers (CSOs) or sustainability directors. Almost half of the companies, 48 percent, either already have a CSO or plan to appoint one within the next year.
Dr. Yahya Anouti, PwC Middle East's Sustainability leader, commented that both business and government leaders in the region are really committed to tackling climate issues and adopting circular economy principles. He emphasised that the region's competitive edge in renewable energy is a huge asset. He also pointed out that it's crucial for both sectors to continue prioritising responsible investments and embracing advanced technologies to drive innovative climate solutions. Essentially, he believes that sustainability efforts can generate returns on investment and boost profitability.
With sustainability becoming more important to top executives, more companies are committing to net-zero greenhouse gas emissions. Half of the survey respondents have made such a commitment, and another 26 percent are working toward it.
Stephen Anderson, PwC Middle East’s Strategy Leader, added that there's a lot of pressure from regulators and society for companies to show real progress in sustainability. He acknowledged that concerns about the costs and perceived low returns of sustainable investments are common, but he emphasised that the evidence actually suggests otherwise. According to him, making real progress on sustainability will require focused and strategic efforts to turn discussions into concrete actions.
A key part of these sustainability strategies is building a future-ready workforce. Most executives, about 79 percent, said that knowledge of sustainability reporting and regulations is crucial. Plus, skills for adopting new technologies like Generative AI are also important. However, the survey found that AI deployment is still in its early stages. Companies are mainly using AI for things like data analysis and reporting rather than optimising supply chains or developing circular economy models.
Funding is another critical area. Over the past year, companies have been tapping into a wider variety of financing opportunities for their green projects. While self-funding is still the most common, about 34 percent of respondents are looking at green loans, and 33 percent are considering options like green or blue bonds.
Interestingly, the private sector is seen as a major driver of sustainability in the region. Almost 90 percent of the leaders surveyed believe that the private sector can significantly scale up the region’s sustainability efforts through collaboration and partnerships.
Anderson concluded by highlighting four key focus areas for sustainability leaders in the Middle East: upskilling the workforce, strengthening infrastructure, creating standardised sustainability regulations, and enabling funding for sustainable development.
This survey was conducted by PwC between April 1 and May 6, 2024, and included insights from C-suite and director-level executives involved in sustainability activities. Most of the participants were from organisations headquartered in the GCC region, particularly the UAE, Saudi Arabia, and Qatar, with 64 percent having revenues exceeding US$100 million across various sectors.
So, it's clear that sustainability is becoming a major focus for companies in the Middle East, with significant steps being taken to integrate it into their business strategies and operations.
