Arab-German Business Partnership: A Lever for the Global Sustainability Agenda

In early May, I took part in the Global Solutions Summit in preparation for the #G20 in #Berlin. The central policy conversation amongst policymakers was about #sustainability. Last week, I participated in the 26th Arab-German Business Forum organized by Ghorfa Arab-German Chamber of Commerce and Industry about 'Building Bridges between #Germany and the #Arab World' again in Berlin. The central topic of discussion for businesses was about #growth.

The main question of my intervention on the panel, "Sustainability as a Success Factor & Global Challenge: How to Maintain Sustainable Growth in Economies?" was: how can a partnership between #Arab and #German businesses help in bridging a prosperous future with a sustainable one?

I was joined at the panel by distinguished speakers such as Prof.?Dr. Khaled Hanafy, Secretary General of the?Union of Arab Chambers, Mr. Kim Tran, Head of Corporate & Institutional Banking,?Europe Arab Bank, Mr.?Ali Al-Baqali, CEO of?Aluminium Bahrain?B.S.C. (Alba), Mr. Jens Otterstedt, General Manager of?Al Masaood Bergum, Mr.?Naji Masri, Director of Business Development & Sustainability Market Area Middle East & Egypt,?BASF, and moderated Mr. Dieter Haller, Managing Director of Haller Consulting GmbH, Former Ambassador.

Listening to the panelists, it's clear that sustainability is recognized as a priority by everyone. However, achieving it is a long, risky, and costly journey. Businesses, therefore, need sustainable financing mechanisms. Most interventions focused primarily on energy sources, consumption, and carbon reduction, which are essential, yet social and governance dimensions appeared less considered.

There are three major transitions that Europe and the world are going through, which will affect all companies in all sectors: digital, green, and economic. Businesses will either succeed in adapting to these transitions or lose their ability to survive.

Europe is adopting a holistic approach to sustainability, encompassing #environmental, #social, and #governance aspects. These have been translated into a set of new #ESG regulations, imposing new standards on companies. Companies in Europe will need to report not only their financial performance but also their environmental, social, and governance impacts. They will do this using instruments such as CSRD, NFRD, and the Supply Chain Act.

These regulations may present a barrier for Arab companies trying to enter the European market. However, if they are willing to adapt, this could become a significant opportunity to bridge Germany and the Arab world through business partnerships. These partnerships could facilitate the access of Arab companies to European markets and vice versa, through knowledge exchange, transfer of technology, and resource sharing.

These regulations are also reaching the Arab world, and governments in the region are gradually adopting similar sustainability regulations. Decarbonization, circularization, social diversity, equity, inclusion, transparency, and good governance are becoming priorities on the agenda of Arab states. Holding #COP28 in #Dubai will contribute further to the Arab world's commitment to the climate protection and sustainability agenda.

One notable example of a country gradually taking policy action on sustainability is #SaudiArabia. For the past 15 years, we have served clients in Saudi Arabia, with nearly all projects undertaken in recent years including sustainability requirements related to environmental, social, and governance standards. One of the projects that our team has been working on recently is the AlUla Governance Structure, which explicitly requires these standards as part of its methodology and deliverables. Social and environmental assessments, mitigation measures, stakeholder engagement, and community participation are now mainstreamed across all projects.

The most significant challenge for businesses in Germany and the Arab world is the complexity of the requirements and unpredictability in the markets. This makes it difficult for companies to adapt to change and comply with new regulations. According to a UN Compact survey, only 18% of CEOs understand what they should do to become more sustainable.

What is the best technology required to achieve a sustainable business model? Is it worth investing in transformation? Would customers be willing to pay a premium for sustainability?

In light of the current complexity and unpredictability, here are three recommendations to transform sustainability into an opportunity rather than a barrier for businesses:

Firstly, businesses should develop a long-term Holistic Sustainability Strategy—environmental, social, and governance—to gradually transition into sustainable business models. According to a UN Compact study, 80% of CEOs surveyed have already developed a sustainability strategy for their businesses.

Secondly, businesses need to take short-term actions to mitigate risks and contribute to the climate agenda. Appointing a Chief Sustainability Officer with an executive task force can ensure responsibility and accountability for strategy implementation.

Thirdly, businesses need to research, test, and integrate new technologies, and secure financing instruments, that leverage the gradual transformation of companies' business models, products, and reporting mechanisms to comply with new regulations.

Drawing from our experiences with businesses we've worked with, three elements are key to successful transformations: agility, innovation, and engagement. Businesses must be agile in making data-driven, fast decisions, innovative in testing new technologies, and engaging for their clients, stakeholders, and employees to participate in the transformation process.

For more insights into our approach to sustainability, please refer to our article in Souq magazine.

Sustainability can serve as a new growth engine, help differentiate products, and even be critical for the long-term survival of a company. And the bridge between Germany and the Arab world could be a lever for business success and the adoption of global policies to ensure a sustainable and prosperous future. Both German and Arab businesses should be ready to rise to this challenge.

In conclusion, I would like to share our experience over the last two years, since the merger between Beyond Group , a strategy and management consulting firm with Arab origins, and Kompetus Management Consulting GmbH , a German-based sustainability transformation consulting firm. We are proud to exemplify the bridge between Germany and the Arab world. This partnership has fostered an exchange of three key energies between Europe and the Arab world, beyond 'fossil fuel': cultural energy, innovation energy, and market energy. This synergy has boosted our endeavor to offer meaningful transformation journeys towards sustainability to our clients worldwide.

I wish you abundant and diverse energies in the coming phase.