GCC companies are making good on sustainability, it’s time to share the results

It’s a widely accepted fact that to get to net zero, corporate entities must prioritise sustainability as an essential part of their business. But of equal importance, this journey must be open and transparent – and it must demonstrate impact with compelling evidence.

Here in the Gulf region, sustainability-related developments have evolved rapidly in the last five years. ?There’s been a lot of great work taking place in every country across the region and it’s necessary that best practices and experiences are in full view.?

There is also an obvious reason for this: Without a full picture into how companies are managing climate change effects or portfolio net-zero alignment, we have no way to accurately understand the financial and business impact of a warming planet.?

With this specific objective in mind, First Abu Dhabi Bank (FAB) and Sustainable Square have partnered to develop the 2022 State of ESG in the GCC report.?

By taking the widely accepted opinion that the transparency and availability of data in the GCC needs to increase in comparison to more mature markets, the report seeks to provide that all-important window into the current developments within the ESG and sustainability ecosystem.?

It’s important to note that his report comes at a critical time, falling in the UAE’s ‘Year of Sustainability’ and launching just days before the country gears up to hold COP28. Now is a crucial moment to have an insightful narrative on the current state of play in the GCC corporate sustainability world.?

While it’s important to acknowledge where we have come from, it’s also vitally important to know where we are going. While we have identified many of the key drivers behind current trends in the report, we have been clear to uncover and outline the forces likely to shape the future of corporate sustainability in the GCC region.?

To properly contrast its findings, the report also looks retrospectively at the 2018 State of ESG in the GCC report to understand the context of the progress.?

And what of these findings? We discovered that almost two-thirds of GCC companies now incorporate ESG factors into their business factors due to new compliance and regulatory requirements. That was more than a four-fold increase in five years, comparing with just 14% in 2018 – which speaks to the region’s fast-evolving regulatory landscape that has been helping drive rapid change

Across our research we surveyed corporate entities that represented all GCC states, including privately owned, listed and government-related entities, as well as multinationals. Around 44% of responses came from the UAE and a further 20% from Saudi Arabia.

More than 80% of companies had an ESG strategy in place in 2023, compared with 64% in 2018. It’s also good to see the lengths that companies are going to provide reporting with 82% doing this in the format of a sustainability or ESG report. Of equal importance, 69% of companies find it necessary to share the benefits of incorporating ESG factors.

Yet with all the progress, there is still room for improvement. We uncovered that the two main challenges to accelerate ESG integration are a lack of standardisation (42%), and a lack of understanding on return on investment (38%).

In my view the report also serves a broader mission as it emphasises how standardised, timely, and reliable data empowers business leaders to make more effective decisions while greater access to this standarised information ensures that investors can also make more informed decisions which in turn creates responsible investment outcomes.

With this in mind, we also hope that the report will serve as a prompt to encourage companies to disclose their environmental performance, climate risks, and sustainability practices.

At FAB, we champion sustainability integration for a low-carbon future and as a regional leader, we believe transparency fosters market integrity and drives corporate environmental improvements in a self-fulfilling cycle. We believe that the 2022 State of ESG in the GCC report serves as a valuable resource to some of the most important current issues in the world of sustainability both present and future.

Link to report:

https://www.bankfab.com/-/media/fabgroup/home/about-fab/esg/reports-policy-frameworks/pdfs/the-2022-23-state-of-esg-in-the-gcc.pdf?view=1