The Turning Point for Businesses in Saudi Arabia: Why Sustainability Reporting Can’t Wait

The Turning Point for Businesses in Saudi Arabia:

Why Sustainability Reporting Can’t Wait

It was late afternoon, and Khalid sat in his office in Riyadh, staring at the presentation on his screen. His company, a leading player in the KSA’s construction sector, had thrived for years on reputation alone, but something had shifted.

Investors were asking new questions. “What’s your ESG score?” “How are you addressing climate risks?”

These weren’t queries about quarterly profits or traditional corporate social responsibility (CSR) initiatives. These were data-driven demands, and Khalid realized that to stay competitive, his company needed to start reporting on sustainability.

Across the globe, businesses are being pushed into the age of Environmental, Social, and Governance (ESG) metrics. Unlike the softer touch of CSR, sustainability reporting revolves around quantifiable data that offers investors, customers, and regulators a detailed snapshot of a company’s impact on the world. ESG reporting shows more than philanthropy; it demonstrates strategic action.

Khalid wasn’t alone in this realization. A growing number of companies in Saudi Arabia are recognizing that sustainability reporting isn’t just a “nice-to-have” anymore—it’s a business imperative.

The Tipping Point for ESG Reporting

Let’s step back. Globally, the trend is unmistakable. In 2020, 96% of the world's largest 250 companies published sustainability reports, according to survey.[1] That’s an almost universal embrace of transparency. But why?

The answer, Khalid soon discovered, lay in the numbers. By 2022, $30 trillion of assets were managed with ESG factors guiding investment decisions. By 2030, this figure is projected to rise to $40 trillion.[2] For companies like Khalid’s, the writing was on the wall—sustainability is now a strategic business advantage.

In the Kingdom of Saudi Arabia, this momentum is being propelled by Vision 2030, which has set the stage for businesses to align with national goals of sustainability. This alignment isn’t just about staying compliant; it’s about staying relevant in a rapidly evolving global market.

Why Sustainability Reporting Matters Now More Than Ever

For Khalid, this was about more than just regulatory compliance. He could see the larger picture. There were tangible benefits to sustainability reporting that traditional CSR lacked. It wasn’t about writing checks to charities anymore—it was about embedding sustainability into the DNA of the business.

1. Building Reputation and Trust As Khalid dug into the statistics, he saw the clear correlation. Companies that published detailed ESG reports had stronger relationships with customers, regulators, and investors. Transparency was the new differentiator. In a competitive market like KSA, where the spotlight on sustainability is growing brighter, a detailed ESG report could set his business apart from its competitors.
2. Improving Risk Management KSA’s harsh climate offered another layer of urgency. Water and energy resources weren’t just global concerns—they were immediate business risks. By monitoring these factors through ESG reporting, Khalid could make informed decisions to reduce waste, optimize energy use, and mitigate risks. His business wasn’t just complying; it was future-proofing.
3. Attracting Capital and Unlocking New Markets As Khalid looked to the future, he realized that ESG wasn’t just a tool for reporting—it was a magnet for investment. Investors are prioritizing companies with strong sustainability credentials, and aligning with global sustainability frameworks like GRI or SASB could open doors to new markets, both regionally and globally. In Saudi Arabia, the number of ESG-focused investment funds was growing, and Khalid knew his company needed to be part of that future.

Leading the Way: How Saudi Arabia is Positioned for Sustainability Success

Khalid’s journey mirrors a much larger shift happening across KSA. With Vision 2030 and initiatives like the Saudi Green Initiative, the Kingdom is positioning itself as a leader in the region’s sustainability transformation. Government bodies like Tadawul, through its ESG Disclosure Guidelines, are pushing businesses to adopt global best practices in sustainability reporting.

As Khalid clicked through the Tadawul guidelines, he recognized that Saudi companies were being given a golden opportunity to lead. Those that embraced sustainability now would have the chance to capitalize on government contracts, foreign investments, and global partnerships.

A Roadmap for Businesses: Practical Steps to Begin Sustainability Reporting

Khalid’s next question was simple: Where do I start? Like many business leaders in KSA, he wanted a roadmap—a clear path to sustainability reporting. His answer came in three practical steps:

1. Align with Vision 2030 Goals Vision 2030 emphasizes sustainability as a key pillar of national growth. Khalid saw this as an opportunity. By aligning his company’s sustainability goals with the broader objectives of Vision 2030, such as reducing carbon emissions and enhancing reliance on renewable energy, he could ensure his business was part of the national strategy.
2. Use Global Reporting Frameworks Khalid knew his report would be more credible if it adhered to international frameworks. GRI Standards were used by 78% of the G250 companies globally.[3] By adopting these frameworks, Khalid’s report would be comparable to global peers, ensuring his business wasn’t just compliant but competitive.
3. Engage Stakeholders Lastly, Khalid realized that sustainability reporting couldn’t happen in a vacuum. He needed to engage his employees, customers, and investors early in the process. By conducting a materiality assessment, Khalid could identify the sustainability issues that mattered most to his stakeholders, ensuring his company was focusing on areas of highest impact.

The Future of Business is Sustainability

As the sun set over Riyadh, Khalid saved his presentation, ready to take it to his executive board. Sustainability reporting wasn’t just a trend—it was a strategic move. By starting now, his company wouldn’t just catch up; it would lead.

Companies across Saudi Arabia, just like Khalid’s, are beginning to recognize that the future of business isn’t just about profits—it’s about purpose. By embracing sustainability reporting today, they are preparing for the demands of tomorrow’s economy. With the help of firms like CEC, which offers expertise in ESG and sustainability frameworks, businesses can build a roadmap that drives growth, innovation, and a more sustainable future.

Acknowledgments:

We would like to express our gratitude to the authors of this article, Babar Ali and Ehsan Gul, for their invaluable contributions and insights

[1] KPMG International, The KPMG Survey of Sustainability Reporting 2020

[2] Bloomberg Intelligence, 2022 Global ESG Assets Report.

[3] KPMG International, The KPMG Survey of Sustainability Reporting 2022