< Previous10 Vol. 23/08, August 2022 ambition to end poverty, while promoting dignity, equality and a healthy work environ- ment. Governance relates to how businesses are administered, including risk, oversight and ethics, with the aim of defining and embedding the organisation’s purpose into their overall strategy and day-to-day operations. Over the last few years, global indices have shown that companies with robust ESG scores outperform some of the most tradi- tional ones; with research showing that ESG positively impacts financial performance and value creation. Businesses that incorporate ESG metrics into key performance indicators (KPIs) to monitor concrete sustainability goals are more likely to be rewarded by the market. Inclusions in indexes such as the Dow Jones Sustainability Index (DJSI) offers benefits to listed companies, who have seen a positive impact on both the firm’s visibility among financial analysts (up to five more analysts in a u Action plan Corporate leaders recognise the urgency of embedding sustainability in their business strategies Creating value through ESG ESG is a business imperative for organisations that are committed to doing social good BY FADI AL SHIHABI, MIDDLE EAST ESG LEADER AT KPMG SPO TLIGHT/ ES G Along with digital transformation, net zero and decarbonisation, environ- mental, social and governance (ESG) programmes have catapulted to the top of C-suite agendas in recent times. This has added another dimension to the extreme transformation experienced by regional organisations during the pandemic. The typical perception of the purpose of a busi- ness – to generate profit and to be finan- cially sustainable – no longer holds water. Companies are moving from a compliance and costs model towards a mindset focused on resilience and value creation. ESG frameworks interconnect and over- lap; they cannot be assessed in isolation. The environmental pillar combines business and human interactions with the environment, including action against climate change. The social aspect of ESG focuses on interaction with stakeholders, with an GLOBAL EVENT With the UAE having set a net zero target and COP28 (Abu Dhabi 2023) being held within the region, there is an expectation that the regulatory landscape will signifi cantly shift over the coming years and align with the international market.arabianbusiness.com 11 / ESG Q BUSINESSES WILL INCREASINGLY BE EXPECTED TO REPORT SUSTAINABILITY GOALS, ESPECIALLY AFTER THE PANDEMIC” 34% The percentage of fi nancial services CEOs who said they plan to invest more than 10 percent of revenues in their sustainability efforts, according to a global survey by KPMG in 2021 decade) as well as the percentage of shares held by long-term investors. Over the 18 months from November 2019-March 2021, the MSCI World ESG Leaders Index outperformed the tradi- tional MSCI World by +1.84 percent. At the same time, the JP Morgan ESG EMBI Global Diversified Index outperformed the equivalent non-ESG index by +1.94 percent. And a review of over 200 sources on ESG performance by Oxford Univer- sity and Arabesque showed that in the overwhelming majority (88 percent) of companies that focused on sustainability, operational performance was improved, translating to higher cash flows. When Norway’s $1.4 trillion sovereign wealth fund, the world’s largest, exited hundreds of companies to avoid ESG risk, it highlighted the meteoric rise of ESG-based investing. Recognising the deep connec- tion between strong ESG performance and long-term success, the fund screens for a range of ESG risks including climate change, ocean sustainability, anti-cor- ruption and children’s and human rights. Going beyond the numbers provided by ESG ratings firms, the fund now sifts through underlying data to guide portfolio decisions using a pre-screening tool. Moving forward, businesses will increasingly be expected to report sustain- ability goals, especially after the pandemic. According to a KPMG study of corporate sustainability reporting by companies, 80 percent of companies worldwide now report on sustainability – this rises to 96 percent among the world’s largest 250 companies (G250). Corporate lead- ers recognise the urgency of embedding sustainability in their business strategies according to ESG priorities. ESG in the region In a region that is growing for its relevant role in global business, the ESG agenda has been driven by increasing exposure and, to a certain extent, overall global pressure. This is linking local companies to the global pool of both challenges and opportunities. Since then, businesses in the Gulf Coop- eration Council (GCC) have been focused on environmental practices such as reduc- ing waste, preventing pollution, adopting clean energy sources including hydro- gen, conserving water, sustainable supply u Reducing carbon The UAE Energy Strategy 2050 aims to increase the contribution of clean energy in the total energy mix from 25 percent to 50 percent by 2050 chains and reducing carbon emissions. This evolution is aligned with the national agendas of governments across the region. In the UAE, these include the Energy Strat- egy 2050, the UAE Green Agenda 2015-2030 and Vision 2021; regional examples include Saudi Arabia’s Vision 2030, the KSA Green Initiative and Kuwait’s Vision 2035. ESG awareness in the UAE may be at the nascent stage in some spheres, with different maturity levels across the business landscape: there are companies which view it as a hygiene exercise to others who walk the talk. In many cases, ESG reporting could be a matter of translating an organisation’s positive practices or core business opera- tions into global reporting standards, rather than reinventing the wheel. ESG transformational approach ESG is a business imperative for organ- isations that are committed to deliver- ing positive social, environmental and economic value. It can help the organisa- tion strengthen its customer base, retain top talent and build resilience. However, the success of ESG, as well as the challenge, lies in how initiatives mesh with each other and affect operations within the ecosystem of the business. A sharper focus on ESG issues is certainly fostering greater collaboration and trans- parency internally and externally. The shift in mindset is reflected by an understanding that ESG brings signif- icant value creation opportunities, while contributing to the greater good. The chal- lenge is engaging with and influencing a large number of stakeholders with different strategies, priorities and cultures. A top-down approach built on proac- tive engagement, risk mitigation, continu- ous improvement and implementation of high-impact programmes is needed for the ESG strategy to succeed. While it makes financial, social and environmental sense, some internal resis- tance is inevitable. For businesses and employees that have weathered disruption due to digitalisation and the pandemic, fatigue can be a natural reaction to ESG – the ultimate disruptive transformation. In such cases, the responsibility to consis- tently articulate the ESG agenda to the organisation falls squarely upon the shoul- ders of companies’ leadership. u Vital Companies with robust ESG scores outperform some of the most traditional ones, believes Al Shihabi12 Vol. 23/08, August 2022 C OMMENT / By Jadd Elliot Dib, founder and CEO of Pangaea X Data analytics has impacted every sector from travel and tourism to manufacturing. Its use cases have shown that it can improve business operations signifi- cantly. However, with careful spending and being highly risk averse, SMEs are not at the forefront of this revolution that we are seeing in every sector, a fact that may eventually give larger corpo- Ways in which SMEs can benefi t from data analytics Data analytics was previously considered the realm of large corporates with bloated budgets but it may revolutionise how SMEs operate and compete u Statistics Data can reveal information that can have an impact on business operations yarabianbusiness.com 13 C OMMENT Q DATA ANALYTICS CAN HELP SMES UNDERSTAND THEIR CUSTOMERS BETTER AND EMPOWERS THEM TO ENGAGE WITH DIFFERENT OPPORTUNITIES THAT CAN IMPROVE REVENUE OPPORTUNITIES” providing them exclusive services. Data analytics can provide SMEs with insights about their customers that can lead to higher revenues, better services and ensured customer loyalty. For instance, ecommerce platforms can use customer purchases to provide them with a holistic shopping experience that include discounts, product sugges- tions and exclusive offers. Profi t margins Improving margins and cash flows are crucial to the initial success and survival of an SME. Data analytics can offer insights that can significantly improve profit margins and increase net income of SMEs to ensure busi- ness sustainability and competitive- ness. Higher profit margins can also lead to rapid growth of SMEs into larger companies and diversifying into different sectors. Data analytics can help SMEs understand their customers better and empowers them to engage with different opportunities that can improve revenue opportunities. $229bn The estimated overall spending on ICT across the META region in 2022, according to International Data Corporation (IDC) u Effi ciency Data analytics can offer insights that can improve profit margins of SMEs rations an edge over them. Businesses, whether small or large, process huge amounts of data. These data sets are mostly unstructured and have little value on their own. However, when structured, data can reveal infor- mation that can have an impact on business operations, supply chain, inventory management, and revenue tracking and employee incentives among others. For SMEs there is more. It provides them the edge to compete among them- selves and with larger corporations. Here is how data analytics is changing the SME sector. Marketing Building a business requires more than just quality work. For SMEs, the biggest reward for their work and abil- ities is recognition that can be lever- aged later. While this may seem straightforward, most SMEs are unable to fully utilise digital marketing plat- forms as they do not fully understand their target audience or don’t have the right data to understand their target market preferences. Data analytics helps companies leverage digital marketing avenues by giving them insights about their target audience and sectors. SMEs can save a great deal of expenses by targeting marketing campaigns on the right audience. Effi ciency Efficiency is crucial to any business large or small. While larger companies focus heavily on improving efficiencies, SMEs generally overlook the efficiency aspect in favour of revenue and client and customer relationships. SMEs underes- timate the volume of data they process and the impact it can have on their oper- ations if the data is utilised. If SMEs leverage data analytics their operations can be significantly streamlined and the staff can understand the areas that require improvement. Customer service With more competition, SMEs have to keep their customer base intact by u Campaign Most SMEs are unable to fully utilise digital marketing platforms14 Vol. 23/08, August 2022 C OMMENT / By Rana Hajirasouli, founder of The Surpluss swell in emissions and exacerbating the effects of climate change. Simultane- ously, global food demand is set to increase by 42 percent; with the current practices in the food sector alone, we will greatly exceed our global carbon budget. A new direction If we want to make transformational changes, we must first acknowledge that we cannot solve the new challenges climate change poses with old para- digms. To transform every element of our take-make-waste system, we need more meaningful collaborations to drive new definitions of how we use products and what we do with them afterwards. One of the most significant steps forward will be transitioning to a circular econ- omy. Put simply, the circular economy is a restorative model which involves sharing, reusing and recycling materials and resources to extend their value as much as possible. Currently, only 8.6 percent of the Can the circular economy be the paradigm shift businesses need to address climate change? u Zero waste The circular economy involves sharing, reusing and recycling materials and resources to extend their value as much as possible Since the dawn of the First Indus- trial Revolution, the global econ- omy has followed a linear approach to using natural resources. We have embedded the take-make-waste model: extracting, transforming, manu- facturing, using, and discarding. The World Economic Forum (WEF) high- lighted that almost half of the emissions causing climate change stem from the production and use of everyday items, which does not include the emissions from transport and energy in non-resi- dential buildings. With those included, we’re looking at 70 percent of global emissions. On our current trajectory, we are now using 60 percent more resources than the earth can provide and leaving behind far too much waste. As our global population and consumerism increase, so will the demand for these materials, creating a As the global population and consumerism continue to increase, businesses will need to increase circular practicesarabianbusiness.com 15 C OMMENT Q COLLABORATION IS A CENTRAL TENET FOR EVOLUTION, WHERE NETWORKING AND COOPERATION ALLOW SPECIES TO SURVIVE BETTER THAN THEY WOULD AS INDIVIDUALS” a way to maximise idle assets with convenient access to products and services, allowing businesses to mone- tise on previously underutilised resources. For SMEs, this may look like sharing industrial assets, such as a ware- house or machinery. For others, it could entail sourcing secondary materials, such as surplus textiles to replace virgin feedstocks, which can lower raw mate- rial costs. Product-as-a-service (PaaS) is becoming increasingly common amongst larger firms. Whereby the producer rents or leases its product to the customer rather than selling it. In addition to financial incentives, circularity yields several benefits for businesses, such as reducing their envi- ronmental footprint, creating novel job opportunities, reducing greenhouse gas emissions, waste and pollution. In an increasingly complex and vola- tile global economy facing unprece- dented supply chain challenges, busi- nesses must learn to adapt to thrive. In the same way that brick and mortar companies adapted to digitisation, it will be critical for linear businesses, particu- larly in resource-intensive sectors, to embed circularity into their practices. After all, materials only lose value once we stop finding uses for them. $26 trillion The projected economic benefi ts of adopting circular economy principles by 2030, according to the Global Commission on Economy and Climate u Transformation The UAE is rapidly emerging as the regional leader by implementing policies that create a fertile ground for sustainable innovation global economy is circular, and for businesses, that means unlocking a $4.5 trillion economic opportunity by 2030. There is a clear link between the circular economy and climate mitiga- tion. In the building sector alone, circu- lar economy actions are estimated to cut emissions by up to 61 percent. However, commitments from busi- nesses often rely on signals and direc- tives from local governments. The UAE is rapidly emerging as the regional leader by implementing poli- cies that create fertile ground for sustain- able innovation. In January 2021, the UAE Circular Economy policy was published. The report covered building a sustainable economy through the effi- cient use of natural resources, transi- tions to cleaner energy and embedding advanced technologies (from artificial intelligence (AI) to 4IR) to instigate more sustainable consumption and produc- tion patterns. Just last month, the coun- cil approved 22 policies proposed by its subsidiary entity, the Circular Economy Policies Committee, to help drive circu- lar economy models in four main sectors: manufacturing, food, infrastruc- ture, and transport. If we take natural ecosystems as an analogy for the circular economy, we can see that waste, as we know it, simply does not exist. In nature, things discarded from one process are then used as the input for another to create sustainable and resilient ecosystems through cooperative and symbiotic rela- tionships. Collaboration is a central tenet for evolution, where networking and cooperation allow species to survive better than they would as individuals. Ultimately, these pairings innovate by embracing the most unlikely partners to thrive in volatile conditions. Opportunities and benefi ts For businesses, this type of symbiotic collaboration could mean adopting a variety of approaches. There are various models of production and consump- tion, including sharing, leasing, reusing, refurbishing, recycling, and upcycling existing materials to extend the life cycle of products. Cross-industrial collabora- tion becomes a breeding ground for innovation by exchanging resources and intelligence. The key thing to remember is that value should be economically recovered from the product somehow. In some cases, products can be broken down into components and perhaps used in another industry entirely. Product life cycle extension is a good start to keep materials in use wherever possible. This process allows value to be transferred or recovered at various stages of the life cycle process. Alternatively, manufacturers allow clients to return products to be repaired/refurbished/upcycled in take-back programmes, offering a competitive advantage in saturated consumer markets and closer collab- oration with customers. Additionally, resource sharing offers 16 Vol. 23/08, August 2022 C OMMENT / By Kelly Lundberg, personal brand and business mentor Masculine and feminine, when hearing these two words your automatic reference point has usually been to consider gender: men and women. I wouldn’t blame you, for many years I did. Operating as a woman in a man’s world, where we often feel there is a further need to prove ourselves in a boardroom or to our male colleagues and peers, has also meant that women 36.9% The share of women hired into leadership roles in 2022, according to the Global Gender Gap Report 2022 from the World Economic Forum (WEF) u Women leaders Feminine energy is powerful in leadership, the workplace and in business, Lundberg believes C OMMENT / By Kelly Lundberg have often held back on our more inher- ently collaborative, empathetic, creative and receptive natures. Feminine energy is powerful in lead- ership, the workplace and in business. It’s a positive attribute and should be encouraged, applauded and work cohe- sively for the benefit of an organisation’s positive culture. It is time to recognise that embracing femininity in the work- place is a good thing. Why business needs to meet its feminine match Encouraging feminine energy in the workplace can only benefit the business, employees and culturearabianbusiness.com 17 C OMMENT Q WE NEED BOTH STRENGTHS IN THE MODERN WORKPLACE, WHERE THERE SHOULD BE NO MINORITIES AND EVERYONE HAS A SEAT AT THE TABLE” I no longer feared being judged, seen as too familiar or weak. These characteris- tics make us unique, they make us stand out and only help to draw people to you. So, what are great female traits that can be leveraged by women and those that men can learn from as they forge ahead and become great leaders? My top five have become those that I value the most and have proven to be my ticket to success – empathy, humility, persua- siveness, resilience and above all, spirit. Opportunities are always found in sharing struggles and insecurities, being unapologetic can be life-chang- ing. Your brand and visible values become your USP. Conforming to the traditional, masculine style of leadership is no longer the route to success. In a time of revolution, where your employees are calling a lot of the shots, and much-needed developments in where and how we work, we need to meet them halfway. You won’t have an all-male work- force, and even if you do, the balanced energies of masculine and feminine only bring a positive flow to your leadership style. We need both strengths in the modern workplace, where there should be no minorities and everyone has a seat at the table. u Gender balance Feminine and masculine energies are used in many different aspects of our lives, particularly in the workplace Every one of us possesses both femi- nine and masculine energy and the balance of these energies is used in many different aspects of our lives, particularly in the workplace. Mo Gawdat, author of Solve For Happy, former chief business officer at Google X and co-founder of 20 other businesses, shared recently that one of his most cherished business regrets was his failure to ‘embrace his feminine side’ earlier in his career. Gawdat said: “The world is suffering from hyper-masculinity, a world of doing rather than feminine qualities such as nurturing creativity, playful, beautiful and empathic”. I remember my early days in busi- ness well – young and female in a very male-dominated environment. I had to hustle hard. I was focused, determined and goal-driven. I frequently overcom- mitted and pushed harder and harder, I didn’t want anything to stand in my way of business. In hindsight, I wasn’t being totally honest with myself. I didn’t fully understand the benefit to my business of embracing my feminine energies. It’s fair to say I have come a long way in 18 years. The shift in embracing my feminin- ity within the workplace did not happen overnight. The true meaning of it crys- talised for me via the self-development workshops coaching, books and podcasts I am such a fan of. It’s strange because my business, launched aged 24, was a very feminine focused service, but my approach to doing business was very masculine. I was typically black or white in my think- ing. I hated the feeling of being constrained and would never reveal my true thoughts, emotions or feelings. I saw this as a sign of weakness – if I was to tell someone else that I wasn’t feeling okay or that my business wasn’t doing particularly well that month. I pushed and pushed but found life becoming increasingly unsustainable. On reflection, much of how I oper- ated had a strong focus on masculine characteristics. These are absolutely not Q CONFORMING TO THE TRADITIONAL, MASCULINE STYLE OF LEADERSHIP IS NO LONGER THE ROUTE TO SUCCESS” bad traits, but an imbalance is never healthy or productive. I embraced the flow more, learning to connect with my intuition and instincts. Seeking consen- sus rather than being (overly) decisive has had many a positive business bene- fit for me. A new personal and business direc- tion was my watershed. A significant shift in my business model, where I became a business mentor and personal brand strategist, found me nurturing clients in pursuit of their dreams. It was no longer about the destination, it was all about the journey – mine and theirs. Reflecting on my new role I found I was truly able to embrace my femininity. 1 The UAE’s ranking across the Arab countries in the World Economic Forum’s Global Gender Gap Report 202218 Vol. 23/08, August 2022 C OMMENT / By Grace Najjar, Managing Director, MENA at Project Management Institute (PMI) It’s a commitment that employees and customers have come to expect in the face of an ever-growing urgency around climate change. It’s also one that can add significant financial value by helping companies tap into new markets, reduce operating costs, ease regulatory pressures and improve employee satisfaction and productiv- ity, according to a report by McKinsey & Co. This potential for gain and growth has more and more organisations investing in ESG initiatives that will Staying on track u Social responsibility Organisations should educate leaders about standards and policies that will help drive ESG There is no denying that corpo- rate sustainability has under- gone a significant shift in recent decades. Today, virtually all of the world’s largest companies issue a sustainability report and at least one-fifth of these organisations, including Procter & Gamble, Saudi Aramco, Amazon, Toyota, HP and BNP Paribas, have proclaimed their intention to achieve net-zero emis- sions by 2050. CO MMENT / By Grace Naj Your ESG communications strategy should include regularly communicating to internal audiences about your projects and their impactarabianbusiness.com 19 C OMMENT Q COMMUNICATION HAS ALWAYS PLAYED A KEY ROLE IN THE SUCCESSFUL OUTCOME OF A PROJECT, BUT AS ORGANISATIONS WORK TO MAKE SUSTAINABILITY A CORE PART OF THEIR PROCESS, IT BECOMES EVEN MORE ESSENTIAL” Your ESG communications strat- egy should include regularly commu- nicating to internal audiences about your projects and their impact. Organisations must be willing to be transparent about what is working, and what is not. That is how they will build trust. At the same time, there needs to be an opportunity for all team members to provide feedback and raise concerns when it comes to the status of these projects and their impact. Give project teams the tools and resources they need to succeed When organisations implement ESG initiatives, it can represent a signifi- cant mindset shift for project profes- sionals. As a result, organisations need to improve the support and tools around ESG. From there, the organisation should educate project leaders and project teams about standards and policies that will help to drive ESG. We also recommend project managers spend time learning about the United Nations Sustainable Devel- opment Goals, reading their organisa- tion’s sustainability report and learn- ing more about the key environmental issues that impact their industry. 74% The percentage of UAE investors who said they want to leave a positive legacy through sustainable investing, according to a recent data from Standard Chartered u Environmental action A recent survey by Accenture found that 68 percent of executives felt they have developed a robust sustainability plan u Solar energy Organisations need to improve the support and tools around ESG ensure sustainability remains a core part of how they do business. In turn, this is influencing the role of sustainability in projects – taking it from a piecemeal effort in many organisations to an essential part of the process that must be thought about along the same lines as budget, scope and schedule. As a result, this represents the potential for a significant shift in the way projects are run – and the respon- sibilities of project leadership. If this shift is not managed correctly, it can impact the success of your sustainabil- ity efforts. These tips will help keep your project on track: Ensure executive expectations and employee realities are aligned A recent survey by Accenture suggests that while many leaders are confident that their company is on track to oper- ate more sustainably, that sentiment is not necessarily echoed by employees. The survey found that 68 percent of executives felt they have developed a robust sustainability plan, but 21 percent of employees felt the plan went beyond the superficial. At the same time, 69 percent of executives say they track and monitor progress against measurable sustainability goals, and only 34 percent of employ- ees felt these goals were realistic. The survey points to a significant gap between the strategy and execu- tion of sustainable processes that must be overcome in many organisations to ensure sustainability becomes a core part of the organisational DNA. To get a better sense of those gaps, many organisations are conducting employee surveys to identify internal strengths and weaknesses. Be transparent with project teams about what’s going well, and what’s not Communication has always played a key role in the successful outcome of a proj- ect, but as organisations work to make sustainability a core part of their process, it becomes even more essential. Q ORGANISATIONS MUST BE WILLING TO BE TRANSPARENT ABOUT WHAT IS WORKING, AND WHAT IS NOT. THAT IS HOW THEY WILL BUILD TRUST”Next >