< Previous30 Vol. 24/04, April 2023 PR and communication Media Person of the Year: Kenana Dahlan, Head of Saudi Arabia for Edelman The winners KSE Women ExcellenceAwards 2023 Law Legal Person of the Year: Rawan Rahbini, Head of Corporate and Commercial Legal at Red Sea Global Inspiring women Special Recognition: Linah AlHabeeb, Director of Human Capital Development at DGDA Healthcare Medical Person of the Year: Dr Tamara Sunbul, Medical Director of Clinical Informatics, John Hopkins Aramco Healthcare Saudi Arabiaarabianbusiness.com 31 Digitalisation Science and Technology Person of the Year: Zainab Alamin, VP for Digital Transformation and Sustainability at Microsoft Kingdom’s fi nest The winners – all industry veterans – have played a major role in transforming industries and championing the role of women in business Host Sahar Ahmed Mushtaq served as the master of ceremonies for the event32 Vol. 24/04, April 2023 Moving towards net zero hotels Embracing sustainability represents both risks and opportunities for the tourism and hospitality sector Sustainable operations Embracing sustainability represents both risks and opportunities for the tourism and hospitality sector 5% The contribution of the tourism industry to the world’s greenhouse gas emissions SUSTAINABILITY | Like all industries, they have an important role to play. Tourism today accounts for 5 percent of the world’s greenhouse gas emissions. And this number is alarmingly forecast to rise 130 percent by 2035 without an urgent course correction. One solution could be creating a practical path forward for hotels to leverage new technologies to achieve net zero status. Corporate travellers show a higher level of concern for sustain- ability compared to leisure travel- lers. However, both corporate and leisure travellers care about sustain- ability, making it a key driver for businesses. Embracing sustainability represents both risks and opportuni- ties for the tourism and hospitality sector. One major risk for owners who do not invest in sustainability is the depreciation of their assets. On the BY CÉDRIC SALA, MEA HOTEL SEGMENT DIRECTOR – SCHNEIDER ELECTRIC A s the world grapples with global warming and an energy crisis, sustainability has reached a critical inflection point. Hotel owners and developers must look at how they can curb their carbon emissions to keep our planet from heating above 1.5C. arabianbusiness.com 33 Energy effi ciency The key to future-proofi ng net-zero hotels is smarter energy-saving products other hand, adopting sustainable prac- tices brings benefi ts that go beyond just operational effi ciency. With its palatial collection of world-class resorts, the UAE has the potential to become a leader in sustainable tourism and reduce emis- sions at scale. By improving the energy management of existing buildings, hoteliers can not only commit to a more sustainable future but set an example for others to follow. The question is: how do we get here? Impressive steps toward sustainability have already taken place. Firstly, the UAE aims to become carbon-neutral by 2050 and generate 50 percent of its power from clean sources. Addition- ally, Dubai’s Department of Economy and Tourism recently re-launched its Carbon Calculator tool. This measures the carbon foot- print of hotels in real-time and helps identify areas where hotels can reduce their environmental impact. Preventing catastrophic climate tipping points is clearly a whole-of-so- ciety challenge, but the UAE has got its strategies in the right place as it looks ahead to COP28. So where does this leave hotel owners? As the majority of emissions asso- ciated with a hotel building are related to on-site energy consumption after construction, the key to future-proof- ing net-zero hotels is smarter ener- gy-saving products. They include digi- tal building automation systems that can share power more intelligently for greater effi ciency, reliability, and oper- ational performance. Another essential strategy is to invest in renewable energy. Solar panels, for instance, can be installed on hotel rooftops to generate clean energy. Installing onsite renewable energy generation can help off set util- ity costs as well as supply new loads like electric vehicle chargers and provide backup power in an emergency. This not only reduces a hotel’s reliance on traditional energy but also cuts green- house gas emissions. It is also important for hotels to consider the environmental impact of mise their overall environmental impact and contribute to a more sustainable future. Adopting sustainable practices By striving to achieve net zero hotels, hospitality leaders in the UAE can not only reduce their carbon footprint but improve their operational perfor- mance. Sustainable practices can lead to cost savings through reduced energy consumption and waste, as well as improved guest satisfaction and repeat trips. Sustainability is increasingly becoming a factor in consumer deci- sion-making. As more and more trav- ellers prioritise ecotourism, hotels must adapt. Those that embrace sustainable practices will be better positioned to attract and retain guests concerned about their envi- ronmental footprint. This is particularly true in the UAE where tourism is a key industry and competition for guests is fi erce. To accelerate our progress toward a sustainable future, we must prioritise the transformation of existing hotels into net-zero buildings of the future. By leveraging the power of intelligent and connected technologies, we can enhance energy effi ciency and reliabil- ity, and create a pathway toward a cleaner and greener future. We must prioritise the transformation of existing hotels into net-zero buildings of the future | SUSTAINABILITY their operations beyond energy usage. This includes reducing waste, conserving water, and promoting sustainable practices such as recy- cling and composting. By implement- ing these practices, hotels can mini- Specialist Sala believes adopting sustainable practices brings benefi ts that go beyond just operational effi ciency34 Vol. 24/04, April 2023 Moving towards a circular economy The UAE is primed to drive the move to the circular economy Forward-looking The UAE Cabinet approved the UAE Circular Economy Policy in January 2021, which provided a comprehensive framework for determining the country's approach to achieving sustainable governance $4.5TR The additional economic growth from the shift to circular economy practices by 2030 SUSTAINABILITY | The idea of a “circular” economy was conceptualised in the 1970s as an academic’s dream, where one day, the world would reform its “linear” economy, which operated in a take, make, waste paradigm. Instead, it would adopt a new circular economy that would reduce, reuse and recycle the resources required for modern life, creating a sustainable “closed loop” system. Over the decades, several initia- tives were taken to make this dream a reality. Recycling legislations were adopted, innovative businesses were established, patents were registered, and much more. Public awareness and enthusiasm slowly began to grow. Nonetheless, humankind’s consumption of the earth’s resources BY JESSICA MATTHEWS, GLOBAL HEAD OF SUSTAINABLE INVESTING, JP MORGAN S mart investors who are looking to maximise their capital over the long term are paying special attention to circular economy principles. After all, the potential gain could be benefi cial to an individual’s portfolio and contribute to achieving sustainability.arabianbusiness.com 35 has more than tripled since 1970. If current practices continue, we will need to fi nd an additional Earth planet to satisfy our need for resources. However, three signifi cant cata- lysts - high infl ation, climate change and legislation - are compelling us to transition towards circular economic practices such as using renewable energy and materials, building greater effi ciency and less waste into supply chains, and delivering goods and services virtually. High infl ation is changing businesses and consumers Today’s ongoing high infl ation is lead- ing some consumers and businesses to adopt circular economy practices. Central banks have continued to hike interest rates to help rein in infl ation from 40-year highs. Moreover, when inflation rates are high, consumer behaviour natu- rally changes, as people limit their expenditures and make trade-offs about what is essential versus what is expendable. According to a study by RedSeer, the UAE’s market for pre-owned items has been growing steadily, with a quarter of consumers in the region having bought or rented pre-owned goods within a six-month period. The study also noted that the interest in pre-owned or second- hand goods was accelerating due to growing digital adoption, an increas- ing focus on the environment and the chance to snap up significant discounts. In the UAE, vehicles emerged as the most popular segment in the pre-owned market, followed by electronics, homes and fashion. Infl ation is also driving businesses to explore cost saving opportunities, frequently through recycling. A vast majority of supply-chain leaders anticipate profi ts to increase between now and 2025 as a result of imple- menting circular economy principles. Therefore, savvy investors should seek out companies that are conscien- tiously recycling their resources and avoiding waste. ment drive. The Cabinet continues its eff orts to implement the UAE Circular Economy Policy through programmes and projects that are set to attract investments to this fi eld and expand its infrastructure. Efforts are also being exerted to establish a circular economy database, in addition to off ering incentives to encourage the private sector to shift towards clean production methods. Mitigating climate change And of course, in addition to infl ation and legislation, the drive to mitigate climate change is also causing some consumers and businesses to adopt circular economy practices. Over the next 20 years, global temperatures are expected to reach or exceed 1.5° C of warming above pre-industrial levels. To counteract this trend, urgent action is required, and individuals and corpo- rates are responding, recognising the necessity to better manage their waste and reduce their consumption. While there are challenges to tran- sitioning to a circular economy, there are also tremendous opportunities and potential benefi ts to our world. Estimates show that the shift to circu- lar economy practices could generate $4.5 trillion of additional economic growth by 2030. According to a study by McKinsey, businesses that adopt four out of these six potential circular economy practices could signifi cantly improve their performance and reduce their costs: 1. Regenerate (shifting to renewable energy) 2. Share (promoting the sharing of products and prolonging lifespans) 3. Optimise (improving effi ciency and removing waste from supply chains) 4. Loop (keeping materials in “closed loops” through remanufacturing and recycling) 5. Virtualize (virtual delivery) 6. Exchange (replacing old materials with advanced renewable ones) Investors seeking to access these themes have plenty of options to do so, both in the public equity markets, or via venture capital opportunities in the private sector. Humankind’s consumption of the earth’s resources has more than tripled since 1970. If current practices continue, we will need to fi nd an additional planet to satisfy our need for resources | SUSTAINABILITY Reaction High infl ation is leading some consumers and businesses to adopt circular economy practices, Matthews says Government policies now encourage the transition Some governments are supporting the shift to a circular economy. The UAE Cabinet approved the UAE Circular Economy Policy in Janu- ary 2021, which provided a compre- hensive framework for determining the country's approach to achieving sustainable governance and the opti- mal use of natural resources through the adoption of consumption and production methods that ensure the quality of life for current and future generations. Since then, the country has approved over 22 policies aimed at accelerating the UAE’s transition to a circular economy. These policies have contributed to addressing the chal- lenges faced by the private sector in its shift to a circular economy and support the country’s green develop-36 Vol. 24/04, April 2023 UAE corporate tax and its eff ect on foreign investment While the introduction of corporate tax in the UAE may be seen as a dilution of the country’s appeal to foreign investors, it’s important to look at the broader picture to get a full understanding of its effects Regional leader The UAE boasts the second-largest economy in the Middle East, with an estimated economic size of $415bn ECONOMY | income tax (CIT, or CT) in the UAE has historically been one of the country’s key selling points for foreign investors, so the introduction of a corporate tax regime, eff ective from 1 June 2023, has prompted many to ask what its eff ects will be and how it will infl uence the UAE economy. How will the introduction of corporate tax affect the country’s appeal to foreign investors? While the introduction of corporate tax in the UAE may be seen as a dilution of the country’s appeal to foreign inves- tors, it’s important to look at the broader picture to get a full under- standing of its eff ects. The worldwide average statutory corporate income tax rate, measured across 180 jurisdictions, is 23.37 percent, and 25.43 percent when weighted by gross domestic product (GDP). In this context, the UAE’s 9 percent rate makes it the country with the joint third lowest corporate tax rate in the world and one of only three Organisa- tion for Economic Co-operation and Development (OECD) member states among the 20 countries with the world’s lowest corporate tax rates. This demonstrates the UAE’s success in reconciling its obligations and commitment to the OECD with its desire to continue to make the country an attractive investment destination. It has succeeded in fi nding the delicate balance between honouring its commitment to the global minimum effective tax rate established by the OECD and maintaining investor inter- est and confi dence. This is particularly pertinent at a time when countries are coming under increasing pressure to reform their tax systems and align them- selves with changing global norms and regulations. The introduction of corporate tax can be seen as a sign of the UAE’s commitment to long-term economic stability and growth, making it more attractive to investors looking for a stable and predictable business environment. BY JOHN HANAFIN, FOUNDER AND CEO OF HURIYA PRIVATE T he UAE’s business policies have always centred around promoting economic growth, diversifi cation and entrepreneurship. This blueprint has enabled the country to move away from its traditional reli- ance on oil and gas revenues and successfully diversify into areas such as tourism, real estate, construction, fi nance and technology. The country now boasts the second-largest econ- omy in the Middle East, with an esti- mated value of $415bn. The absence of a federal corporate arabianbusiness.com 37 Economic boost Hanafi n says the UAE corporate tax revenues will provide the necessary funds to further support SMEs 4.1% The growth of the UAE's economy this year, according to projections by the World Bank Businesses entering the UAE market will now be able to make investments with greater confi dence and build greater trust with their customers and stakeholders. Impact on the UAE economy and a stronger model to support foreign direct investment (FDI) The introduction of corporate tax in the UAE is a major step towards the country’s diversifi cation goals. Estab- lishing this new revenue stream will allow it to further reduce its reliance on oil revenues and fund other projects beyond the energy industry. Increased spending on infrastruc- ture projects, such as transportation networks, water and electricity supply systems, and telecommunications networks, will enable the government to help support the growth of other sectors of the economy and create new demand and opportunities for over- seas investment. Corporate tax revenues will also provide the necessary funds to further develop initiatives to support small and medium-sized enterprises (SMEs). Increased spending on accel- erator programmes such as Dubai’s Future Accelerators and Abu Dhabi’s Hub 71 will provide the critical resources and support startups and early-stage companies need to help them succeed. The opportunity for these SMEs to access capital, mentor- ship and networking opportunities and other important resources will play a vital role in supporting the growth of the UAE’s startup ecosystem and helping entrepreneurs succeed in their ventures. These moves will ultimately fuel the country’s economic growth and incen- tivise businesses to choose the UAE as a base for their operations. The support available to new businesses in the UAE makes the country very competitive amongst its global competitors, and when coupled with the country’s stra- tegic location between major markets in the East and West, it provides a great opportunity for businesses to explore international expansion and access lucrative growth markets. It’s also important to note that while the application of the corporate tax is nationwide, the UAE government will continue to honour the corporate tax incentives being extended to all businesses registered in free zones across the country. These businesses can maintain their 0 percent corporate tax position provided they comply with all regula- tory requirements and do not conduct business on the mainland. Concluding thoughts In the current climate of global insta- bility and the scrutiny of tax evasion, the UAE’s introduction of corporate tax and involvement in the OECD’s base erosion and profi t shifting (BEPS) proj- ect is a clear sign of the country’s eff orts to promote economic growth, trade and investment. The new corporate tax regime will bring increased transparency in terms of tax compliance and accountability and provide investors with greater confidence in the UAE’s regulatory framework. The country’s membership of the OECD will facilitate the exchange of information and best practices on issues such as taxation, anti-corrup- tion, anti-money laundering, and investment policies, all of which will enable access to a wider network of countries and international organisa- tions and help expand trade and investment opportunities. The new corporate tax will also provide the government with increased funds for large-scale investment in public services. The recently approved UAE federal general budget suggests that significant spending will be directed towards infrastructure, social welfare, education and healthcare, generating lucrative new investment opportunities and creating a much more robust and stable economic envi- ronment for the future. Overall, the UAE’s economic outlook looks much brighter as a result of this move. It will generate new and exciting opportunities for investment and underlines the strategic advan- tages the country provides. | ECONOMY Implications of corporate tax for cross-border trade The UAE’s 9 percent CT rate on taxable profi ts above AED375,000 makes it one of the world’s most competitive corpo- rate tax rates. Its introduction ensures that the UAE remains aligned with inter- national standards and requirements while retaining a competitive advantage over other global markets. It also ensures that businesses in the UAE continue to benefit from the country’s extensive network of double taxation treaties. The UAE has over 100 agreements in place with trade partners around the world. These treaties guard against the possibility of being taxed twice on the same source of income and provide transparency between member coun- tries on taxation related to cross-bor- der trade and investment. For prospective investors in the UAE, these agreements help to opti- mise their revenue generation by providing tax relief. For businesses with a multinational presence, they provide much needed clarity on where their tax obligations lie while providing the security they are fully compliant with current international regulations.38 Vol. 24/04, April 2023 Gender gap: Why we can’t aff ord to ignore gender equity anymore Employees and employers will both benefi t from increased diversity Removing barriers Companies need to identify and remove structural inequities in order to attract and retain the female workforce 93% The percentage of women who say they value employers who offer them development oppor- tunities, according to a PwC survey in 2022 EQUALITY | Additionally, increasing the number of women in the workforce can have a positive impact on the economy. Several studies have shown that the gender diversity effect on productivity could increase the national GDP of several countries by around 35 percent, with the Middle East and North Africa (MENA) region potentially seeing a boost of 57 percent, or the equivalent of $2 tril- lion, according to the PwC Middle East MENA Women in Work Survey 2022. Overall, employees of both genders working for companies with a higher percentage of women in the workforce rate their organisations more favourably in terms of job satis- faction and employee engagement and experience fewer incidences of job-related burnout. BY NAOUM BARAKAT, DIRECTOR, HUMAN CAPITAL DEVELOPMENT, HOTELS AND THE DESIGN STUDIO T he case for gender equity is compelling. Research has shown that workplaces that are more gender-diverse tend to have more positive corporate cultures and higher rates of job satisfaction and employee engagement. arabianbusiness.com 39 We still have some way to go before we can reach this stage, with the 2022 World Economic Forum Global Gender Gap Report stating that the world is 132 years away from reaching full gender parity. In the Middle East and North Africa (MENA), which has the second-largest gender gap after South Asia, the UAE is among the best-performing nations, jumping four places from 72nd to 68th globally in the space of one year and rank fi rst across the Arab world and fi rst glob- ally across five sub-indicators. In addition, the country is placed fi rst across nine international competi- tiveness indexes that chart progress towards Goal 5 of the Sustainable Development Goals 2021, that of gender balance. One of the biggest challenges to gender equity in the region is the lack of representation of women in tradi- tionally male-dominated sectors. For example, even though around half of the engineering students in Arab countries are female, the percentage of women who go on to build their careers in roles that contribute to infrastructure development stands at a mere one percent. It is clear that several factors need to be directly addressed to overcome the critical barriers to entry to the profession and, for those who over- come this fi rst hurdle, to progress their career in the development fi eld. To attract and retain the female workforce, companies need to iden- tify and remove structural inequities, which can range from policies to overcome wage disparities to cementing maternity leave rights. Facilitating fl exible work hours and promoting hybrid working practices is also of high value, particularly for the many employees juggling the responsibilities of their role with that of motherhood. In addition, we need to examine the company culture through a crit- ical lens to ensure that stereotype threat and implicit bias, which often manifest in a myriad of subtle ways, can be identified and informed dialogue established to offset any resultant negative aff ect. I would also recommend that HR professionals adopt an open-door policy to encour- age female employees to come forward with honest feedback about their day-to-day experience and to feel confi dent in asking for the advice and on-the-job training they need to realise their career goals. It is important to note that gender equity is not just about doing the right thing, but also about doing what is best for the organisation. A gender-diverse workforce can bring a range of perspectives and experi- ences that can lead to greater creativity, innovation and prob- lem-solving capabilities. A diverse workforce can also enhance the organisation’s reputation and attract the best talent. Regardless of the prevalent challenges, the bene- fits of driving gender parity in the workplace are persuasive. Gender equity is not just about doing the right thing, but also about doing what is best for the organisation | EQUALITY 19.77% The percentage of women in the MENA region's labour force – the lowest rate globally Asset A gender-diverse workforce can bring a range of perspectives and experiences that can lead to greater creativity, innovation and problem-solving capabilities Female inclusion Barakat says increasing the number of women in the workforce can have a positive impact on the economyNext >