< Previous20 AB LEADERS February 2023 STARTUP | Food security in a changing world New agritech solutions are revolutionising the industry and tackling issues from food security to climate change. UK companies are leading the way Vertical farming The UAE remains committed to maintaining the highest levels of food security OUTLOOK | BY SIMON PENNEY, HIS MAJESTY’S TRADE COMMISSIONER FOR THE MIDDLE EAST AND PAKISTAN, AND HIS MAJESTY’S CONSUL GENERAL TO DUBAI The agritech and agrifood sector has grown in importance over the years, in line with today’s global challenges. This topic is front and centre at Abu Dhabi Sustainability Week, during the year that the UAE hosts COP28. Population growth, environmental change, food security, food safety and geopolitical uncertainty are impacting all areas of the agri-food chain world- wide and call for a new mindset in food production which is circular and regenerative, to lessen the planet’s waste burden. arabianbusiness.com 21 Trade partners UK companies are collaborating with organisations in the Middle East across a number of sub-sectors within the agritech industry, Penney says 21% The rise in the UAE’s food imports in the rst half of 2022, according to the UAE Ministry of Climate Change and Environment | OUTLOOK Across the Middle East, the future of food is changing. The enormous resource and environmental cost of traditional agriculture in a challenging desert environment has led to the emergence of many new agritech companies as well as an unprece- dented level of investment in technol- ogies related to agriculture and aqua- culture. The increasing popularity of plant-based diets and alternative protein sources create opportunities that were simply not there ten years ago. The abundance of sunlight to generate power opens yet other oppor- tunities to use technology in farming. And the recognition that our planet’s resources are nite have spurred new ideas and innovations. Where there are signi cant chal- lenges, there are also significant opportunities. Support for the agritech sector in the Middle East has grown thanks to government initiatives. These include Saudi Arabia’s Vision 2030 which places a huge emphasis on sustainable agriculture; Bahrain’s Food Sustainability Initiative; and the UAE’s Foodtech Challenge. UK companies are collaborating with partners in the Middle East across a number of sub-sectors within the agritech industry. Many more are on the cusp of establishing a footprint in the region, with solutions that could make a significant impact in the Middle East. Today, some of the most exciting innovations are in horticulture and alternative proteins. Minimum water for a maximum harvest: Innovations in horticulture Horticulture – the branch of agricul- ture concerned with plant cultivation and growing plants for food – is a key component of food security. Technology applications in horti- culture have expanded to meet the growing need to feed more people with fewer natural resources by saving water, reducing the carbon footprint and minimising the use of chemical pesticides. Controlled environment horticul- ture (CEH) is an umbrella term that A-frame structures and fed via fog directly into their exposed roots. This innovation is particularly suited to environments where water is scarce but which o er an abundance of natu- ral light such as the Gulf region. Problem solving using alternative proteins Demand for alternative proteins has grown alongside the popularity of plant-based diets. Comprising a wide range of prod- ucts, alternative proteins require fewer natural resources when compared to traditional proteins, packing a protein punch with a lower carbon footprint. Growing protein-rich animal feed such as soy has a negative impact on the environment. Insects such as black soldier flies are a highly efficient protein alternative. British company Entocycle has taken insect farming to the next level using food waste, auto- mation and machine learning to enable scalable solutions. The company produces alternative protein in the form of black soldier y insect larvae for animal feed. The black soldier y eats food waste, making the solution truly cyclical and reducing the agricul- tural footprint of the protein. Another protein-dense superfood comes in the form of water lentils, which o er high nutritional value and a very low carbon footprint. With no requirement for arable land, water lentils can grow in high salinity water, 95 percent of which can be recycled. The plant doubles in biomass every 24 hours, producing vast quantities of oxygen. UK company Sustainable Planet is leading the way in highlight- ing this solution to arid countries, with products ranging from pasta and falafel to protein bars and plant- based meat. Food security is a pressing issue across the world, but especially so in countries where arable land and fresh water are scarce. By harnessing inno- vative solutions and developing new technologies, the UK can partner with the Middle East and Pakistan region to e ect the change required to deliver a cleaner, greener future. includes smart technologies for managing glasshouses right through to vertical farming, where fresh produce is grown in stacked layers under LED lighting. CEH solutions such as vertical farming can produce crops with 70 to 95 percent less water than normal cultivation, key for arid climates. Indoor vertical farms are less impacted by an unfavourable climate and weather changes, providing greater certainty of harvest output throughout the year, and can grow crops without the use of chemical pesticides. Cambridge-based Airponix Ltd o ers a fog-based technology solution using no soil and 95 percent less water, which sees crops suspended in The UK can partner with the Middle East and Pakistan region to e ect the change required to deliver a cleaner, greener future 22 AB LEADERS February 2023 What can we expect the key trends to be for ESG investing 2023: A GCC perspective ESG and the environment looks set to remain at the top of the agenda Responsible investing Dubai recently announced the establishment of an ESG investment department INVESTMENT | Iam immersed in this industry every day, so I nd it fascinating to track industry trends, but I also spend a lot of time helping my clients understand that it is crucial for investors to comprehend the difficulties and possibilities that businesses encounter due to the rapidly shifting geopolitical and socioeconomic situation. The environment continues to be at the top of the ESG agenda, and regulators are becoming more aware of the role they must play with govern- ments in ensuring that businesses and nations ful l their commitments with regard to the environment. This topic has been widely discussed at the recent Abu Dhabi Sustainability Week, with leaders brought together under the theme “United on Climate Action Towards Cop28”. Abu Dhabi Sustainability Week is an annual event that brings together leaders from government, business, and civil society to discuss and promote sustainable development. The event typically covers a range of topics related to sustainability, such as renewable energy, green buildings, sustainable transportation, and sustainable urban development. Some key themes that are usually discussed during the event include the importance of collaboration and partnerships between different sectors and stakeholders in driving sustainability, the role of technology and innovation in achieving sustain- ability goals, and the need for policies and regulations to support sustainable development and impact investments. The ESG and climate sectors saw a dramatic change in the last year. With global unrest, energy market disruptions, rising interest rates, and rocketing in ation have all combined to create a global cost-of-living crisis and revived geopolitical and macro uncertainty, regulators are stepping up their game on everything from greenwashing to tighter climate target disclosures. It is simple to understand why investors tend to tread carefully as they strive to grasp the difficulties Climate awareness Zahara Malik, CEO and co-founder of Grosvenor Capitalarabianbusiness.com 23 For the planet Abu Dhabi Sustainability Week is an annual event that brings together leaders from government, business, and civil society to discuss and promote sustainable development 18% The loss in global GDP by 2050 if global temperatures rise by 3.2°C, according to a report from the Swiss Re Institute | INVESTMENT and opportunities faced by compa- nies when you consider the recent series of climate-related tragedies and the rising politicisation of ESG investing. As countries prioritise energy security and affordability, continu- ing global conflicts and the rising inflationary climate may lessen approaching pressure to cut global gr eenhouse-g as emissions. However, switching from coal and oil to natural gas may not be the only viable choice for power firms. I’ll be keeping an eye on which industries are increasing their use of renewable energy and keeping an eye on longer-term emissions reduction trends in 2023. The Dubai Investment Fund recently announced the establishment of an ESG investment department with the goal of monitoring the local and global market and identifying the most lucrative sustainability assets. The Dubai Investment Fund is one of the biggest private investment funds in the world in terms of assets under management. ESGs are also gaining popularity in other GCC countries, like Kuwait. The National Bank of Kuwait recently implemented a sustainable nancing framework to aid in the implementation of the country’s climate change strategy and to include ESG criteria in all of the bank’s operations. It has recently been reported that investors voted against corporate climate policies in greater numbers in 2022 than in 2021, particularly when a company’s emissions trajectory was out of step with goals for the world temperature. However, the turbulence in the energy market and the emphasis on energy security may alter voting patterns. Because of this, I believe in 2023 we will see less investor scepti- cism of corporate climate policies under uncertain market conditions. Despite pledges to stop the destruction of forests globally, 25.3 million hectares of tree cover were lost in 2021, an area larger than the UK. Furthermore, wildfires worldwide Over 25 percent of the clothing we wear is made of cotton, but its adverse e ects, such as land erosion and water use, have increased demand for more environmentally friendly alternatives. In response, clothing stores are look- ing into alternatives and collaborating with independent certifiers of sustainable cotton. Supply problems have arisen due to the disastrous ooding in Pakistan and the removal of some certi cations from China. I’ll be paying close atten- tion to which retailers can manage these impending shortfalls and which ones are willing to support novel, alternative bres in 2023. Implementation of ESG require- ments is generally optional throughout the GCC region, however criteria devel- opment is still going ahead. The fact that high performers in ESG come from a broad range of countries and industries – including telecom logistics industrials (20 percent), real estate (10 percent), and nancials (30 percent) – proves that any business can ourish in ESG. Only half of the region’s top insurers disclose ESG data, but regional insurers are growing in their ESG reporting maturity and estab- lishing important best practises, proving that the GCC is taking ESG commitments onboard. destroyed millions more hectares of land in 2022. Such natural l osses w e re addressed at COP15, and the European Parliament recently adopted legisla- tion mandating that goods marketed in the EU be free of deforestation. As they attempt to keep access to crucial markets in 2023, I’ll be watching to see if companies susceptible to deforesta- tion can strengthen supply chain oversight and due diligence. Continuing global con icts and the rising in ationary climate may lessen approaching pressure to cut global greenhouse-gas emissions 24 AB LEADERS February 2023 STARTUP | How to close Saudi Arabia’s skills gap The kingdom’s digital economy is poised for growth, as the government and the private sector invest in digital skills and infrastructure Strategic thinking Dr Zerak Saleh currently serves as the Head of Finance Strategy at the Saudi British Bank (SABB) $100BN The potential contribution of the digital economy to Saudi Arabia’s GDP by 2030, according to a report from nancial consultants PwC COMMENT | on its ability to create jobs, drive inno- vation, and attract investment in the digital sector. But as the government pushes forward with its ambitious Vision 2030 plan to modernise the economy and reduce dependency on oil, it’s becoming clear that a major obstacle stands in the way: the digital skills gap. The problem is twofold. On the one hand, there are simply not enough quali ed candidates for digital jobs, leaving companies struggling to ll positions. On the other hand, there are not enough digital jobs to begin with, making it di cult for people to build careers in the eld. According to PwC’s ‘Becoming a Digital Disruptor’ report, the digital economy has the potential to contribute over $100bn to Saudi Arabia’s GDP by 2030 and is expected to create more than 300,000 jobs. With unemployment among Saudi nationals hovering at 9.9 percent, according to the General Authority of Statistics, the need to bridge the digital skills gap and create oppor- tunities for young people has never been more urgent. Enter the Human Capability Development Programme (HCDP), a government initiative aimed at empowering Saudi nationals to participate in and bene t from the digital economy. The HCDP is a crucial tool in achieving this; by investing in training and education programmes that focus on digital skills, the country can help ensure that its workforce is equipped to take advantage of the opportunities presented by the digital economy. As the HCDP gears up to tackle the skills gap, it’s not just the government that’s taking action. The private sector, in particular Saudi banks, are playing a crucial role in driving the country’s digital economy forward. From the big banks to smaller players, these nancial institutions are invest- ing heavily in digital initiatives to enhance customer experience, improve operational e ciency and maintain a competitive edge. To stay current with the ever-evolving digital As the world becomes increas- ingly digital, the race is on for countries to keep pace and reap the rewards of the digital econ- omy. For Saudi Arabia, the stakes are high. With a population of 34 million and a rapidly growing youth demo- graphic, the kingdom’s future depends arabianbusiness.com 25 Reaping the bene ts The digital economy has the potential to improve the quality of life for Saudi citizens by providing access to more ef cient and convenient services | COMMENT landscape, the banking industry needs to continue to invest in digital plat- forms and promote nancial inclusion to increase access to nancial services and support economic growth. They can also collaborate with fintech companies and government institu- tions to encourage digital innovation and spur economic growth. But it’s not just about keeping up with the Joneses. Saudi banks are also using digital platforms to promote nancial inclusion, reaching out to underbanked or unbanked citizens and small businesses, and increasing access to nancial services. Through this e ort, the banking industry are also helping to bridge the digital divide and increase the number of Saudi citizens who can participate in the digital economy. The World Bank reports that the percentage of adults with a formal account in Saudi Arabia has surged from around 46 percent in 2011 to 74 percent in 2021, thanks to the efforts of banks to promote nancial inclusion. It is clear that addressing the digi- tal skills gap and fostering the partic- ipation of Saudi citizens in the digital economy not only holds signi cant economic bene ts, but also has the potential to bring about transforma- tive changes to society. It can help tance of the digital economy and have been taking steps to close the digital skills gap and empower Saudi citizens to participate in and bene t from the digital economy. However, it’s import- ant that this is a continuous process, which requires constant effort and adaptation to keep up with the ever-changing digital landscape. The collaboration between the government and the private sector is crucial in order to achieve this goal and is key to unlocking the potential of Saudi Arabia’s digital dream. This will help increase the level of digital literacy and skills among the work- force and improve the overall compet- itiveness of the country. As the digital economy continues to shape our world, it’s clear that the future belongs to those who can navi- gate it. Saudi Arabia has a unique opportunity to leverage the power of the digital economy to drive economic growth and social transformation. By addressing the digital skills gap and empowering its citizens, one thing is clear: the future of Saudi Arabia depends on its ability to harness the power of the digital econ- omy. And with the right investments in training, education and digital infrastructure, that future looks brighter than ever. increase Saudisation rates in the job market and decrease unemployment, leading to a more prosperous and stable society. Furthermore, the digital economy also has the potential to improve the quality of life for Saudi citizens by providing access to more e cient and convenient services, such as e-gov- ernment, e-health and e-education. This can help increase the level of trust in the government and create more engaged and informed citizens. The government, private sector, and banks have all recognised the impor- Saudi Arabia has a unique opportunity to leverage the power of the digital economy to drive economic growth and social transformation 300,000 The number of jobs the digital economy is expected to create in Saudi Arabia26 AB LEADERS February 2023 Business leaders who are making headlines this month Alain Bejjani Murari Lal Jalan Hussain Sajwani Loredana Pettinati Gautam Adani Once one of the richest men in the world, Gautam Adani has fallen of the top 10 global billionaire list following a massive share sell-off in Adani Group after turmoil triggered by the Hindenburg Research report. Alain Bejjani was replaced as CEO of Majid Al Futtaim Holding after eight years in the role in what is seen as the biggest organisational shake-up since the death of founder, billionaire Dubai businessman Majid Al Futtaim. UAE businessman Murari Lal Jalan has continued to face setbacks in his attempt to lead a consortium to purchase Jet Airways, with the carrier’s lenders approaching India’s appellate court to block the ownership transfer. As real estate markets have continued on a bullrun throughout 2022, Hussein Sajwani told Arabian Business that Dubai’s real estate market is only just getting started and was entering its most sustainable period yet. Red Sea Global’s senior travel trade director Loredana Pettinati clari ed current regulations for destination visitors while announcing that women will be allowed to wear bikinis at the Saudi Arabian destination.INTRODUCING THREE NEW COMPANIES THAT WILL BUILD THE FUTURE. THESE PLANS MAY BE SUBJECT TO THE OUTCOME OF LEGALLY MANDATED CONSULTATION IN SOME PARTS OF THE WORLD.Next >