< Previous30 CEO MIDDLE EAST APRIL 2023 he potential of the building and construction sector to play a role as a catalyst for global decarbonisation efforts is yet to be fully explored, even though the built environ- ment is responsible for almost one-third of total global energy consumption and nearly 15 percent of direct CO2 emissions, according to IEA estimates. Therefore, any high-impact actions targeted at the industry could yield significant sustain- ability and financial gains. With the Middle East region joining global efforts to cut carbon emissions drastically and fight climate change, a sustainable building sector will play a vi- tal role in helping reach these objectives. Apart from greenfield real estate projects in the Middle East, massive sustainabil- ity gains also exist in greening existing property stock. Retrofits generate efficiencies by optimising energy use in air condition- ing, ventilation, and other mechanical and electrical systems. HVAC systems, in particular, are a rich target for energy savings; heating and cooling easily ac- count for 40 to 60 percent of a commer- cial building’s total energy costs. In a re- vamp, switching to variable speed drives (VSDs) and intelligent control strategies on HVAC systems delivers significant savings in energy costs and reduces carbon emissions. VSDs electronically optimise wind flow by matching the speed of the motors that drive fans and pumps to process requirements. The Affinity Laws of such centrifugal pumps or fans indicates the influence on volume capacity, head and/or power consump- tion of a pump or fan due to change in speed of wheel revolutions per minute, reducing electricity consumption. Some recent use cases in the region demonstrate how retrofitting can drive sustainability gains. In 2022, Abu Dhabi- headquartered developer Aldar awarded a portfolio-wide energy management project to four Energy Service Compa- nies (ESCOs) including ENGIE Solu- tions, seeking to reduce energy con- sumption by 20 percent and potentially With the Middle East region joining global efforts to cut carbon emissions drastically and fi ght climate change, a sustainable building sector will play a vital role in helping reach these objectives OPPORTUNITIES TO IMPACT CLIMATE CHANGE THROUGH ENERGY-EFFICIENT BUILDINGS Strategic planner. Digital technology is a powerful sustainability multiplier, says Holsters SUSTAINABILITY BY BART HOLSTERS, GENERAL MANAGER UAE, ENGIE SOLUTIONS T APRIL 2023 CEO MIDDLE EAST 31 SUSTAINABILITY Carbon reduction. ‘Greening’ existing buildings is a highly effective model to address climate change generate AED40m per year in savings. The extensive project covered lighting retrofits, a switch to variable speed drive (VSD) technology in HVAC and pumping systems, heat recovery units and building controls solutions (BMS/EMS/IoT). Upon completion, Aldar aims to reduce CO2 emissions by 80,000 tonnes , elec- tricity consumption by 110 GWh, water consumption by 886,000m3, chilled water consumption by 23,000,000 TRH and gas consumption by 726,000m3 on a yearly basis. At the public level, governments are exploring retrofit in a bid to drive the national sustainability agenda. In Abu Dhabi, the development of a build- ing retrofit programme as part of Abu Dhabi’s Demand Side Management and Energy Rationalisation Strategy (DSM) 2030 aims to reduce electricity consumption by 22 percent and water consumption by 32 percent by 2030. Dubai has initiated similar Demand Side Management initiatives, such as starting a giant project to retrofit 30,000 buildings by 2030. These initiatives will significantly contribute to the UAE’s ambition to reduce energy demand by 30 percent by 2030. Digital technology is a powerful sus- tainability multiplier. Everyday building operations generate loads of data. Today, readily accessible digital tools such as Fault Detection and Diagnostics (FDD), Machine Learning (ML), or Artificial In- telligence (AI) extract impactful insights from this data, allowing operators to make proactive decisions regarding op- erations and the maintenance of assets and effectively maintain equipment. This substantially reduces operating costs by optimising energy, extending asset life and the more efficient use of resources. In addition, energy service providers can add more value by increasing the system reliability by close monitoring of the health status of the asset and the ability to act based on actual asset condition and prediction algorithms. Secondly, EMaaS-tools (Energy Management as a Service) integrate software, hardware, ICT technologies and services to monitor, control and automate lighting and HVAC functions and generate energy efficiency in build- ings. Applied at scale, these advanced digital technologies can provide vis- ibility to an entire real estate portfolio, amplifying its impact. Cost has traditionally been a bar- rier to extensive sustainability-focused upgrades. But today, developers can tap into innovative financing models, such as Energy Performance Contract- ing, Shared Savings Agreements or Build-Own-Operate-Transfer (BOOT), that turn heavy upfront CAPEX into spread-monthly OPEX with 100 percent guaranteed performance as a bonus to the client. By passing the financial risk to Energy Performance Management Companies/Energy Service Companies (ESCOs), building owners benefit from more comfortable surroundings while contributing to corporate and national sustainability goals without incurring capital investments. Of course, retrofit is one cog in a much larger sustainability wheel. Com- bined with the region’s ongoing clean en- ergy investments, sustainable buildings can accelerate the region’s sustainability aims. The Dubai Clean Energy Strategy aims to produce 75 percent of the emir- ate’s energy requirements from clean energy sources by 2050. The strategy also aims to make Dubai a global centre of clean energy and a green economy. In KSA, the Saudi Energy Efficiency Centre was launched to rationalise and increase energy efficiency to preserve the kingdom’s natural resources and enhance socioeconomic welfare. The above examples demonstrate that energy performance management is a powerful contributor to cutting carbon emissions. Use cases such as Aldar’s buildings retrofit project prove that greening existing buildings is a highly ef- fective model to address climate change while reducing energy waste, saving money, and affordably expanding renew- able energy resources. 39% The contribution of the built environment in the gross annual carbon emissions worldwide, according to the United Nations Environment Programme “COMBINED WITH THE REGION’S ONGOING CLEAN ENERGY INVESTMENTS, SUSTAINABLE BUILDINGS CAN ACCELERATE THE REGION’S SUSTAINABILITY AIMS”32 CEO MIDDLE EAST APRIL 2023 SG (environmental, social, and governance) is like a seed in the ground, growing roots and branches, making it increasingly difficult to ignore or uproot. But the real question is whether it will truly reach its full potential. The number of voices demanding more transparency on ESG issues has skyrocketed in recent years. As the global economy faces chal- lenges such as climate change, social inequality and corporate misconduct, stakeholders demand more clarity and accountability from companies about their ESG practices. PwC recently surveyed investors and found that 79 percent of respondents felt ESG reporting was crucial when making investment decisions. With a projected 84 percent increase to $33.9 trillion in 2026, ESG-focused institutional invest- ment will account for 21.5 percent of all assets managed, according to PwC. ESG considerations have emerged as a top priority in the policy and strate- gic frameworks of businesses operat- ing in the Middle East. The UAE has positioned itself as a trailblazer in ESG reporting. It has spearheaded initiatives, such as the Dubai Carbon Abatement Strategy and the Dubai Clean Energy Strategy, to combat climate change. These goals and ambitions include targets for reducing emissions, increas- ing renewable energy generation, and promoting sustainable practices. Busi- nesses aspiring to demonstrate commit- ment to climate change and the UAE’s net-zero emissions target by 2050 must comprehensively evaluate their opera- tions, encompassing possible avenues for growth and potential risks. Integrating ESG principles into business strategy entails a commit- ment to the three fundamental pillars of environmental sustainability, social responsibility, and ethical corporate governance. Consequently, it mandates a comprehensive approach to reducing waste, CO2 emissions, and pollution and promoting diversity and inclusivity throughout the organisation’s manage- ment hierarchy. With the upcoming Cop28 event, all eyes will be on the UAE, so regional businesses must create robust ESG reporting. Implementing comprehen- sive ESG disclosure can help position businesses as leaders in sustainability, ensuring their long-term viability and Integrating ESG principles into business strategy entails a commitment to three fundamental pillars writes Farhat Ali Khan, Managing Partner, Century Maxim International THE FUTURE OF BUSINESS IN THE UAE: WHY ESG REPORTING IS A MUST Leading by example. The UAE has positioned itself as a trailblazer in ESG reporting Ali Khan says SUSTAINABILITY $33.9TR The value of ESG-focused institutional investment in 2026, according to projections by PwC E APRIL 2023 CEO MIDDLE EAST 33 SUSTAINABILITY Cutting carbon emissions. ESG has the power to shape the entire landscape of an organisation relevance. Therefore, regional compa- nies are encouraged to prioritise the development of ESG reporting to align themselves with global sustainability objectives and to demonstrate their commitment to a sustainable future. Demand for ESG products exceeds supply Even though there has been a dra- matic growth in interest in ESG-centric products, 30 percent of investors report having difficulty locating suitable ESG investment alternatives. Investors are increasingly looking for products that generate a return and have a positive environmental, social, and govern- ance (ESG) impact. As more investors become interested in ESG products, demand is outstripping supply. The legal obligation to disclose information for publicly listed companies Investors in public firms increasingly place a premium on ESG factors. As a result, to attract and retain investors, publicly held companies must maintain their ESG reports and strategy and pro- vide accurate information publicly. The Securities and Commodities Authority (SCA) has implemented specific ESG disclosure requirements that public joint stock companies listed in the UAE must comply with. Don’t wait for the mandate: Stay ahead of future regulatory guidelines ESG will continue to thrive in the future. Companies that fail to moni- tor and track the metrics required for future compliance with ESG stand- ards risk being left behind when these standards become mainstream. To remain competitive, businesses must prioritise ESG metrics and integrate them into their operations. Leading by example: Becoming the change you want to see Today’s businesses are often consid- Making your business sustainable and assessing ROI on reduced emissions Your business’s worth will increase due to the credibility you get through ESG reporting. Company values that emphasise fostering a low-carbon future will win the support of stakeholders and the general public. Just cutting down on carbon output isn’t enough. The return on investment (ROI) of energy efficiency upgrades must be shown with reliable statistics. ESG reporting is useful for calculating ROI and making a public commitment to cutting carbon emis- sions, which is incredibly valuable for business and promotes more justice. The final verdict Like an iceberg, most of ESG’s impact is hidden below the surface; it has the power to shape the entire landscape of an organisation. With the world’s attention on the Middle East, as Egypt and the UAE hold COP27 and COP28, corporations can progress toward ESG disclosure. Companies in the UAE and Saudi Arabia can gain a competitive advantage, increase their attractiveness to investors, and help the government achieve its enormous sustainable development and social responsibility objectives by focusing on ESG factors. “TO REMAIN COMPETITIVE, BUSINESSES MUST PRIORITISE ESG METRICS AND INTEGRATE THEM INTO THEIR OPERATIONS” erably more outspoken about social concerns than their predecessors were. Some businesses are even altering their methods to reflect the change they advocate. There has been a widespread shift toward more eco-friendly packag- ing among major manufacturers of con- sumer products. Not only that, but many large companies donate millions of dol- lars annually to various charity causes. This shift in the corporate landscape has been driven by several factors, including an increasing awareness among consum- ers about social and environmental issues and a desire to make a difference in the world.34 CEO MIDDLE EAST APRIL 2023 ne of the biggest challenges facing the aviation industry is the environmental impact of flying. Even while concerns on the climate front intensify post-pandemic, global emissions and total passenger numbers continue to rise. In a bid to drive sustainable aviation forward, the International Air Transport Association (IATA) has established the ‘Net to Zero by 2050’ – a commitment from the global air transport industry to achieve net-zero carbon emissions by 2050. With the industry under pressure to find sustainable solutions, invest- ments in the ‘green aero-tech’ space are starting to take off, offering exciting opportunities for startups in this field. Here, we look at five ways green aero- tech is launching the aviation industry to a cleaner future. Solar-powered flight Solar power is one of the most popu- lar types of renewable energy sources available to date. However, while solar panels on rooftops are an increasingly common sight, harvesting the sun’s rays to power an aircraft may seem a little too sci-fi to be true. Nevertheless, the impossible has been made possible. On 26 July 2016, the world’s first solar-powered aircraft, Solar Im- pulse 2, touched down at Al Bateen Executive Airport in Abu Dhabi. The round-the-world flight, which covered 40,000 km over four continents, was achieved without a single drop of liquid aviation fuel. While the feasibility of solar- powered commercial aviation may be many years in the making, this incred- ible feat in engineering has been the catalyst for driving green innovation in the aviation industry. Subsequently, aviation giants such as Airbus, Boeing and Siemens are developing programmes for electric and hybrid technologies to reduce emissions in the future. Investments in green aero-tech are taking off, writes Ghanim Al Falasi, Senior Vice President Technology and Entrepreneurship at Dubai Silicon Oasis FUTURE OF FLIGHT: HOW GREEN AERO-TECH IS CLEANING UP AVIATION Transformation. Al Falasi says investment in innovative green aerospace technologies will continue to grow AVIATION O APRIL 2023 CEO MIDDLE EAST 35 AVIATION Sustainable transport. Alice is the first all-electric commuter aircraft developed by Eviation Aircraft The success of the Solar Impulse flight led to creator Bertrand Pic- card launching the World Alliance of Efficient Solutions – an initiative that connects governments, startups, and investors with 1,000 innovative solutions to create and promote ‘clean growth’ in the aviation industry. It’s not just an aircraft that can benefit from solar power. Thanks to the abundance of sunshine in the UAE and the region, Emirates Airline is currently operating solar photovoltaic panels to power its Engine Maintenance Centre, saving around 800 tonnes of carbon dioxide each year. Electric flight Electric flight is not a new concept. In fact, lightweight experimental planes capable of flying short distances have been around since the 1970s. But today’s growing urgency to reduce CO2 emissions has led to a surge of interest in the development of electric passen- ger aircraft. In October last year, ‘Alice’, the first all-electric passenger plane, took off from Grant County International Airport, Washington, USA. Alice is the brainchild of Israeli-founded aviation company Eviation Aircraft. Using bat- tery technology similar to electric cars, the nine-passenger aircraft is capable of flying up to approximately 440 nau- tical miles (800 km) with a maximum cruise speed of around 460 km/h. Eviation is not the only company investing heavily in electric technology – the race for a 100 percent electric, emissions-free future is on. These are some of the leading players taking flight right now: • Airbus – the aviation giant has been developing and testing all-electric aircraft since 2010, laying the ground- work for the future development of all-electric passenger jets. • Harbour Air Seaplanes – in 2019, the Canadian airline, in partnership with aero-tech firm magniX, successfully converted a retro-fitted, six-passenger Hydrogen-powered planes Largely due to the use of traditional kerosene to fuel planes, commercial aviation is currently responsible for around 2.5 percent of global CO2 emis- sions. Cleaner, greener, and quieter, could hydrogen, as a replacement fuel, be the answer? Emitting only water, allowing potential speeds to match traditional planes and capable of carrying more passengers, hydrogen-fuelled aircraft could be a feasible option in the not- too-distant future. According to industry leader Airbus, working extensively on the de- velopment of hydrogen-based technolo- gies, renewable hydrogen has the po- tential to reduce CO2 emissions in the aviation industry by 50 percent. Airbus is currently working on a hydrogen- powered zero-emissions engine that is expected to be in service by 2035. Flying taxis Autonomous flying vehicles may seem like something from a Disney Pixar movie, but in Dubai they could become a reality by 2026. In October 2022, the XPeng X2, developed by Chinese aviation affiliate Xpeng Inc, “AUTONOMOUS FLYING VEHICLES MAY SEEM LIKE SOMETHING FROM A MOVIE, BUT IN DUBAI THEY COULD BECOME A REALITY BY 2026” De Havilland Beaver into an all-electric aircraft. The company is committed to becoming the world’s first all-electric, zero-emission commercial airline. • Avinor – Norway’s public opera- tor of the country’s airports aims for all short-haul flights leaving its airports to be 100 percent electric-powered by 2040. • Heart Aerospace – in a bid to make all Swedish domestic flights fossil-free by 2030, the aviation firm is currently developing the ES-30, a 30-passenger plane with a fully battery-powered range of 200 km. 36 CEO MIDDLE EAST APRIL 2023 made its debut in the Marina District, Dubai. The two-passenger flying car produces zero carbon emissions and can travel in the air and on roads. Reaching a top speed of 130 kmh, the flying taxi could provide a viable, high-tech solution for reducing urban congestion and pollution. XPeng Inc is not the only company delving into flying vehicle R&D. Blueprint for sustainability. Etihad committed to net-zero carbon emissions by 2050 and a 50 percent reduction in net emissions by 2035 AVIATION • German company Volocopter has been testing flying taxis in Dubai in an agreement with the RTA since 2017. • Boeing-backed air taxi startup Wisk Aero unveiled its all-electric, four-seater, pilotless aircraft at Dubai’s Gulf Information Technology Exhibi- tion (GITEX) 2022. • Airbus launched its CityAirbus NextGen in September 2021. The four-passenger aircraft, equipped with eight electrically powered propellers, has an 80 km range and a cruise speed of 120 kmh. Sustainable aviation fuel Sustainable aviation fuel (SAF) is one of the green aero-tech areas invested in most heavily by airlines today. Current research suggests that SAFs APRIL 2023 CEO MIDDLE EAST 37 AVIATION could cut carbon emissions by up to 80 percent. Biofuels use sources such as waste and residues, animal fat, used cooking oils and plant-based oils to create a renewable, sustainable aviation fuel that could be a feasible and accessible replacement to tradi- tional kerosene. The Greenliner programme, run by the UAE’s Etihad Airways, was recently used to highlight the benefits of SAFs at the COP27 Climate Con- ference in November. The Greenliner initiative is committed to adopting sustainable solutions for cleaner air travel, such as using SAFs and ad- dressing other threats to the climate like plastic waste and inefficient travel operations. Emirates, a member of the Clean Skies for Tomorrow coalition, oper- ated its first SAF-powered flight from Chicago O’Hare airport back in 2017. Its first A380, powered by SAF was received in December 2020. In part- nership with GE Aviation, the airline is currently developing a programme to use 100 percent SAF on its Boeing 777-300ER aircraft. In 2023, Virgin Atlantic is set to operate the world’s first net-zero transatlantic flight using only SAF. The London to New York flight will be fuelled primarily by waste oils and fats such as reused, standard cooking oil. In December 2021, Qantas became the first Australian carrier to order SAF on an ongoing basis for its regular scheduled services from Heathrow Airport, London. The future for green aero-tech looks bright (and clean!) From the development of SAFs to advanced propulsion technologies, the future for green aero-tech startups is bright. As the pressure for airlines to improve their sustainability agendas intensifies, investment in innovative green aerospace technologies will con- tinue to grow. The increase in corporate venture capital in the airline industry shows how willing airlines are to explore new and disruptive technologies. In the context of sustainability, could innova- tive startups drive forward the changes that are needed? World’s first net zero transatlantic flight. Virgin Atlantic is set to fly one of its Boeing 787 aircraft from London to New York using solely sustainable aviation fuel (SAF) later this year 2.5% Aviation industry’s contribution to the global CO2 emissions, according to scientific online publication Our World in Data38 CEO MIDDLE EAST APRIL 2023 obile payment systems through one’s basic or smart- phone have opened advanced banking services to millions of new individuals in recent years, but most people lack the basic financial literacy to protect their money and their future. Thus financial education becomes an enabler for these individuals to gain the required knowledge and skills to become financial literate. The oppor- tunity to close the gap is real as only 30 percent women and 35 percent of men worldwide are financially literate. Mobile Network Operators (MNOs) have already enabled 5.3 billion people to access services beyond telephony. Over the last decade, 1.2 billion more people have accessed financial services through mobile money accounts such as Safaricom’s M-PESA and MTN’s MoMo in markets across Africa. The exponential growth in peer-to-peer transfers and merchant payments shows the potential of this platform. This transformation now needs to include programmes for digital financial equity and inclusion to boost financial literacy. One of the key drivers of this change will be fintechs – the integration of technlogy into offerings by financial services companies – such as stcpay in Saudi Arabia or Djamo in Cote d’Ivoire. Though their current focus has been on enabling payments within and across borders through mobile devices, the real game changer will be in education at scale. Fintech’s scalability and reach represent an opportunity to address the financial literacy gap for com- munities to take full advantage of the digital economy. As a result, they have emerged as a new tool to spur financial literacy for youth and adults alike. What is at stake is financial inclu- sion: access to useful and affordable financial services delivered in a respon- sible and sustainable way. Customers need the full set of skills and knowledge to thrive in the digital economy. Finan- cial education can become the social contract that binds the fintech and Customers need the full set of skills and knowledge to thrive in the digital economy and fi nancial education and literacy is a must THE FINANCIAL EDUCATION IMPERATIVE Importance. Governments are already taking steps to support financial education, Manlan says ECONOMY M BY CARL MANLAN, VICE PRESIDENT, INCLUSIVE IMPACT & SUSTAINABILITY, CENTRAL & EASTERN EUROPE MIDDLE EAST AND AFRICA AT VISA APRIL 2023 CEO MIDDLE EAST 39 ECONOMY Ecommerce. Fintechs have already revolutionised the digital movement of money and access to payments their users. And this contract should mean that the use of the service does not lead to a worsening of the situation of one of the parties. For example, un- derstanding interest rates and how the compounding effect works on savings and borrowing is key to a better debt management as highlighted by Marco Di Maggio, Director of Fintech, Crypto and Web3 at Harvard University. Fintechs have already revolution- ised the digital movement of money and access to payments. Now they can revolutionise financial education for underserved populations. However, the rise in access has also created new challenges and risks for individuals that will not all be solved by financial education only. It represents one of the drivers of vulnerability. The opportu- nity as argued by Mayada El Zoghbi lies in our collective ability to understand and measure the drivers of vulnerability in order to strengthen the ecosystem. With a holistic view, skills development through financial education will not be an isolated experience connected to use and access of financial services but an opportunity to solve, once and for all, for one of the drivers of vulnerability. Acquiring the financial literacy skills limits the loss to individuals and society. And improving financial literacy is not only relevant in the Global South because of the complex- ity of existing financial products. For example, the United States the TIAA Institute-GFLEC Personal Finance index indicates that lack of financial literacy cost 15 percent of adults at least $10,000 in 2022. With globalisation boosting access to financial products in all markets, lagging financial education in less developed markets means a higher cost to countries with less experienced consumers. This is corroborated by the fact that in Africa, the most finan- cial literate country is Botswana (51 percent) with the least being Somalia (15 percent) according to S&P’s Global Financial Literacy Survey. Moreover, it is also on the civil society organisations’ agenda. Afla- toun, an international NGO dedicated to broadening financial literacy, is supporting a network of more than 300 organisations in more than 100 countries to make financial education accessible in schools. By developing curricula, training teachers and providing partnerships and support, it has allowed educators and students to become more aware of the risks and opportunities that money represents. Furthermore, recognising that financial education should start as early as possible could mean integra- tion in the national school curricu- lum which has been effective in The Gambia, Cameroon, Philippines, North Macedonia and Jordan, with the support of Aflatoun. With the proliferation of financial services brought by mobile technolo- gies, we have a unique opportunity to promote financial literacy at scale, thereby supporting individual and household’s path to prosperity. “WE HAVE A UNIQUE OPPORTUNITY TO PROMOTE FINANCIAL LITERACY AT SCALE” Across the world, governments are already taking steps to support finan- cial education. A study by the Asian Development Bank, in Vietnam, found strong and positive effects between financial literacy and an individual’s awareness and use of fintech products. In South Africa, the regulator is leading a public-private coalition to run the FSCA financial literacy speech competition where grade 11 pupils from 500 non-paying fee schools com- pete nationally. Next >