The busi­ness of sus­tain­abil­ity

Amid a wider gov­ern­ment push, are pri­vate sec­tor firms tak­ing sus­tain­abil­ity more se­ri­ously?


Amid a wider gov­ern­ment push, are pri­vate sec­tor firms tak­ing sus­tain­abil­ity more se­ri­ously?

IT IS NO SE­CRET that sus­tain­abil­ity has be­come a ma­jor buzz­word in UAE gov­ern­ment cir­cles.

A series of projects, plans and strate­gies are in the works to in­crease the con­tri­bu­tion of clean en­ergy to the coun­try’s en­ergy mix from 25 per cent to 50 per cent by 2050 and re­duce the car­bon foot­print of lo­cal power gen­er­a­tion by 70 per cent.

Mean­while, the coun­try has formed a na­tional com­mit­tee to im­ple­ment the United Na­tions Sus­tain­able De­vel­op­ment Goals (SDGs) and re­port its progress.

But in the pri­vate sec­tor, the sus­tain­abil­ity mes­sage has moved at a some­what slower pace.

In par­tic­u­lar, over the last two years as com­pa­nies have tack­led re­duced eco­nomic sen­ti­ment linked to lower oil prices, some ar­gue the fo­cus has been on cost cut­ting rather than sus­tain­abil­ity strate­gies.

How­ever, there is an in­creas­ing train of thought that busi­nesses can­not af­ford to ig­nore or ap­pear un­in­ter­ested in sus­tain­able prac­tices - even in try­ing times.

“Here in the UAE, an in­creas­ing num­ber of or­gan­i­sa­tions have al­ready in­cor­po­rated el­e­ments of the SDGs into their ex­ist­ing sus­tain­abil­ity con­sid­er­a­tions and ap­proaches, but the gap when com­pared to global coun­ter­parts pro­vides an op­por­tu­nity for UAE com­pa­nies to do more,” says KPMG Lower Gulf ’s head of sus­tain­abil­ity ser­vices Han­ife Ymer.

One rea­son for busi­nesses to take no­tice is con­sumer pres­sure. In a 2015 global sur­vey of 30,000 peo­ple across 60 coun­tries, Nielsen found nearly three out of four mil­len­ni­als were will­ing to pay ex­tra for sus­tain­able of­fer­ings.

In ad­di­tion, 66 per cent of over­all re­spon­dents said they were will­ing to pay more for prod­ucts and ser­vices that came from com­pa­nies com­mit­ted to a pos­i­tive so­cial and en­vi­ron­men­tal im­pact.

This in turn was re­flected in com­pany fi­nances, with Nielsen not­ing sales of con­sumer goods from brands that had demon­strated a com­mit­ment to sus­tain­abil­ity were up more than 4 per cent glob­ally, while those with­out grew less than 1 per cent.

On a re­gional level the fig­ures were even more en­cour­ag­ing with con­sumers in Latin Amer­ica, Asia, Mid­dle East, and Africa 23-29 per cent more will­ing to pay a pre­mium for sus­tain­able of­fer­ings.

Busi­nesses in the UAE are tak­ing no­tice; with Emi­rates Wildlife So­ci­ety in as­so­ci­a­tion with the World Wildlife Fund (EWS-WWF) not­ing ris­ing in­ter­est in sus­tain­able busi­ness prac­tices over the 16 years it has been op­er­a­tional.

“Over the years we have been wit­ness­ing an in­creas­ing or­ganic in­ter­est in sus­tain­able busi­ness prac­tices, and the data sug­gests this trend will con­tinue to grow as gov­ern­ments and busi­nesses seek to en­cour­age and adopt sus­tain­abil­ity strate­gies,” says direc­tor of busi­ness de­vel­op­ment Ab­dulla Al Nuaimi.

“Com­pa­nies that clearly ar­tic­u­late sup­port for en­vi­ron­men­tal and so­cial is­sues, fre­quently cite rep­u­ta­tional and bot­tom­line ben­e­fits as added in­cen­tives in pur­suit of sus­tain­abil­ity ob­jec­tives.”

He be­lieves that pri­vate sec­tor firms in the UAE can be­come part of the so­lu­tion to the coun­try’s en­vi­ron­men­tal chal­lenges and as­sist in key goals like ad­dress­ing cli­mate change and con­serv­ing the coun­try’s na­tional her­itage, marine

"through our ini­tia­tives we have proved that go­ing green does not mean re­sort­ing to cap­i­tali n ten­sive ini­tia­tives" HESHAM ALI MUSTAFA ENOC GROUP EX­EC­U­TIVE DIREC­TOR

and ter­res­trial wildlife through long-term busi­ness strate­gies.

As a sign of this grow­ing in­ter­est, some of the coun­try’s largest com­pa­nies are tak­ing no­tice.

Emi­rates Global Alu­minium, the UAE’s big­gest in­dus­trial com­pany out­side of oil and gas, launched its first sus­tain­abil­ity re­port in Au­gust to de­tail its “val­ues, com­mit­ments, as­pi­ra­tions and achieve­ments in en­vi­ron­men­tal, so­cial and eco­nomic per­for­mance”.

In­cluded in the re­port is data on the com­pany’s per­for­mance in ar­eas like emis­sions, safety, tech­no­log­i­cal in­no­va­tion, com­mu­nity en­gage­ment, waste and ef­flu­ent man­age­ment and so­cial re­spon­si­bil­ity with en­tries as far back as 2014.

“We recog­nise that our role must ex­tend be­yond sim­ple com­pli­ance or keep­ing up with our peers. Work­ing with our cus­tomers, reg­u­la­tors, share­hold­ers and stake­hold­ers, we in­tend to be an in­no­va­tor and a leader in sus­tain­abil­ity,” says manag­ing direc­tor and CEO of EGA Ab­dulla Kal­ban.

Per­haps more sur­pris­ingly for an in­dus­try not of­ten as­so­ci­ated with sus­tain­abil­ity,

Emi­rates Na­tional Oil Com­pany (ENOC) too has com­mit­ted to an ex­pan­sive agenda, with $16.3m in­vested to­wards im­ple­ment­ing ini­tia­tives over the 20142017 pe­riod. In 2017, the com­pany pub­lished its first sus­tain­abil­ity re­port fol­low­ing guide­lines of the in­de­pen­dent Global Re­port­ing Ini­tia­tive (GRI).

“Of course, we can [change the per­cep­tion of oil com­pa­nies not be­ing sus­tain­able] – and we are al­ready do­ing it. As a Na­tional Oil Com­pany (NOC), we fol­low the vi­sion of our lead­er­ship, fo­cused on pro­mot­ing sus­tain­able de­vel­op­ment,” says ENOC Group ex­ec­u­tive direc­tor, shared ser­vices cen­tre, group HR, new busi­ness de­vel­op­ment Hesham Ali Mustafa.

“We firmly be­lieve that sus­tain­abil­ity can be achieved only if we trans­form the way busi­nesses think and op­er­ate. We are evolv­ing in a way that aligns with this phi­los­o­phy. Through our ini­tia­tives we have proved that go­ing green does not mean re­sort­ing to cap­i­tal-in­ten­sive ini­tia­tives. The key is to think smart and look for creative, in­no­va­tive and in­cre­men­tal mea­sures – that can bring trans­for­ma­tional change.”

Other no­table an­nounce­ments have come from Dubai Prop­er­ties, which said last month it had com­pleted the in­stal­ment of en­ergy-sav­ing sys­tems from Honey­well and Sig­nify in its com­mu­ni­ties that will off­set an es­ti­mated 1,450 tonnes of CO2 emis­sions an­nu­ally.

Mean­while Dubai’s Depart­ment of Tourism and Com­merce Mar­ket­ing (Dubai Tourism) also pub­lished its first in­ter­ac­tive web-based man­ual to help ho­tels and hos­pi­tal­ity firms de­velop a sus­tain­abil­ity plan in Au­gust.

The ini­tia­tive, in part­ner­ship with the Green Build­ing Coun­cil, aims to en­cour­age the emi­rate’s 700 ho­tels to en­gage in sus­tain­able prac­tices like en­ergy con­ser­va­tion, wa­ter con­ser­va­tion, waste man­age­ment and sus­tain­abil­ity en­gage­ment of staff and guests. EWS-WWF’s Al Nuaimi says the or­gan­i­sa­tion is also work­ing with Dubai Tourism on a num­ber of ini­tia­tives rang­ing from a sus­tain­abil­ity board game to work­shops and train­ing ses­sions.

“We know that one or­gan­i­sa­tion alone can’t ef­fect the change needed. The changes we want to see in the world can only come about through the ef­forts of many ac­tors in­clud­ing lo­cal com­mu­ni­ties, multi­na­tional cor­po­ra­tions, gov­ern­ments and NGOs,” he says. “At EWS-WWF, we are work­ing to im­ple­ment sus­tain­able so­lu­tions that strike a bal­ance be­tween the UAE and re­gion’s eco­nomic and en­vi­ron­men­tal well­be­ing.”

Chang­ing con­sumer habits

Another no­table sus­tain­abil­ity ini­tia­tive in the UAE this year has come from the lo­cal fran­chise op­er­a­tor of UK su­per­mar­ket chain Waitrose, Fine Fare Food Mar­ket, which is en­gag­ing in a 12-week trial across five stores in Abu Dhabi from June 16 to Septem­ber 8 to re­duce us­age.

In the open­ing weeks of the ini­tia­tive, the com­pany saw a 74 per cent re­duc­tion in the sin­gle use of plas­tic bags and a dra­matic rise in the pur­chase of re­us­able plas­tic bags from 60 dur­ing the same pe­riod last year to 5,728. It sub­se­quently de­cided to roll out a scheme, al­low­ing cus­tomers to de­posit used bags for other shop­pers to use, across all Waitrose stores.

“Be­ing an in­de­pen­dently-owned re­tailer, we ben­e­fit from be­ing able to lis­ten to our cus­tomers and re­act to the chang­ing shape of the re­tail land­scape quickly and ef­fec­tively, and in or­der to bring about change, we want to help our cus­tomers make small shifts in their be­hav­iour, to even­tu­ally lead to pos­i­tive habits,” says Fine Fare Food Mar­ket and Spin­neys Dubai CEO Matthew Frost.

“Upon com­ple­tion of the trial ini­tia­tive on Septem­ber 8, we will con­duct a full anal­y­sis of the scheme re­view­ing data on sin­gle-use plas­tic bag re­duc­tion, as well as qual­i­ta­tive in­for­ma­tion from our cus­tomers – with the hope to be able to roll out the ini­tia­tive across all of our stores.”

Frost says busi­nesses and con­sumers in the UAE are be­com­ing more aware of plas­tic pol­lu­tion fol­low­ing wider steps taken glob­ally that have seen gov­ern­ments and su­per­mar­kets in a num­ber of coun­tries in­clud­ing the UK and Aus­tralia aim to re­duce plas­tic bag us­age by charg­ing cus­tomers.

“We are work­ing in­ter­nally on iden­ti­fy­ing key ar­eas for plas­tic re­duc­tion, from the deli to mi­crobeads in health and beauty. We are also work­ing closely with our sup­pli­ers to en­sure sus­tain­able pro­duc­tion and new in­no­va­tive means of pack­ag­ing.”

He sug­gests the trial has shown that con­sumers are will­ing to make small

"We want to help our cus­tomers make small s h i f t s i n their be­hav­iour, to even­tu­ally lead to p o s i t i ve habits” MATTHEW FROST FINE FARE FOOD MAR­KET AND SPIN­NEYS DUBAI CEO

changes in their be­hav­iour in a coun­try where the Min­istry of Cli­mate Change and En­vi­ron­ment es­ti­mates 11 bil­lion plas­tic bags are used each year.

“As we con­tinue to shine a spot­light on a global is­sue at a lo­cal level – it’s im­por­tant that change is en­forced and I be­lieve that a per­ma­nent charge for sin­gle-use plas­tic bags will be wel­comed by the UAE com­mu­nity.” ENOC has also pushed for­ward a num­ber of con­sumer ini­tia­tives in­clud­ing the in­tro­duc­tion of bio-diesel pro­duced from waste veg­etable cook­ing oil and com­press nat­u­ral gas sta­tions and elec­tric vehicle charg­ing sta­tions at all of its new fuel sta­tions.

Mustafa says the com­pany is now dis­cussing the in­tro­duc­tion of hy­dro­gen as a fuel with bio­fuel man­u­fac­tur­ers hav­ing also re­cently un­veiled the Mid­dle East’s first so­lar pho­to­voltaic pow­ered re­tail sta­tion in Dubai.

“Mov­ing for­ward, all the up­com­ing sta­tions of ENOC will be pow­ered by So­lar PV, in­clud­ing our sta­tions in Saudi Ara­bia,” he says.

“Also as part of the Sus­tain­abil­ity In­dex, all our busi­ness units are man­dated to im­ple­ment so­lar PV in their oper­a­tions be­fore end of this year."

Other plans in­clude an ex­pan­sion of Jebel Ali re­fin­ery, due to be com­pleted by the end of 2019, to in­crease pro­duc­tion lev­els and en­sure prod­ucts meet en­vi­ron­men­tal stan­dards. The com­pany has achieved Dh­s45m ($12.2m) of sav­ings through en­ergy ef­fi­ciency and re­source man­age­ment ini­tia­tives in the first half of the year, plac­ing it ahead of sched­ule to achieve a re­turn on the Dh­s55m ($14.97m) in­vested be­tween 2014 and 2018.

Is enough be­ing done?

As these and other ini­tia­tives take shape it is im­por­tant to mea­sure the ef­forts of re­gional com­pa­nies in com­par­i­son to their global peers.

KPMG re­cently con­ducted a study of the largest com­pa­nies in the UAE to help grasp how the UN Sus­tain­able De­vel­op­ment goals are un­der­stood and linked to cor­po­rate strat­egy.

Ymer says the re­search re­vealed an in­crease in over­all sus­tain­abil­ity re­port­ing but sug­gested there was still room for im­prove­ment in the UAE pri­vate sec­tor to align with global trends and prac­tices.

“Many com­pa­nies recog­nise the need to con­sider and sup­port the SDGs, but they seem to be find­ing it chal­leng­ing to trans­late their sup­port into more spe­cific, ac­tion­able and mea­sur­able busi­ness goals,” he ex­plains.

To change this, he sug­gests com­pa­nies can be­gin by try­ing to en­sure the proper im­ple­men­ta­tion of the SDGs through map­ping their ex­ist­ing ac­tiv­i­ties to them and set­ting tar­gets and key per­for­mance in­di­ca­tors.

“Nat­u­rally, there is no one-size-fits-all ap­proach, which is why or­gan­i­sa­tions may have to un­dergo some trial and er­ror be­fore find­ing the most suit­able ap­proach,” he says.

“A well-planned ap­proach to the SDGs is more likely to help com­pa­nies to demon­strate how they are sup­port­ing them and how the SDGs in turn are driv­ing busi­ness value.”

Mean­while, the ad­vice on the cor­po­rate side is that there is no time like the present for re­gional com­pa­nies to be­gin their sus­tain­abil­ity jour­ney.

“En­sur­ing the sus­tain­abil­ity of en­vi­ron­men­tal re­sources is an as­pect all com­pa­nies must be com­mit­ted to – no mat­ter its size or na­ture of busi­ness,” Mustafa says.

“Sus­tain­abil­ity plans must be done now – not later. Whether that be re­cy­cling, draw­ing on so­lar en­ergy, or shrink­ing the car­bon foot­print, this is a com­mit­ment that goes be­yond the re­mit of re­turns on in­vest­ment – be­cause what we do to con­serve our earth and re­sources is an in­vest­ment in our fu­ture.” Though it may take some time. Clearly the busi­ness and en­vi­ron­men­tal ben­e­fits mean that sus­tain­abil­ity is not an area that GCC com­pa­nies can af­ford to ig­nore.

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