MUFG: Contours of GCC ESG ecosystem set to ‘accelerate’

DUBAI, UAE, Aug 8: The GCC is undergoing a series of impactful transitions, ranging from energy and fiscal reforms to market dynamics and now a burgeoning ESG agenda, according to a recent study by MUFG titled “ESG in the GCC region: Journey towards the next normal is underway.” As oil and gas intensive states, climate change and the energy transition are top of mind, but social and governance considerations are equally part of the strategy. Rapid development of ESG disclosures continues to propel corporates’ sustainability plans which is enabling investors to strengthen engagement.

Ehsan Khoman, Head of Emerging Markets Research (EMEA) at MUFG and co-author of the report says: “The stars are aligned for the GCC to become a market leader in the global hydrogen space. The region’s abundant lowcost land, low cost of capital, existing industrial capacity, excellent solar and wind resources, geographic proximity to growth markets, low-cost natural gas, and ease of carbon capture, utilisation, and storage (CCUS), as well as ample liquidity and ease of access to capital markets, set it in an excellent position to become a leading global green hydrogen producer and exporter.”

With the energy mix heavily skewed towards fossil fuels, attention has been resolutely on ESG’s “E” pillar – states have addressed this head on. Both COP27 (Egypt) and COP28 (UAE) will increase the pressure not only on the hosts but the region as a whole to articulate execution strategies.

Following the awarding of major international events such as Dubai World Expo 2020, FIFA World Cup 2022, Formula 1 races, GCC labour laws have significantly reformed. Contextualising key social initiatives that entities can adjust to can buttress international best practices towards the “S” pillar.