ESG TO DEFINE UAE COMPANIES’ FUTURE
Businesses will soon find that owner and shareholder interests alone are not supreme
As regional businesses make sense of a tumultuous recent past, they will be struck by their vulnerability. Whether a thriver or mere survivor of the pandemic economy, the modern enterprise must face certain realities, among them the undeniable power of their communities.
Shareholders’ bugbears now pale next to those of the general public to which enterprises must sell their products and services, and from which they must recruit their talent. Consumer and employee attitudes towards issues like climate change, diversity, pay parity, energy efficiency and resource rationalisation are increasingly informing corporate policy.
Startups, SMEs and global heavyweights — all will sink or swim on their approaches to environmental, social and governance (ESG) issues. In essence, ESG has entered the mainstream.
The good news is that the ESG imperative is gaining momentum in the region. According to PwC, 46 per cent of Middle East CEOs are planning at least a moderate increase in investment in sustainability and ESG initiatives over the next three years as a result of the Covid-19 crisis.
But the challenge will be in the transition between “brown” and green assets. Organisations must plan to adjust their positions and accommodate the attitudes of consumers/customers and employees, both of whom now have more choice than ever — in where and who they want to consume products and services from, and in where and how they work.
Businesses know they must now walk the talk because their communities — whether local, regional, or global — demand it. But what does ‘the walk’ look like?
Environmental
Enterprises must find ways to become environmental champions, not just by painting themselves as such, but by verifiable and measurable action in areas such as resource efficiency and net-zero carbon goals. Successful organisations will find ways of making every employee a stakeholder in the journey.
When we consider encouraging the employees of an entire company to go without meat once a week, we are soon talking about how many swimming pools of water we are saving. This is an exceedingly important achievement in the Middle East, where water shortages are becoming major areas of concern. Organizations must think long-term. Much as they would have five- and 10-year business plans, they must adopt similar road maps for energy use, sustainable procurement, and waste management.
Social
The future of work should be focused on providing more opportunities for more people — each individual has a right to be respected, heard, belong, participate and ultimately reach their full potential. For regional organisations this starts with the employees. To attract (and retain) optimum talent in the hybrid-work future, businesses must ensure that work itself meets the expectations of candidates.
Consider the needs of each worker to make work accessible and rewarding for all. Diversity, inclusion and belonging (DIB); employee health and safety; compassionate, supportive leadership; training opportunities, especially as they relate to digital skilling and pay parity — all these approaches and more will be necessary to accommodate the digital labour market.
Beyond catering to employees, organisations must consider how they can address broader social issues.
Ethical, transparent business practices — particularly when it comes to how organisations deal with consumer or customer data — is central to good governance.
Governance
Corporate integrity was a perpetual demand for past generations, but they had considerably less power over companies than the media-savvy digital-natives of the 2020s. Ethical, transparent business practices — particularly when it comes to how organisations deal with consumer or customer data — is central to good governance and building brand equity.
Champions also win prizes. Continuity is just the beginning; next comes longevity. And the only price is taking the time to recognise the obvious — people come first.