Environmental, social and governance (ESG) metrics in the Middle East may need to be revised to allow businesses to address issues specific to the region, according to a senior Strategy & Middle East official. Such issues include decarbonisation, climate change, diversity and inclusion, labour nationalisation and water scarcity.
Dr. Yahya Anouti, ESG Leader, Strategy& Middle East, part of PwC network, said:
Given that there are different ESG standards and frameworks, there are bound to be different nuances of ESG. More important than the definition, however, is to think over the core ESG priorities given the stage of social, environmental and governance development in this region.
According to a PwC study, despite the fact that the Middle East is home to around 6% of the world's population, the region accounts for 1% of the world's freshwater supply. In addition, 60% of people in the Middle East live in areas with high surface water scarcity, compared to a global average of around 35%.
Anouti noted that there are at least three major challenges for businesses in the region in achieving ESG targets:
However, Dr Anouti expects many of these issues to change in the next years or so, with many announcements from SWFs and banks in the region linked to ESG financing.
He also expects regional financial markets as well as companies to bring more clarity to the issue and strengthen their ESG reporting mechanisms in the near future.
Dr Anouti further said that very soon the level of ESG awareness in the region would be on par with other parts of the world:
Countries in the region, such as Saudi Arabia and the UAE, have put ESG at the heart of their national visions. Cop28, which is happening in the UAE next year, will fuel this forward and put the UAE and this region in a leading position.