Mapping the future of ESG at COP28
It has become increasingly clear from the vast array of information on climate change that advancing environmental, social, and governance (ESG) goals is an essential part of any long-term solution to the crisis. Although the loosely defined concept remains a work in progress, the upcoming United Nations Climate Change Conference (COP28) in Dubai provides an opportunity for business leaders and policymakers to agree on how ESG can best contribute to achieving net-zero emissions by 2050.
Sound ESG strategies that focus on robust standards, clear metrics, and strict compliance procedures can improve the investment decision-making process for firms in all sectors. This, in turn, makes it easier for companies to unlock debt and equity financing, while also yielding reputational returns.
Beyond offering substantial benefits, ESG has become a business imperative. As the global race to achieve net-zero emissions intensifies, firms looking to form new alliances and partnerships must be able to outline their ESG strategy and, crucially, explain how they plan to execute it. This makes it even more important to develop a cohesive, equitable, and transparent approach to ESG at COP28 and secure buy-in from a wide range of stakeholders.
ESG has gained significant momentum in the Middle East in the run-up to COP28: nearly two-thirds of regional organizations surveyed by PricewaterhouseCoopers (PwC) earlier this year reported adopting a formal ESG strategy in the last 12 months. This would have been unimaginable only a few years ago, when very few in the region were taking the concept seriously. And the trend looks set to continue, as 66% of survey respondents want their CEO and board to allocate more time to ESG-related issues.
Moreover, the fact that 40% of respondents hope that COP28 will lead to governments improving ESG infrastructure and providing incentives for green growth underscores the significance of the climate summit. Fortunately, the United Arab Emirates is already spearheading the reform effort, building awareness of how an ESG framework can pave the way to a net-zero economy. On the environmental side, the UAE has announced plans to invest $54 billion in renewables over the next seven years and has pledged $4.5 billion to finance climate projects in Africa. Mobilizing these huge sums ahead of COP28, as well as undertaking major initiatives to support social and governance investments, demonstrates the UAE’s commitment to championing ESG at the summit and beyond.
Banks must also do their part, which means raising awareness of the central role that ESG plays in sustainable finance and ensuring that there are enough green financial products – including Sharia-compliant instruments – to meet soaring demand from customers. They should also improve ESG reporting metrics to streamline internal and sector-wide data collection. While such changes take time, a more immediate fix could be improving in-house training to help staff better incorporate ESG factors into investment decisions and overall bank strategy.
A meaningful shift in resource management is already underway. Today, 27% of Middle Eastern companies responding to the PwC survey have a chief sustainability officer, and almost half of those individuals are primarily responsible for ESG. Relatedly, only 20% of respondents this year said that the CEO had overall control of ESG, down from around 55% last year. Corporate leaders across the region are clearly attaching more importance to these principles.
While large corporations will find it easier to navigate the increasingly complex framework of green financing, small- and medium-size enterprises (SMEs) will require more support and should not be an afterthought – especially in the UAE economy. According to government data published in mid-2022, the country is home to 557,000 SMEs, which account for 63.5% of non-oil GDP, and that number could grow to one million by 2030. If ESG is to be successful, it must become a key component of business for companies of all sizes.
Global warming represents an existential threat, but the magnitude of the challenge has given rise to unprecedented dynamism: governments and business leaders are embracing new frameworks and radical measures to ensure rapid and significant progress on climate action. COP28 in Dubai will only accelerate this process, especially when it comes to building a consensus on ESG implementation. Speed is of the essence, because the sooner companies begin incorporating ESG into their investment decisions, the better they will do – both economically and environmentally – on the path to net-zero emissions.
Copyright: Project Syndicate
-- Contact us at [email protected]
-
Disappointed, Hong Kong migrants return from U.K. Mark O'Neill
Unable to find a satisfactory job and integrate easily into British society, some Hong Kong migrants have returned home – but remain discreet for fear of losing face with their friends and former
-
Visualisation is the best way for communication Dr. Winnie Tang
In recent years, environmental expectations have become increasingly high, and urban development is prone to disputes. The international tournament held at the Fanling Golf Course in March reminded
-
What drives you? Brian YS Wong
“What drives you?” All eyes were on me – the instructor at the front of the class. Before me were thirty eager high-schoolers, ambitious and aspiring, bushy-eyed and cherubic yet by no means naïve.
-
Integration of GIS and BIM can drive development of smart city Dr. Winnie Tang
The China Association for Geospatial Industry and Sciences (“the CAGIS”) released the Top Ten Highlights of China's Geographic Information Industry in 2023, which provides much inspiration. The
-
Equip young people for the future Dr. Winnie Tang
In late February, the inaugural flight of an air taxi from Shenzhen Shekou Cruise Homeport to Zhuhai Jiuzhou Port took only 20 minutes with an estimated one-way ticket price of 200 to 300 yuan per
-
黃家正:從不離棄香港 本地薑音樂節正式回歸
-
CINDY CHAO 20周年系列頌揚生命的律動
-
WATCHES & WONDERS 2024︰PANERAI賽船情緣
-
WATCHES & WONDERS 2024︰HUBLOT科技精髓
-
WATCHES & WONDERS 2024︰TUDOR金光四射
-
WATCHES & WONDERS 2024︰GRAND SEIKO東灜景色
-
WATCHES & WONDERS 2024︰ZENITH追本溯源
-
WATCHES & WONDERS 2024︰JAEGER-LECOULTRE大師之作
-
WATCHES & WONDERS 2024︰TAG HEUER尖端破格
-
WATCHES & WONDERS 2024︰ROGER DUBUIS 桀驁登場