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UAE companies step up ESG compliance, look towards sustainable future

The efforts are in line with the nation's vision to drive the sustainability agenda through strategic development policies

With the increased focus on climate change, corporate companies in the UAE are upping the game by considering environmental, social and governance (ESG) benchmarks while making business and investment decisions, experts said.

A panel discussion titled "Welcoming a Sustainable Future" was held at Expo 2020 Dubai on Wednesday to highlight these corporate efforts.

Shady Elborno, head of macro strategy at Emirates NBD, said: ”The UAE companies are starting to see the benefits of developing a more sustainable approach to business in addition for understanding the potential risks associated with climate change within their own operations and of the societies in which they operate."

The efforts are in line with the UAE's vision to drive the sustainability agenda through strategic development policies, such as Vision 2021, the energy strategy for 2050, the Green Agenda 2030 and the National Innovation Strategy.

The panel, moderated by Abdulla Galadari, senior partner at Galadari Advocates and Legal Consultants, tackled the topic of how social and environmental considerations have found their place in the country’s development agenda and serve corporates in the global and regional economic context.

Commenting on the impact ESG is having on businesses and economies, Elborno said the COP26, the UN’s 26th annual global climate change conference currently being held in Glasgow, will “supercharge ESG metrics guidelines and goals for companies around the world.”

He said investors have started pushing companies to be ESG compliant and the fact that they are choosing companies based on their ESG benchmarks is having a huge impact.

But Elborno added that it is an encouraging trend that consumers themselves are taking a “much more involved attitude towards ESG metrics” of companies, everything from packaging of goods down to the sustainable recycling of foods down to the way how companies are governed.

Echoing the same sentiment, Fatima Alnaqbi, head of strategy and future department at Ministry of Finance, said when investors looking at diversifying their portfolio, they are assessing companies on their ESG benchmarks.

“Even for SMEs, being ESG complaint has become an important requirement for them to set up their businesses,” she added. “There is a good understanding and a strong belief that there is a strong correlation between the financial performance and ESG practices,” she said.

For his part, Galadari said ESG is an integral part of the company’s vision and it aims at doing better for the future of the environment.

“We have recently made great progress in terms of diversity, environmental practices, and social initiatives. I know my words will resonate with many of you sharing a similar vision,” he said.

Sara Ahmed Alliusie Alhilali, project manager, Tourism Development and Investment at Department of Tourism and Commerce Marketing, spoke about Dubai’s vision to become one of the world’s leading sustainable tourism destinations.

She said the Dubai Sustainable Tourism Initiative, launched in 2016, has created a regulatory framework that allows for measurements, metrics, performance impacts of the hotel industry.

“With the 19 requirements, we are really encouraging hotels to have a real presence of being advocates of sustainability,” said Alhilali.

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From a regulatory perspective, Peter Smith, managing director and head of strategy at Dubai Financial Services Authority (DFSA) said he is hoping that something will come out of COP26 that will enable them as a regulatory community to carry on pushing the agenda of sustainability finance.

He quoted examples like regulatory framework of banks and underwriting by insurance companies while dealing with claims due to natural disasters and global warming as some areas where a fresh look is needed.