De rezagado a líder: The Changing ESG Landscape in the Middle East.

As Earth Day 2023 approaches, the world is quickly shifting towards addressing wider ESG issues, and the Middle East is no exception.

With its vast reserves of oil and gas, the region has been historically associated with high carbon emissions and a dependence on fossil fuels, often seen as lagging on ESG issues and action.

But recently, it has been given fresh impetus from its increasingly active participation in global climate action. Boosted by COP 27 and COP 28 hosted within MENA, coupled with the pressing need to diversify energy sources, the volume of recent sustainability initiatives rolled out by regional governments is impressive.

Countries like the UAE, Saudi Arabia, and Oman are investing heavily in renewable energy sources like solar and wind power. The UAE has set a target of generating 50% of its energy from renewable sources by 2050. In 2022, it launched the region’s first independent Climate Change Accelerator led by Sheikha Shamma bint Sultan bin Khalifa Al Nahyan to drive its commitment, on the back of creating the world’s first regulated carbon credit trading exchange and clearing house.

Saudi Arabia has announced plans to install 58.7 gigawatts of renewable energy and increase renewable energy production to 50% of its grid needs by 2030. Egypt’s plans include a $11 billion wind farm to provide electricity to Saudi Arabia and other neighboring countries.

This trend is not just restricted to government-led initiatives. A recent PwC study found that ESG and sustainability factors affect Middle East consumers’ decisions more than global consumers (31% in the region compared with 18% globally). Sixty-three percent of regional consumers said data protection is a key factor in trusting a brand (compared with 58% globally). And 65% of Gen X respondents in the same survey said social considerations influence whether they would recommend a company or brand.

Similarly, sustainable finance is gaining momentum. According to a report by UNEP FI, there has been a surge in sustainable finance in the region, with green bonds and sustainable loans gaining popularity. The UAE, for example, issued its first green bond in 2019, raising $600 million for sustainable projects.

The Middle East is also witnessing a growing trend towards sustainable agriculture and food production. Countries such as Qatar and Saudi Arabia are investing in vertical farming, which involves growing crops in controlled environments using minimal water and space. More sustainable than traditional farming methods, this approach can help address the growing challenge of regional food security concerns.

There is clearly still work to be done, and it would be naïve to underestimate the challenges of overturning a legacy reputation. But as the world celebrates Earth Day on Saturday, 22 April, it is heartening to see that the Middle East is punching back hard with a credible voice within ESG debates, and seriously investing in the bold steps needed to support a more sustainable future.