UAE declares 2023 the Year of Sustainability
UAE President His Highness Sheikh Mohamed bin Zayed Al Nahyan has declared 2023 the Year of Sustainability, which will culminate in November with the UAE hosting the 28th session of the Conference of the Parties (COP28) of the United Nations Framework Convention on Climate Change (UNFCC).
A signatory to the Paris Agreement, the UAE was the first country in the region to issue a Nationally Determined Contribution (NDC), laying out its plan to address climate change, and to pledge to transition its economy to net zero by 2050.1
The UAE also played an important role in the creation of the 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals (SDGs), adopted by the United Nations in 2015 as a universal call to action to deliver peace and prosperity for all people and protect the planet by 2030.
“Effective climate action requires a shared vision and collective will. As host of COP28, we are committed to fulfilling our role as a global convener and will continue to support action and innovation in the field of sustainability,” said Sheikh Mohamed bin Zayed Al Nahyan.
Why is corporate sustainability crucial?
Sustainability has become a business-critical issue for organisations seeking to manage a variety of emerging challenges, risks, and opportunities while creating stakeholder value. Here are some reasons why businesses should make ESG a key pillar of their corporate strategy:
- Expanded access to capital
Enhancing ESG performance allows a company to lower its risk profile, thereby attracting institutional investors and accessing sustainable finance. Banks are also increasingly embedding ESG considerations into their risk assessments and will look to prioritise companies that have an ESG strategy in place. This automatically enhances a company’s ESG rating which enables it to access capital at lower cost.
- Regulatory demands
So far, about 140 countries have set proposed net-zero targets. (Net-zero means cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed into the atmosphere.4) As more countries enshrine net-zero commitments into legislation, these efforts become legally binding.
- Consumer awareness
Consumers are increasingly turning towards products and services that are produced in a responsible manner, taking societal and environmental impact into account. More than 8 out of 10 consumers report purchasing green alternatives to reduce their carbon footprint.6 Sustainable business practices can also improve productivity and reduce costs.
- Business continuity
Businesses that fail to embrace sustainable practices risk becoming irrelevant in their respective markets. This is especially evident with younger consumers, who favour engaging with sustainable businesses. Companies that embrace sustainable practices can play a leading role in their sector by developing products and services that drive the transition to a more sustainable economy.
- Talent retention
Sustainability is increasingly becoming important in hiring as well. 82% of global workers want to work for companies that align with their values and actively seek to meet sustainability goals.
The organisational ESG must-haves in 2023
Embedding ESG can therefore deliver a competitive edge and create long-term stakeholder value. To maximise the benefits, businesses should adopt a systematic and holistic approach to integrating sustainability into every aspect of their business models.
Companies must be prepared to reassess how they do business and transform their operations where necessary. These are the four “must haves” to get started:
One: A clear ESG strategy
A clear ESG strategy allows an organisation’s key stakeholders (including shareholders, employees and customers) to rally around a common vision and mission for a sustainable future. The ESG strategy should include the following key criteria:
- Encompass the organisation’s core values, principles, and purpose, and set out an action plan to improve environmental and social impact.
- Be embedded into overall corporate strategy and day-to-day decision-making and actions. This includes a change management process and governance policies for implementation.
- Set clear goals and objectives that are measurable to gauge progress over time.
- Define how the company reports and communicates progress to key stakeholders.
- Allocate the resources and build the capabilities an organisation needs to achieve its goals
- Include a comprehensive approach to risk management.
- Address how the organisation will engage with stakeholders, including customers, suppliers, competitors, investors, and communities, to build trust and create a positive impact.
Two: Understanding what matters
Companies must develop a clear understanding of the ESG factors that are most material to their business. Ideally this should focus on double materiality. This means understanding which ESG topics have the biggest impact on their business, as well as how their business impacts the economy, the environment, and society in general.
Three: Measuring current performance
Before charting a path forward, it is vital to have a clear understanding of how the company is performing relative to peers and best practices. Putting in place processes to gather data is an essential first step towards setting goals and steadily improving progress over time.
Four: An actionable net-zero plan
Climate change is the single greatest challenge of our time and a priority for all stakeholders. Companies must be able to measure their greenhouse gas emissions before considering actions to align themselves with net-zero commitments. Ensuring they complete a comprehensive greenhouse gas inventory and implementing systems to accurately measure emissions is a critical step in the net-zero journey.
Organisations should have a robust action plan in place to meet their net-zero targets, which includes a clear timeline for implementation, a budget for investment, communication and reporting plans, and performance management measures. The plan should also be informed by an understanding of the latest technology and approaches for reducing emissions. It should include an assessment of potential risks and opportunities associated with transitioning to net zero.
How Renoir can help
Renoir Consulting supports organisations to develop comprehensive ESG strategies and make the shift towards achieving net zero. Our services include:
- Supporting organisations in defining their sustainability statement and roadmap
- Conducting stakeholder engagement and materiality assessments
- Defining sustainability strategy with pillars, objectives, initiatives, and KPIs
- Building GHG emissions inventory and developing a net-zero plan
- Providing the necessary capacity-building support
- Managing organisational culture and change to ensure effective implementation
Contact us today to learn more about our ESG transformation, implementation, and management strategy.