Today's Edition
HUSSAM ABDELNABY (ABU DHABI)
As companies in various sectors grow increasingly keen to implement sustainability practices and enhance sustainable environmental, social, and governance (ESG) practices, a series of new, innovative jobs have been created in the UAE as the world continues its efforts to tackle the realities of climate change.
Several companies, especially those listed in local and global stock markets, have opened the position of sustainability manager, and new types of companies specialised in providing integrated solutions to help companies integrate corporate sustainability strategies have emerged alongside the increasing demand for sustainability consultants, especially in financing the transition to a low-carbon economy.
Sustainable finance experts who can assist clients in their sustainability portfolios are now increasingly in demand as many companies have moved towards issuing green bonds and sukuk. Furthermore, the emphasis on enhancing sustainable, ESG practices has added new tasks to certain professions, including internal auditors, who are now responsible for combating the phenomenon of greenwashing and ensuring that the sustainability-related portions of companies’ financial statements are accurate.
The role of sustainability manager in particular has emerged as a new career path in the UAE due to the country’s growing interest in applying sustainability standards in all companies and institutions, to the extent that some companies operating in multiple countries have decided to appoint a sustainability manager for the Middle East and Africa (MEA) region.
Alida Saleh, Head of Sustainability for the MEA region at Jones Lang LaSalle, a global real estate investment and consulting firm, said that her role involves leading the company’s sustainability strategy in the region with a focus on developing ESG strategies and enhancing sustainability services for clients.
She mentioned that one of the key tasks is helping institutions and companies develop innovative solutions for one of the biggest current global challenges, which is financing the transition to a low-carbon economy. The sustainability programme for some real estate companies, for example, focuses on the company’s commitment to stimulate climate action through the development of sustainable properties, creating safe and healthy spaces for all, and providing inclusive places that create equal opportunities for all residents of their thriving communities, she said.
In line with the current focus on achieving climate neutrality, companies in various sectors are accelerating their efforts to reduce their impact on the environment. In this context, sustainability consulting services will play a pivotal role in driving the social and environmental transformation in developing economies and environmentally conscious societies, Saleh added, noting that sustainability experts has become necessary as companies across various sectors prepare to meet climate commitments and carbon emission reduction goals in anticipation of the COP28 conference, to be hosted by the UAE.
Abdelqader Obaid Ali, Chairman of the UAE Internal Auditors Association (IAA), confirmed that all companies, as well as public and private sector institutions, have become more keen on enhancing sustainable ESG practices, creating new tasks for those working in internal auditing.
Ali also indicated that facing the phenomenon of greenwashing is the most important new task in the internal auditing profession.
Greenwashing refers to the issuance of inaccurate statements claiming to achieve sustainability requirements and goals contrary to the actual reality. This includes issuing statements about the exaggerated application of ESG requirements, he said, adding that for this reason, the role of the financial auditor has evolved to not only monitor financial data, but also to ensure that the figures and data mentioned by the company in its financial statements regarding sustainability goals are accurate.
Ali said that he expects that companies and institutions to increase their focus on enhancing sustainability practices, especially with the growing demand for all public and private sector entities to apply ESG requirements, rather than just companies listed in stock markets.
To assist companies in adopting the best practices for achieving sustainability, the IAA in the UAE announced the launch of the “Sustainability in Internal Auditing Award”, so that institutions can compete to apply the latest and best practices in sustainability in the internal auditing profession, and then share these practices at the local and global level.
“With the increase in environmental awareness among individuals and companies, specialised companies have emerged to provide integrated solutions that allow companies to develop and implement a corporate sustainability strategy. These companies are already collaborating with various sectors in the United Arab Emirates, including digital banking, hospitality, real estate, and finance, enabling their clients to achieve leadership in sustainability practices and solutions at the regional level,” he said.
Zain Al Tarawneh, co-founder and Chief Growth Officer at Green Future Project, said that there are a growing number of companies in the UAE seeking to implement ESG responsibility policies amidst the trend towards sustainability and environmental awareness. A recent study showed that 64% of institutions in the Middle East adopt an official ESG strategy, compared to only 18% in 2022.
Al Tarawneh noted that the market today lacks skills in environmentally friendly fields, with sustainable financing available to only 13% of companies. In the Middle East, 46% of companies still rely on themselves for financing their ESG activities, which is a positive indicator, she said.
However, she pointed out that more innovative green financing opportunities are available, which companies should take advantage of to achieve their climate goals and utilise the immense potential offered by the region. Al Tarawneh noted that today’s green transition is based on two main trends: the first is driven by changing consumer behaviours and increased environmental awareness, and the second is initiated by companies’ efforts to develop transformative frameworks, such as policies related to ESG responsibility.
In the context of companies moving towards green financing and the increasing issuance of green bonds, there is a growing demand for sustainable finance experts in banks and global financial institutions to assist clients in their sustainability journey. In this context, Dubai Electricity and Water Authority and J.P. Morgan Chase, the world’s largest bank by market value, are discussing ways to cooperate, especially in the field of green and sustainable finance and participation in the authority’s future projects.
Commenting on the growing importance of sustainable finance, Rola Abu Manneh, CEO of Standard Chartered Bank (SCB) in the UAE, mentioned that providing sustainable financing solutions has become a priority. Since January 2020, hundreds of billions have been allocated globally towards sustainable infrastructure and clean technology projects, along with a commitment to achieve net-zero carbon emissions from operations by 2025, and from financing by 2050, with interim goals to reduce financed emissions in the most carbon-intensive sectors by 2030.
Abu Manneh detailed the provision of sustainable financial products and services that enable clients to achieve their sustainability goals, including many bilateral and syndicated loans linked to sustainability, the structuring of many ESG bonds and sukuk in environmentally and socially friendly formats, and support for the bank’s clients to support them in developing their sustainability framework, which she noted was introduced as a solution to clients in the UAE for the first time by SCB.
During the Global Future Councils 2023 meetings in October, Ahmed Galal Ismail, the Chief Executive Officer of Majid Al Futtaim Properties, said: “We need green financing, green legislation, green talents, green technology, and a green mindset that shifts companies’ perspectives towards sustainability.”
He explained that despite existing opportunities, there are some challenges that stand in the way of accelerating sustainability efforts in the region. For instance, only 20% of the companies listed in the financial markets have sustainability disclosures, and pointed out that Majid Al Futtaim Properties was the first to announce the issuance of green sukuk in May 2019, becoming the first private company in the Middle East to adopt and implement sustainable financing principles. This environmentally friendly bond was covered six times over in subscriptions, indicating a growing demand in the region for this type of finance aligned with sustainability efforts.
Ahmed Abdelaal, the CEO of Mashreq Group, mentioned that there are sectors of importance to Mashreq Bank, including energy, industry, waste, water, and food. The bank is facilitating financing in these areas, considering the significant role of the banking sector in cooperation with governmental bodies and leaders in various sectors worldwide. This cooperation aims to contribute to the flow of capital needed for renewable energy infrastructure projects and wastewater treatment, he said.
He emphasised the commitment to explore financial tools necessary to accelerate the transition in the energy sector and to enable financing mechanisms to improve the bankability of renewable energy and water treatment projects. Additionally, investments are being launched to enable carbon emission reduction in economic sectors.
Abdelaal explained that the structuring of deals and sustainable projects is a vital element in attracting new sources of liquidity. For example, project bonds offer an alternative to refinancing, and their use is increasing for refinancing clean energy programmes, pointing out that project financing represents a fundamental necessity for the development of this sector. Therefore, regulatory improvements and suitable policies are needed to keep pace with this development, enabling full benefits through financing these projects.
