4 TRUTHS OF ESG THAT WILL HELP DECISION-MAKERS CRAFT THEIR STRATEGY

The Middle East consumer base is increasingly dominated by a young, socially conscious subsection. According to PwC research, shoppers here base their buying decisions on environmental, social, and governance (ESG) issues to a greater extent than the global average. Some 31% of those in the Middle East say they consider ESG when making a purchase compared with 18% globally. ESG strategies have leaped up several places on the priority lists of regional boardrooms as regulators and employees join consumers in demanding more responsible business operations.

But calling for it is one thing. Navigating its challenges to deliver on ESG pledges is another. In a fragile global economy, how do we choose wisely from the many potential areas for investment? And how do we solve problems of measurement to demonstrate progress? The fog on the path forward starts to clear when considering four central truths of ESG.

NO TWO JOURNEYS ARE THE SAME ESG will mean something different for each enterprise, based on the nature, maturity, and scope of operations. Legal demands, values, and customer expectations will also come into play. The business leader must then decide how to translate these requirements into consistent practices that reach across the organization itself and along the value chain to each partner and supplier for the optimum community impact.

Where Europe may be further along in sustainability and other ESG areas, the Middle East journey is admittedly more recent given governments’ prior focus on rapid growth. But in areas such as the Arab Gulf, sustainability clauses have found their way into the government guidelines that drive national economic programs. The region’s decision-makers must take care in timing their ESG forays. Invest too impulsively and the ability to deliver could be compromised. Conversely, the potential for partnerships with global organizations on ESG could be missed if enterprises wait too long.

Cathy Mauzaize

the fact that today’s candidate does not need to compromise on this point because they find themselves in a seller’s labor market — especially if they have strong digital skills, which are in short supply in the region. And good ESG management requires these very skills.

This means companies must invest in talent. This will help them retain the talent they have and help to acquire more. It is a cycle. A mature, digitalskills talent pool, nurtured appropriately, is a sound foundation for implementing sustainable, socially responsible policies that give the organization an advantage in hiring more people with digital skills.

CONTROL TOWERS’ ARE ADVANTAGEOUS

information, ESG managers and other stakeholders can collaborate on which areas can be targeted for effective improvement. And they can simultaneously lay the groundwork for enhanced governance and compliance. This will be important in the face of escalating regulations around ESG, such as the requirement of the UAE Securities and Commodities Authority that companies submit regular sustainability reports. Gone are the days of CSR, which was largely an optional branding tool. ESG is branding necessity and compliance requirement rolled into one.

Goalposts Have Legs

Talent Is Vital

The successful implementation of any great change rests on the shoulders of people. When it comes to ESG, not only will an organization’s talent be part of the change process, but today, they will also be judges as to its success. The digital natives that make up the majority of modern workforces are more invested in sustainability issues than any generation that has preceded them. Generation Z, while having only entered the workforce in the past decade or so, is having a farreaching influence on ESG. A third of them would turn down a job offer over ESG concerns, according to research from BUPA Health. In an extraordinary shift, the current talent pool is brimming with passionate young professionals who expect their employer to align with their values. This twist has likely been driven by

Measuring success in ESG is difficult, to say the least. That is due in part to the problems faced by ESG managers in simply defining what success looks like to their organization. ESG classically starts by listing commitments. Perhaps an enterprise aims to be carbon neutral or net-zero by a given date or to reduce its emissions by a certain amount per year. To deliver on these pledges is to examine all processes and determine which can be adjusted to contribute to the end goals. A “control tower” approach allows these investigations to bear fruit more readily.

With the right technology, the entire value chain from internal processes to those of suppliers and partners can be analyzed to identify what emissions occur (Scope 1, 2, or 3). Only with complete visibility from the control tower can an organization make meaningful progress. With the right

Because ESG is now so much a part of the jurisdiction of regulators, there will continue to be rapid movement in the rulebooks. As goalposts continue to shift, the skill sets required to put the ball between them will also change. ESG stakeholders must be agile, with a plan in place to reskill and reconfigure operations at a moment’s notice. Innovation will help, and that is where nurtured talent comes in. A staff that knows the inner workings of operations and the technology that serves it will be better placed to tweak the mix and come up with a way to keep pace with the latest introductions to legislation.

The Clock Is Ticking

The environment and our society are waiting for us to innovate our way to remedies that can be deployed costeffectively at scale. It is up to us to act on ESG and leave the world a little better than we found it. n