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Nearly Two-Thirds of Businesses in the UAE and Saudi Arabia Lack an ESG Framework: ASDA’A BCW Survey

Exclusive research conducted to mark the launch of OnePoint5, ASDA’A BCW’s new ESG advisory dedicated to the MENA region

Dubai, UAE; June 30, 2022: Nearly two-thirds (60%) of businesses in the United Arab Emirates (UAE) and Saudi Arabia do not have a framework governing their environment, social and governance (ESG) standards, and around half of those who do are not sure their employees fully understand it.

These were the top findings of an exclusive study of 200 decision makers in the two countries commissioned by ASDA’A BCW, the region’s leading integrated communications agency, to mark the launch OnePoint5, its new ESG advisory dedicated to the Middle East and North Africa (MENA). Its name is inspired by the world’s most important sustainability goal – limiting global warming to 1.5 degrees Celsius above pre-industrial levels.

OnePoint5 aims to strengthen the voice of the MENA region on ESG issues while helping clients to adopt more sustainable business practices. The new advisory arrives as Egypt prepares to host the UN Climate Change Conference, COP27, in November, to be followed by COP28 in the UAE in 2023.  

Out of the 200 opinion elites interviewed, 41 per cent said their business already had an ESG framework in place, while a third (33%) said they were developing one. A quarter (26%) admitted their company had no ESG policy. Underscoring the need for raised awareness of the benefits of ESG standards, over half (52%) of respondents who said their company had introduced an ESG framework said they did not fully understand it.

Sunil John, President – MENA of BCW and Founder of ASDA’A BCW, said the research indicated that the Middle East’s business community had work to do to meet the high expectations of their governments on sustainability best practice.

Developing a strong ESG proposition

“OnePoint5 can help client develop a strong ESG proposition to deliver greater value for their shareholders and stakeholders,” said John. “The specialist advisory will be led by Stephen Worsley, Senior Vice President at ASDA’A BCW. A communications professional with more than 25 years’ experience, he has advised clients in the sustainability and energy sectors, including Masdar, Total, Zayed Sustainability Prize, Engie and First Solar.”

OnePoint5 offers four key services: Advice & counsel to client decision makers to ensure sustainability thinking is central to their business planning and disclosure; auditing and gap analysis to understand a client’s sustainability impacts; designing operational plans to help integrate best practices; and communications strategies and plans to help clients inform and motivate employees and internal stakeholders, as well as amplify external stakeholder awareness of their sustainability commitments.

Bridging the ‘say-do’ gap

“The gap between awareness of the acute need to advance sustainable development and action on the ground by much of the business community needs closing,” added John. “Consultancies like OnePoint5 can help clients address this so-called ‘say-do’ gap, by combining the skills of experienced communicators with the technical abilities of sustainability specialists.”

He said: “The UAE, Saudi Arabia and several other countries in MENA have pledged to go Net Zero and are enacting a wave of reforms aimed at raising the bar for transparency, good governance and sustainability – that is not to mention the massive infrastructure projects being undertaken, from The Line in Saudi Arabia to Expo 2020 in Dubai, the most sustainable Expo ever staged and the planned venue for COP28 next year. The message is clear: all of us need to raise our game.”

Climate Change Already Impacting Middle East Businesses

The survey further revealed that Middle East businesses need to pick up the pace on climate action, with about two-thirds (61%) of decision makers in the UAE and Saudi Arabia saying that global warming was already having an impact on the way their business operates.

While governance standards also show room for improvement, 40 per cent of businesses in the two countries claim to have robust policies to combat bribery, corruption and unethical behaviour. Forty-six per cent of respondents in the UAE and 43 per cent in Saudi Arabia said they had a whistle-blower policy in place to expose corruption.

The survey was conducted by PSB Middle East, the wholly owned data and analytics subsidiary of ASDA’A BCW, from May 22 to 29, 2022. The interview sample, comprising decision makers directly involved in ESG affairs, was evenly split between Saudi Arabia and the UAE.

See all findings here

Top Findings of the ASDA’A BCW ESG Research Among Decision Makers in the UAE and Saudi Arabia

To mark the launch of OnePoint5, ASDA’A BCW’s Environment, Social and Governance (ESG) advisory, we commissioned an exclusive study of 200 decision makers in the UAE and Saudi Arabia to understand their perceptions about ESG.

The survey was conducted by PSB Middle East, the wholly owned data and analytics subsidiary of ASDA’A BCW, from May 22 to 29, 2022. The interview sample, comprising decision makers directly involved in ESG affairs, was evenly split between Saudi Arabia and the UAE.

Here are the top findings of the survey

Top findings

HSBC’s head of responsible investing dismisses climate activists as “nut jobs”

By Stephen Worsley

The financial industry was still reeling this week from incendiary comments made by one its most senior figures on the threat of climate change, or rather the lack of it.

Entitled ‘Why investors need not worry about climate risk’, the 16-minute address by Stuart Kirk, apparently now the former global head of responsible investments at HSBC Asset Management, to an audience of industry experts hosted by the Financial Times last week, had at the time of writing racked up more than 90,000 views on You Tube.

Add to that a few red faces at an institution that has pledged to help its customers achieve up to US$1 trillion in sustainable investments by 2030 – and been named best investment bank for sustainability.
Stating that his beard was his “one sop to sustainable investing”, Mr. Kirk dismissed climate activists as “nut jobs” and bemoaned the tendency of his peers to “out-hyperbole the next guy” on the dangers of global warming on the international conference circuit.

Worst of all, he said, was the volume of climate change risk analysis he and his colleagues were being forced to do, at a time when HSBC was dealing with the “China problem”, cryptocurrency attacks, spiraling interest rates, inflation and a looming housing crisis.

“The proportionality is completely out of whack,” he exclaimed.

The Cambridge University graduate went on to insist that the markets agreed with him, arguing that the more the media used the term “climate catastrophe”, the more asset prices increased. Either this meant climate risk was negligible, that it was already priced in, or that investors were all wrong.

Fears about global warming were exaggerated, much like the Y2K scare at the turn of the century, because they underestimated the ability of human beings to adapt, Mr. Kirk concluded.

“Who cares if Miami is six meters under water in 100 years?” he reasoned. “Amsterdam has been six meters under water for ages and that’s a really nice place.”

While the FT will be delighted with the amount of engagement its humble webinar has received so far, Mr. Kirk’s rant raises a number of important issues.

Firstly, it shows how disconnected capital markets have become from the real economy, a recurring topic of debate since the downturn of 2008, from which stock markets have recovered strongly, unlike a great many households.

Share prices even continued to march upwards during the COVID-19 pandemic – remember that? – when capitalism itself was temporarily in a state of suspended animation.

Secondly, it reveals the worrying indifference of some financial professionals to climate change, a phenomenon that they, admittedly, will not be experiencing as acutely as billions of others around the world, mainly its poor.

While HSBC’s leadership was swift to distance itself from Mr. Kirk’s inflammatory remarks, other observers have been quick to defend his right to free speech and have praised him for dispensing some necessary “home-truths”.

These may be a minority, but even those committed to sustainable investing are generally only concerned with financially material climate change risks. The moral imperative of tackling global warming tends to feature less prominently in the debate, as Mr. Kirk’s outburst clearly illustrates.

Mr. Kirk also highlights a third issue, the genuine frustrations of policymakers in dealing with present-day crises, such as the war in Ukraine and the specter of a global recession, on the one hand, and the even more serious but relatively more distant threat of climate change on the other.

That is not to justify the head-in-the-sand thinking of Mr. Kirk, whose faith in humanity’s resilience to climate emergencies fails to account for the human cost of rising global temperatures. Nor the inability of the natural environment to adapt, on which we all depend.

Then again, who cares when Amsterdam and Miami are such nice places, even under water?

For communications professionals, Mr. Kirk exposes the reputational risk of speaking one’s mind in the online universe. Before, a frank exchange at an intimate gathering of industry professionals would have had few consequences. Today, as Kay-Achim Schönbach, the former head of the German navy, discovered when wandering off message during an online Q&A session on the Ukraine conflict in January, it can cause terminal damage to one’s career.

Webinars pose another stubborn communications problem – that of management approval.
The FT insisted that the theme and content of Mr. Kirk’s presentation had been signed off by the suits at HSBC. But can a presentation amounting to a few bullet points and three emojis on a ten-slide PowerPoint deck really be approved?

I have a hunch that HSBC’s spokespeople will be submitting recorded versions of their speeches for their managers to scrutinize in the future. Or, like Stuart Kirk, they may find themselves suspended.

Watch Stuart Kirk’s presentation here

Stephen Worsley is the Senior Vice President – Growth & Innovation at ASDA’A BCW

UAE President HH Sheikh Mohamed bin Zayed Al Nahyan will drive the nation’s transformational growth

Sunil John, Founder and President of ASDA’A BCW

It is my honour to congratulate Sheikh Mohamed as he leads a transformational era of growth for the nation. As the driving force in the UAE’s economic diversification strategy, Sheikh Mohamed has not only enhanced the nation’s geopolitical stature across the world but also fostered a framework of sustainable development backed by positive climate action. 

His progressive policies are a model for future-driven development and will help secure the nation’s Vision 2071 to be among the best countries in the world. Sheikh Mohamed’s belief that youth, not oil, is the future of the nation has been an inspiration for everyone.