As global awareness of climate change grows, Environmental, Social, and Governance (ESG) criteria have become central to corporate strategy and investment decisions. Once viewed as niche, ESG is now at the forefront of decision-making processes for companies and investors, driving capital allocation, policy frameworks, and operational changes.
However, while ESG adoption is creating major opportunities in various industries, it also presents numerous challenges, particularly in data accuracy, technology scalability, and regulatory clarity.
This complexity was brought to the fore at the recently concluded World Utilities Congress in Abu Dhabi on a panel discussion under the topic “Driving increased investments while navigating risk, inflation and ESG.” It featured key players from the worlds of finance, energy, and regulation, who offered insights into how businesses and governments are navigating existing infrastructural, regulatory and financing challenges associated with integrating ESG practices.
Key speakers included His Excellency Dr. Saif Saeed Al Qubaisi, Director General of Regulatory Affairs at the Abu Dhabi Department of Energy; Lina Osman, Managing Director and Head of Sustainable Finance for the West at Standard Chartered; Mark Blackwell, CEO of Apex Investments; Karim Megherbi, Founder & Executive Director, Orisun Invest, and Board Member, Global Solar Alliance; and Ashish Sethia, Global Head of Commodities at BloombergNEF. The panel session was moderated by Yasin Kasirga, Decarbonisation Leader, Carbon Solutions – Middle East & Africa, GE Vernova.
Here is a summary of key points raised by the speakers during the panel discussion:
Yasin Kasirga: Can you walk us through the challenges and opportunities that Environmental, Social, and Governance (ESG) factors present when it comes to making investment decisions?
Lina Osman: Managing Director & Head – Sustainable Finance, West, Standard Chartered
Focusing on the opportunities ahead, the rise of ESG has unlocked new possibilities, especially in capital access and technology adoption. Companies are increasingly leveraging ESG to enhance efficiencies, creating substantial growth and innovation potential.
The energy transition has introduced a variety of solutions. While renewable energy continues to evolve, hydrogen is emerging as a key player in the future of energy. These developments go beyond environmental benefits to also reflect the market’s emerging trends.
Investment opportunities in areas like carbon capture and hydrogen present great potential for both environmental and financial gains. Identifying these trends allows us to balance contributing to a cleaner future while strategically positioning ourselves to benefit from advancing technologies.
Access to capital is crucial, as growing investor demand for sustainable assets creates liquidity in sectors that traditionally struggle to attract funding. This trend encourages innovative financial solutions to scale capital efficiently, particularly with a sustainability focus.
However, major challenges remain. One key issue is making new technologies scalable and bankable. Many emerging technologies are unproven, raising questions about structuring deals to manage associated risks. Addressing these challenges requires a shift in mindset toward risk mitigation and creative solutions.
New technologies often lack straightforward valuation and market mechanisms, complicating financing. However, this also presents opportunities for innovative financial structuring to navigate these hurdles.
Data accuracy is another challenge as reliable information is essential for informed investment decisions. Investors and lenders depend on accurate data, making it vital to address data sourcing and reliability.
There is also shortage of skilled professionals with the necessary expertise to manage these new technologies and investment opportunities. Building capacity and ensuring individuals have the right skills are crucial for scaling innovations.
Lastly, distinguishing between “green” and “transition” technologies can be complex, leading to potential greenwashing risks. Robust data and thorough due diligence are essential to mitigate these risks and ensure credibility.
While challenges abound, the sector remains an exciting one, full of opportunities for those willing to tackle these issues head-on.
Yasin Kasirga: Do you believe there is a gap between investments and the ESG agenda? If so, could you explain the factors contributing to this disconnect?
Mark Blackwell: CEO, Apex Investments
The challenge of bridging the gap between ESG commitments and tangible outcomes has been a recurring topic, but progress remains slow. While bold pledges are made, particularly at global events like COP 27, implementation often falters, with many countries struggling to deliver on their promises.
COP 28, however, saw the UAE taking a stronger stance, backing its sustainability goals with real investments. The platform for progress now exists, but aligning critical energy elements such as solar, hydro, and nuclear, remains a pressing challenge.
The key question is how to transform ESG promises into concrete results. Too often, momentum is lost when moving from commitment to execution. To truly make a difference, we must move beyond incremental improvements and embrace disruptive technologies that challenge conventional approaches.
To achieve this, stakeholders—investors, operators, and infrastructure providers—must collaborate in a way that fosters genuine progress. It is not just about adopting green technologies, but coordinating their deployment effectively to advance the ESG agenda. There is a risk of falling into “ESG paralysis,” where repeated discussions yield little action.
At APEX Investment, we focus on identifying disruptive innovations that can push market shifts, driving sustainability faster than ever before. These aren’t just theoretical concepts, but real technologies and business models that can transform how ESG is approached. By creating environments that incubate these innovations, and partnering with stakeholders to scale them, we aim to drive lasting change.
True progress requires more than talk, it demands action, partnerships, and a shared commitment to deploying disruptive technologies. Only then can we bridge the gap between ESG goals and impactful, measurable results.
Yasin Kasirga: Can you elaborate on the role of the Department of Energy in Abu Dhabi and the development of clean energy resources under its leadership?
H.E. Dr. Saif Saeed Al Qubaisi: Director General of Regulatory Affairs, Department of Energy (DoE)
At the Department of Energy in Abu Dhabi, we oversee policy-making and regulation across sectors like energy, water, electricity, district cooling, and petroleum products. Our aim is to support the energy transition while ensuring water and electricity supply security, with a focus on environmental and social considerations.
We are crafting agile policies to accommodate emerging technologies, especially those securing supply. In line with our leadership’s vision of achieving net zero by 2050, we’re creating an environment that encourages long-term, low-carbon investments to reduce emissions.
Since COP28, it’s clear we must ramp up investment in low-carbon technologies. In 2019, only 4.5% of Abu Dhabi’s electricity came from clean energy. By 2024, we expect 44%, thanks to projects in nuclear, solar, wind, and innovative water technologies.
For instance, the fourth unit of our nuclear plant now meets 25% of the UAE’s electricity needs, cutting 22 million tonnes of emissions annually. In solar, a large-scale project launched in 2023 is generating four terawatt-hours of electricity. On the wind front, we’ve achieved 103.5 megawatts of capacity, with two gigawatts coming soon.
Water security is a challenge, but we’re investing in decoupling desalination from electricity generation, including commissioning the largest reverse osmosis plant in 2022.
Yasin Kasirga: Could you walk us through the project you completed in Sri Lanka? How did the energy crisis and inflation affect the industry and the project, and what strategies did you implement to overcome these challenges?
Karim Megherbi; Founder & Executive Director, Orisun Invest, and Board Member, Global Solar Alliance
Two years ago, we undertook a project for a 100-megawatt solar installation, marking the first tender in the country with a Power Purchase Agreement (PPA) denominated in dollars. Our consortium bid for this project. Currently, we are finalising arrangements with local banks.
Managing this project in Sri Lanka, a frontier market, presents unique challenges, especially given the country’s ongoing debt crisis. The IMF and World Bank are providing assistance, which is progressing well, but Sri Lanka remains in default on its public debt.
The difficult economic environment has made it challenging for foreign companies to operate, particularly with inflation affecting energy pricing. While we acknowledge that inflation is severely impacting costs—such as the rising prices of solar panels and increased interest rates from banks—we must adopt a realistic approach in our financial modeling.
It’s important to avoid assumptions like “inflation will stabilise in two years” or “interest rates will eventually decrease.” Partnering with a local entity can help mitigate risks, as they have a better understanding of the country’s trajectory. However, it’s essential to remain cautious and not overestimate improvements in the financial model based on optimistic projections.
In early 2010, India experienced its first wave of restructuring in the solar industry. Many companies anticipated a major decrease in solar panel prices, but that decline did not materialise as expected. As a result, several companies faced bankruptcy and were acquired by others, leading to substantial losses for many international firms operating in the market.
From this experience, and similar situations in other countries, we believe it’s important not to rely on overly optimistic assumptions about future market conditions. One cannot assume that challenges will resolve themselves over time. For example, if a company expects a 70% improvement in conditions, it’s important to realistically assess how to absorb potential risks rather than simply banking on future gains.
This illustrates the complexities of renewable energy markets, where multiple factors come into play. The Levelized Cost of Electricity (LCOE) is influenced not just by financing and technical aspects but also by the overall contractual environment.
Take Europe as an example: when import taxes on Chinese solar panels were removed, many believed that this would lower solar panel prices and, consequently, reduce LCOE. However, by the end of 2020, we found that LCOE did not decrease as anticipated; instead, development costs rose.
LCOE is a multi-faceted metric that reflects various layers of costs. Our approach involves careful design of solar plants, considering development fees and other factors. Through these strategies, we successfully achieved an LCOE of eight cents per kilowatt-hour.
In a country that heavily relies on importing and using fossil fuels while attempting to transition to renewable energy, achieving an LCOE of eight cents per kilowatt-hour is a huge achievement, especially with the ongoing crises. This success points to the importance of managing risks realistically rather than assuming that conditions will improve over time.
To effectively navigate this situation, it’s important to acknowledge the risks you face and base your financial models on realistic projections. If losses occur, they are part of the process; it’s essential to avoid falling into the trap of optimistic thinking, where one hopes for improvements without a solid foundation.
In any bidding process, whether in the GCC or elsewhere, one has to assess not only the price but also the associated risks of delivering on that price. As a regulatory body, you want to avoid situations where players present unrealistically low bids based on hopeful assumptions. Instead, you should ensure that these bids reflect a genuine ability to deliver on the promised price, thereby maintaining a stable and reliable market.
Today, many companies are backing out of projects, particularly in the offshore wind sector, due to significant changes in costs and market conditions. This has led to an inability to deliver on commitments, highlighting a very crucial issue that while cheap electricity and energy are desirable, the reality is that our energy sources are not truly inexpensive.
Currently, we are facing $7 trillion per year in external costs associated with oil and gas, as calculated by the IMF. These externalities are often overlooked and are paid by society rather than the energy sector itself. If we aim to promote a just transition and incorporate some of these risks, we need to reconsider how we integrate these external costs into our energy pricing.
The renewable energy industry, especially offshore wind, is advocating for this approach. We must ensure that tender documents and bids include Environmental, Social, and Governance (ESG) elements in the overall cost calculations. By doing so, we can create a more sustainable energy backdrop that accurately reflects the true cost of energy.
Yasin Kasirga: Given our current position (Point A) and the goal of achieving net zero (Point B), could you provide more insight into the scale of capital investment required to reach net zero? How much are we really looking at in terms of financial commitment?
Ashish Sethia: Global Head of Commodities, Energy & Environmental Markets, BloombergNEF
Let’s look back at the COVID era—specifically 2020—when we saw roughly $980 billion invested in energy consumption. That figure has almost doubled, and by 2023, global energy transition investments reached an all-time record of approximately $1.8 trillion, showing strong growth year over year.
To achieve net zero by 2050, we should have been investing around $5 to $6 trillion annually. Beyond 2030, this figure increases to about $7.5 to $8 trillion per year. While we currently see record-high investments in various sectors, we must significantly scale up our efforts to meet net zero targets by 2050. These efforts must be seen around policy design, the role of financial institutions, and investor engagement.
Additionally, we conduct an annual exercise called the New Energy Outlook, which explores two scenarios. One is the economic transition scenario, where we assume that economic factors drive changes in the energy mix. Unfortunately, the outcome of that scenario isn’t encouraging: while we see peak emissions now and a decline in emissions by 2050, the associated increase in global temperature compared to pre-industrial levels is projected to be around 2.6 degrees.
We all likely remember the agreements made in Paris to limit global warming to well below 2 degrees, with an aim for 1.5 degrees. Unfortunately, even in our net-zero scenario, which requires an annual capital investment of $7 to $8 trillion, achieving the 1.5-degree target seems almost out of reach. Realistically, the best we might achieve is around 1.7 to 1.8 degrees, highlighting the scale of the challenge we face.
The conversation around Environmental, Social, and Governance (ESG) criteria has quickly become complex. While ESG considerations began to gain traction 10 to 15 years ago, the past six or seven years have seen the emergence of various reporting standards and processes, contributing to significant industry growth. However, the current situation in the U.S. is quite revealing: only seven states have adopted ESG-friendly policies, while 20 states have implemented anti-ESG measures. This fixation on the term “ESG” can be distracting.
I believe it’s more productive to focus on energy transition as a whole and continue advancing our goals without getting too caught up in definitions. While we have made progress, we must scale up our efforts much faster.
Yasin Kasirga: You mentioned data, capacity building, and other challenges. How do you see these factors influencing decision-making overall, and why do you believe it’s crucial to integrate them into decisions across industries and geographies?
Lina Osman: Managing Director & Head – Sustainable Finance, West, Standard Chartered
While it’s great to announce the capital you intend to deploy, there are several key factors that must be addressed. For instance, ensuring shareholder returns is vital; you want to avoid investing in projects that could result in losses. This is why these considerations are so important as we move forward.
We’re increasingly recognising that no one is immune to the impacts of ESG factors. I hesitate to call them trends, as that suggests they are temporary; rather, these factors are real and significantly affect investments from a regulatory standpoint.
These developments can also present opportunities, particularly through subsidies, such as the Inflation Reduction Act (IRA) in the U.S. and various incentives emerging in Europe. The question then becomes whether you can leverage these opportunities effectively. The clarity around these incentives varies, which highlights the necessity for organisations to stay informed and consider these elements in their strategies.
For instance, how do ESG considerations impact the credit risk of an asset when providing financing to a company that may be exposed to climate risk? This includes adaptation finance as well. Additionally, if you’re an investor, you’ll likely need to incur capital expenditures (CapEx), operational expenditures (OpEx), and other costs to ensure that the asset aligns with your ESG objectives and meets shareholder expectations.
All of these factors translate into real costs associated with the investments you make and the financing decisions you undertake.
Yasin Kasirga: We cannot emphasise enough the importance of public-private partnerships and attracting investors. Could you walk us through how Abu Dhabi is fostering an investor-friendly environment to support these initiatives?
H.E. Dr. Saif Saeed Al Qubaisi: Director General of Regulatory Affairs, Department of Energy (DoE)
I believe everyone on this panel will agree that Abu Dhabi is a highly attractive investment destination, thanks to its transparent and clear regulations. At the Department of Energy, we are committed to ensuring that our policies and regulations remain transparent and investor-friendly, particularly for those involved in long-term climate-related projects. Our focus is on safeguarding foreign investments in these critical sectors.
We are actively working towards a target of achieving 60% clean energy by 2035, as part of our broader goal to reach net zero by 2050. If you look at the energy market here, you’ll notice a high level of clarity, with forecasts and tenders being published for public participation. This approach—what we call competitive bidding—ensures transparency in pricing and offers investors the confidence of government backing. The Emirates Water and Electricity Company (EWEC), which oversees these tenders, plays a key role as the offtaker, providing guarantees for long-term projects, some spanning over 25 years.
I’d like to highlight a significant achievement from the Department of Energy. We pioneered the issuance of the region’s first Clean Energy Certificates and Low-Carbon Water Certificates, the first of their kind in the Middle East. These certificates allow industries to demonstrate that their electricity is generated from clean sources. They have already been sold to major sectors, including petrochemicals, aluminum, and steel, as well as companies like ADNOC.
Currently, these certificates are available for nuclear and solar projects, with wind energy soon to follow.
Yasin Kasirga: In the first part of our discussion, you mentioned the need for disruptive approaches. From an investor’s perspective, what markers are you focusing on when evaluating these investments?
Mark Blackwell: CEO, Apex Investments
First, it’s crucial to consider the environment, location, and geography when deciding where to invest. You need to ensure you’re operating in a favorable regulatory environment.
Second, the risk appetite in that environment must align with the sustainability agenda. This means balancing sustainability goals with the fundamental need for return on investment (ROI). No matter how you approach it, if you’re not delivering ROI to your shareholders, meeting the climate challenge will be incredibly difficult. The right conditions are essential for this balance.
Third, we need to ask: what disruptive technologies can we capitalize on? From our experience, breakthrough innovations often emerge from a single component in the energy chain. Yes, we’re investing in solar, nuclear, and hydro, which are all fantastic, but they don’t fully address the issue. For example, solar power is great, but what happens when the sun isn’t shining?
This is compounded by the fact that global energy demand is projected to increase by at least 30% over the next 8 to 10 years, as per the latest estimates from 2023. We’re not just fighting to reduce fossil fuel use today; we’re also grappling with future energy needs. And if we’re committed to avoiding an increase in fossil fuel consumption, the challenge becomes even more urgent.
Finally, the most critical factor is having the right partners. It’s not just about funders or operators, but ensuring that all aspects—funding, operations, regulatory compliance—are aligned. The faster we all get on the same page, the faster we can meet the investment requirements, which, as my colleague mentioned, are massive—around $7 trillion. We’re already behind schedule, and without collective effort, we’ll face significant challenges.
Yasin Kasirga: Given your central role in the solar industry, what are your expectations on how ESG regulations will impact the sector, and how do you foresee these rules shaping future developments?
Karim Megherbi: Founder & Executive Director, Orisun Invest, and Board Member, Global Solar Alliance
ESG is a key framework to guide investments fairly. However, in the context of recent global events—like COVID-19 and the energy transition—governments must also focus on securing jobs and supporting local industries to ensure that their policies are accepted by both citizens and businesses. ESG has played an important political role, particularly in the relocation of activities. A clear example of this is in the U.S., where ESG has been used to justify domestic investments and safeguard against foreign competition. It’s almost become a tool to navigate around some World Trade Organization (WTO) regulations.
In Europe, we’ve seen significant movement as well. The Solar Stewardship Initiative, launched by SolarPower Europe—a key partner of the Global Solar Council—introduces a set of ESG rules specifically for the solar industry. The idea is that these standards should be global, not limited to individual countries or regions. A global standard for solar energy is already under discussion, with certification processes being developed. We believe this should be as globally recognised as the Equator Principles in the financing world, providing a clear, standardized path for lenders and investors to follow when supporting solar projects.
Let me share an example from some of our partners who have taken transparency to the next level with blockchain reporting. This technology allows you to trace the entire process—from mining the raw materials to the production of solar panels. During my visit to China, I asked if it’s truly possible to track every step. The response was, “Yes, but there are challenges.” For instance, how do we verify that the truck driver transporting materials from the mine has all the necessary documentation? There are still gaps and costs associated with this kind of reporting, and while some elements are already in place, others are not.
The question is: will we ever achieve full traceability? Some companies are already pushing in that direction because they understand that without it, they may face difficulties accessing certain markets. This is a trend worth strengthening, and we should aim to establish universal standards. We’re moving in the right direction, but challenges like inflation and rising costs remain a concern.
However, when it comes to renewable energy, especially solar, there are ways to manage these challenges. The efficiency of solar panels continues to improve, though we’ve likely reached the upper limits of technological advancement for now. New technologies are emerging, and we’re still in the midst of the innovation curve.
Currently, the cost of solar panels is around 10 cents per watt, and we expect further cost reductions as we optimise the management of solar plants, such as through better cleaning techniques and maintenance. There are clear ways to absorb the impact of rising costs and keep the momentum going.
Yasin Kasirga: During the energy transition, we have seen significant cost reductions and scaling in wind and solar technologies over the past decade. What lessons can we draw from this phase to apply to emerging technologies like hydrogen, carbon capture, utilisation, and storage?
Ashish Sethia: Global Head of Commodities, Energy & Environmental Markets, BloombergNEF
My response to that would be: we need to avoid falling into a common trap—overhyping technologies that aren’t ready for deployment. There is a saying in the tech industry that we often overestimate the impact of technology in the short term and underestimate its potential in the long term. This is precisely what’s happening with some decarbonisation technologies. You’ll hear bold claims about achieving a target price per kilogram of fuel, but once projects start taking shape, the reality sets in, and the actual cost turns out to be three times higher than expected.
At this stage of the energy transition, we can’t afford these missteps. Overpromising and underdelivering will quickly erode credibility, and rebuilding that trust could take years. Instead, what we need is a strong focus on transparency across the entire energy supply chain, as Nina mentioned earlier.
We’ve seen countries outline ambitious 2050 or 2060 visions, but without a detailed yearly roadmap for how much capacity they plan to build, how much international investment they’re seeking, and what specific technologies (solar, wind, electric vehicle charging infrastructure) they want to implement each year, those long-term visions aren’t actionable for investors.
Without a clear, staggered plan, the supply chain can’t properly align with the goals. From policy creation to the actual projects themselves, we need greater transparency—both in terms of what’s being built and the costs involved, as well as the supply chain challenges we face. The more transparency we can bring to this process, the more effectively we can advance the energy transition.
