While climate action has long been associated with compliance and brand-building, Deloitte’s latest “2024 Middle East CxO Sustainability Report” suggests that companies in the region are realising the broader business potential of sustainability initiatives.
The shift comes amid increasing pressure from global stakeholders and regional regulatory bodies, as well as growing awareness of the impact of climate change on long-term business success.
Speaking with Utility Business MENA following the report’s release at GITEX Global 2024, Daniel Gribbin, Director of Sustainability, Deloitte, said that there were clear and important signs that climate action is driving value creation.
“There has been a shift in mindset,” Gribbin said. “For the past five to seven years, many businesses in the region did the bare minimum in terms of sustainability. But with events like COP28 in the UAE and Saudi Arabia’s expansion, companies are now under the microscope. They realise that they need to focus on long-term sustainability, not just for business continuity but for future generations and the planet.”
Deloitte’s report, which surveyed over 2,100 executives globally, reveals that climate change is now a top priority for businesses in the region.
Gribbin pointed out that regulatory drivers have historically played a major role in shaping the sustainability agenda in the Middle East. “The region has been driven by regulation for years, and while some companies still do the bare minimum, international financial flows are pushing sustainability to the forefront,” he noted.
“We are seeing an increasing number of green bonds issued in the region, and companies that implement sustainable solutions are benefiting from lower costs of capital. This financial pressure will be critical for driving the next phase of sustainable growth.”
The report highlights that 85% of CxOs globally are increasing investments in sustainability, up from 75% in the previous year.
In the Middle East, companies are particularly focused on innovations like carbon capture and storage, artificial intelligence (AI) for operational efficiency, and reducing gas leaks in the energy sector.
Gribbin explained that these solutions are not just about meeting environmental goals but also about improving business operations.
“In the energy sector, we see AI being integrated into processes to improve efficiency and reduce waste. In financial services, companies are using technology to better onboard customers and incorporate sustainability into decision-making. The opportunities are diverse, but they also come with risks such as data privacy and cybersecurity concerns.”
Despite the progress, the report identifies a “moderate middle” of companies that are neither leaders nor laggards in climate action.
More than half of the organisations surveyed are focusing on two or three main sustainability actions. However, 27% of companies have taken minimal or no meaningful steps toward sustainability, underscoring the uneven progress across the region.
Gribbin described this group as a “sleeping giant” with untapped potential. “These companies are well-positioned to scale up their efforts. If they do, they could tip the balance of corporate climate action in the region and beyond.”
The challenge, he said, lies in raising awareness and building the necessary infrastructure. “One of the biggest gaps in the Middle East is awareness. We can have the best sustainability strategies, but without employee buy-in and the right infrastructure, these strategies will never be realised. Encouragingly, we are seeing a civil society push for change, which is a positive sign, but there’s still a long way to go.”
Another key takeaway from the report is the critical role that innovation and technology play in driving sustainability.
More than half of the CxOs surveyed globally have already implemented technology solutions to help achieve climate or environmental goals, with another 42% expecting to do so within the next two years.
The report highlights that many companies are developing climate-friendly products and services, with 85% of leading organisations focused on new innovations.
Gribbin pointed to the Middle East’s growing interest in renewable energy, including solar and hydrogen, as an example of the region’s technological advancement.
“We are seeing a lot of investment in renewable energy and carbon capture technologies. These are essential as the region diversifies away from hydrocarbons. There is a strong baseline, but plenty of green space to expand into.”
He added, “Technology is essential for understanding our environmental footprint. Data measurement is one of the first steps, understanding baselines allows decision-makers to make informed choices. We are seeing more companies in the energy sector adopt energy efficiency programs and educate their customers on reducing their environmental impact.”
Deloitte’s report makes clear that while progress has been made, many businesses in the Middle East are still grappling with the awareness gap, which Gribbin identified as a persistent challenge. “The awareness gap has been one of the biggest challenges for years. You can have all the right technology and strategies, but without widespread understanding and commitment within the organization, those plans will fall short.”
However, Gribbin remains optimistic about the region’s sustainability trajectory. “We are still in a hydrocarbon-centric part of the world, and that won’t change overnight. But the leadership in the region acknowledges the need for diversification. Carbon capture, energy efficiency, and renewable energy are all part of the solution, and we are seeing leaders in the region embrace that.”
“The challenge now is to get the moderate middle to follow suit, and if we can do that, the Middle East will be well-positioned for sustainable growth,” he added.
