Interview: James Babb, partner at KPMG Lower Gulf

Where are UAE businesses focusing their sustainability efforts?
Sustainability goals depend on the nature of the business. However, at a broad level, businesses in the UAE are increasingly focused on practices including reducing waste, preventing pollution, adopting clean energy, conserving water, sustainable supply chains and reducing carbon emissions. The evolution of business practices is well aligned with the UAE Energy Strategy 2050, the UAE Green Agenda 2015-2030 and the nation’s Vision 2021, which promotes sustainability as one of its main themes.

As a result of the pandemic, businesses have been more open to the adoption of digital practices, and an increased focus on sustainability has been a welcome byproduct. According to KPMG’s 2020 CEO Outlook Report, 63 per cent of the CEO’s interviewed said that their response to the pandemic has caused their focus to shift to the “social” component of their environmental, social and governance (ESG) programs. Moving forward, organisations with robust ESG programs, resilient and flexible supply chains and a talent strategy that focuses on the people and skills needed for a more agile and virtual future, will be well-positioned to thrive.

Technology and sustainability in many cases go hand in hand. What kind of technology can enable businesses to reach their sustainable goals faster?
Companies play a crucial role in creating solutions to prevent environmental and health crises, which can be attained through technology adoption in the following ways:

Measuring sustainability performance: To accelerate the pace of change and make a positive impact at scale, companies must adopt and implement technologies that enable and drive redefined business processes. The most important areas to focus on in the immediate future may include the interrelated areas of managing carbon emissions and transitioning to a circular economy.

Managing carbon emissions: Enterprises rely on technological solutions to track and manage CO2 and other greenhouse gas emissions across the entire value chain, from sourcing materials through manufacturing to final distribution. Companies can use this data to more effectively consolidate, analyse and manage the carbon footprint of their individual products and services.

Transitioning to a circular economy and reducing waste: When it comes to keeping valuable materials in use longer, technology can accelerate the benefits of a circular economy for businesses. The move towards a ‘digital and circular economy’ is strengthened by the Dubai Executive Council’s 2021 Agenda. The circular economy plan of Dubai seeks to improve resource efficiencies and reduce/eliminate waste by depending on re-use, sharing, repair, regeneration, re-manufacturing and recycling. The global market potential for a circular economy is over $1 trillion (Dhs3.67 trillion).

Many economies are considering a green post-Covid recovery? Do you see similar sentiment among organisations here?
Environmental goals have been a priority in the UAE for many years. Our 2020 UAE Survey of Sustainability Reporting finds that corporate sustainability reporting among the top 100 UAE companies has increased from 44per cent in 2017 to 51 per cent in 2020. This increase has been driven by a greater commitment to national initiatives and efforts to gain stakeholder confidence by proactively communicating ESG performance. Challenges posed by Covid-19 have motivated organisations to re-evaluate priorities and pivot to assess their impact on the economy, environment and society. While UAE companies have shown steady progress in implementing corporate responsibility practices and adopting sustainability as a business initiative, there will always be scope for improvement.

Is sustainability a cost center or can regional businesses save money by going green?
A growing body of evidence from around the world suggests that companies that strategically invest in ecology and economy, can advance both company profitability and achieve sustainability targets. Companies with a focus on eco-innovation are growing at an annual rate of 15 per cent at a time when many competitors remain flat. For instance, KPMG Lower Gulf recently moved to a future-focused and sustainable workspace in the heart of Dubai, which is expected to save 60 per cent in power usage and 35 per cent in water consumption through energy-efficient fittings and furnishings. It is fitted with recycling facilities and easily reached by public transport.

The businesses in your study are all large businesses. Can SMEs set and reach their sustainability goals?
Yes, small and medium-sized businesses can most certainly set and reach sustainability goals, as well. In fact, according to a recent update from the United Nations, participation and reporting on the 17 Global Sustainable Development Goals (SDGs) can only be reached when small and medium-sized enterprises (SMEs) fully participate in sustainable development practices. Moreover, owing to the scale of their operations, SMEs may find it easier to be more agile in implementing innovative technologies or business practices to achieve sustainability goals.