Why ESG investment is a priority for Saudi businesses
Given the country’s national objectives to create a greener future and promote sustainability across all sectors, ESG management provides an opportunity to ensure investment in Saudi Arabia supports and drives transformational plans
With the increasing focus on climate change and efforts to reduce carbon emissions, companies large and small are facing new challenges dealing with environmental risks that affect both their businesses and society at large. Thanks to the significant efforts being driven by the Saudi Green and Middle East Green Initiatives, this is coming under greater focus in the region.
Environmental, social and governance (ESG) factors are now essential, not only to support country goals but our common focus on global issues that drives greater transparency and engagements, promoting a shared value approach.
ESG management is the key to delivering principles of responsible investment; to create value over the long-term that goes beyond financial gain to better a society through environmental actions, human capital investment, innovation, leadership, governance and more. ESG investment is a relatively new but growing priority for companies in Saudi Arabia.
In recent years, Saudi Arabia has drastically accelerated its energy transition with a particular focus on sustainability – meeting the needs of the present without compromising the ability of future generations. The kingdom’s Vision 2030 sets out a transformative future, with a particular focus on sustainability and economic diversification – this is in addition to the country’s development of the circular carbon economy approach, outlined during Saudi Arabia’s G20 Presidency and endorsed by G20 leaders.
This integrated, inclusive approach supports a transition to a more comprehensive, resilient and climate friendly energy system that enables sustainable development. As a nation, the kingdom’s priorities are set to fast-track into a new age of thriving economic growth and social progress, with sustainability at its core. The government is leading the way in green investments with a focus on delivery and tangible actions.
Now, it’s time for the private sector to step up, both in terms of investment and development. The national priorities provide the foundation to incentivise economic diversification. Projects structured as private-public partnerships offer the kingdom a great opportunity to bring global expertise to the local market.
For example, ENGIE assumes the role of both investor and developer. By injecting foreign direct investment into the kingdom we are not just supporting the development of clean energy solutions, we are helping drive local job creation, capacity building and local economic value.
Through our business development opportunities, we review every investment through a holistic approach, where ESG requirements such as environmental protection, climate change vulnerabilities, decarbonisation and social responsibility, to name a few, are part of the decision making process.
For organisations to be resilent and sustainable, it is important that ESG frameworks are built into the business models which would include risk management standards, metrics, and monitoring systems to evaluate and manage all projects. The framework is there to ensure that companies are meeting sustainability goals such as reduction of carbon footprints, minimising environmental impacts, ensuring a positive contribution to society at large and building solid business principles through governance that provides investors with the level of assurance on on their invetsments.
ESG standards are required to ensure that energy investment has a positive impact beyond the energy supply. So why should this be a priority for Saudi Arabia? Through its close ties with the United Nations Framework Convention on Climate Change (UNFCC), as well as its commitment to the Paris Agreement, the kingdom launched the Saudi Green/Middle East Green Initiatives to align with international efforts to combat climate change and limit global warming.
Given the country’s national objectives to create a greener future and promote sustainability across all sectors, ESG management provides an opportunity to ensure investment in Saudi Arabia supports and drives transformational plans.
In the way consumer behaviour is influenced by a brand’s reputation, foreign investment into the kingdom could be evaluated based on the company’s ability to demonstrate to its potential stakeholders that it is committed to addressing greater environmental and societal objectives.
Having an understanding of the risks, challenges and opportunities creates a deeper enhanced partnership. A clear ESG model serves as the basis to evaluate the capabilities of the foreign investors and their readiness to contribute to kingdom’s vision and progress.
The potential of this investment and business model goes far beyond monetary value, as we collectively seek to reduce our carbon footprint, minimise the impact of climate change and create a sustainable future for all.
Turki Al Shehri, CEO, ENGIE in Saudi Arabia.
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By Turki Al Shehri
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Why ESG investment is a priority for Saudi businesses
Given the country’s national objectives to create a greener future and promote sustainability across all sectors, ESG management provides an opportunity to ensure investment in Saudi Arabia supports and drives transformational plans
Turki Al Shehri, CEO, ENGIE in Saudi Arabia.
With the increasing focus on climate change and efforts to reduce carbon emissions, companies large and small are facing new challenges dealing with environmental risks that affect both their businesses and society at large. Thanks to the significant efforts being driven by the Saudi Green and Middle East Green Initiatives, this is coming under greater focus in the region.
Environmental, social and governance (ESG) factors are now essential, not only to support country goals but our common focus on global issues that drives greater transparency and engagements, promoting a shared value approach.
ESG management is the key to delivering principles of responsible investment; to create value over the long-term that goes beyond financial gain to better a society through environmental actions, human capital investment, innovation, leadership, governance and more. ESG investment is a relatively new but growing priority for companies in Saudi Arabia.
In recent years, Saudi Arabia has drastically accelerated its energy transition with a particular focus on sustainability – meeting the needs of the present without compromising the ability of future generations. The kingdom’s Vision 2030 sets out a transformative future, with a particular focus on sustainability and economic diversification – this is in addition to the country’s development of the circular carbon economy approach, outlined during Saudi Arabia’s G20 Presidency and endorsed by G20 leaders.
This integrated, inclusive approach supports a transition to a more comprehensive, resilient and climate friendly energy system that enables sustainable development. As a nation, the kingdom’s priorities are set to fast-track into a new age of thriving economic growth and social progress, with sustainability at its core. The government is leading the way in green investments with a focus on delivery and tangible actions.
Now, it’s time for the private sector to step up, both in terms of investment and development. The national priorities provide the foundation to incentivise economic diversification. Projects structured as private-public partnerships offer the kingdom a great opportunity to bring global expertise to the local market.
For example, ENGIE assumes the role of both investor and developer. By injecting foreign direct investment into the kingdom we are not just supporting the development of clean energy solutions, we are helping drive local job creation, capacity building and local economic value.
Through our business development opportunities, we review every investment through a holistic approach, where ESG requirements such as environmental protection, climate change vulnerabilities, decarbonisation and social responsibility, to name a few, are part of the decision making process.
For organisations to be resilent and sustainable, it is important that ESG frameworks are built into the business models which would include risk management standards, metrics, and monitoring systems to evaluate and manage all projects. The framework is there to ensure that companies are meeting sustainability goals such as reduction of carbon footprints, minimising environmental impacts, ensuring a positive contribution to society at large and building solid business principles through governance that provides investors with the level of assurance on on their invetsments.
ESG standards are required to ensure that energy investment has a positive impact beyond the energy supply. So why should this be a priority for Saudi Arabia? Through its close ties with the United Nations Framework Convention on Climate Change (UNFCC), as well as its commitment to the Paris Agreement, the kingdom launched the Saudi Green/Middle East Green Initiatives to align with international efforts to combat climate change and limit global warming.
Given the country’s national objectives to create a greener future and promote sustainability across all sectors, ESG management provides an opportunity to ensure investment in Saudi Arabia supports and drives transformational plans.
In the way consumer behaviour is influenced by a brand’s reputation, foreign investment into the kingdom could be evaluated based on the company’s ability to demonstrate to its potential stakeholders that it is committed to addressing greater environmental and societal objectives.
Having an understanding of the risks, challenges and opportunities creates a deeper enhanced partnership. A clear ESG model serves as the basis to evaluate the capabilities of the foreign investors and their readiness to contribute to kingdom’s vision and progress.
The potential of this investment and business model goes far beyond monetary value, as we collectively seek to reduce our carbon footprint, minimise the impact of climate change and create a sustainable future for all.
Turki Al Shehri, CEO, ENGIE in Saudi Arabia.
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