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MENA Watch: Can regional cooperation keep region’s businesses competitive?

MENA enterprises may lead climate policies by focusing on critical material issues, developing private-public collaboration, and sharing information

A small plant in dry, cracked soil contrasts with the city skyline in a MENA (Middle East and North Africa) sustainability blog post. Climate leadership is essential for companies in the MENA region.

World Economic Forum CRTG Deputy Head Kelsey Goodman presented “The World Economic Forum Community Engagement Lead Article” from the “Global Future Council’s Annual Meeting.”

Flooding, heatwaves, and wildfires are becoming more common in MENA. With global actors and activists demanding faster climate action, the region is under pressure to improve sustainability.

MENA enterprises may lead climate policies by focusing on critical material issues, developing private-public collaboration, and sharing information. Recent global events have highlighted the need to confront climate issues head-on, especially in the Middle East and North Africa.

Climate change is worsening vulnerabilities in the region, with record-breaking heatwaves in Iraq and Kuwait, enormous wildfires in Algeria, and severe flooding in Libya. The region is also under pressure to improve sustainability.

The region was scrutinised at the 2023 United Nations’ Climate Change Conference in Dubai (COP28), where global actors and campaigners demanded faster climate action. What did COP28 decide on fossil fuels?

The region set a goal to lead this movement with its high-profile commitments at the conference, such as the UAE’s historic agreement to switch away from all fossil fuels in energy systems in a fair, orderly, and systematic way so that there are no net emissions by 2050.

Now is the time for MENA’s private sector to mobilise and help transition to sustainable business models. Given the region’s social and economic environment, achieving true sustainability requires a coordinated approach across the value chain.

Navigating MENA sustainability issues acting to stay competitive in the global market is now necessary as climate change accelerates. To meet regulatory requirements and stakeholder demand for transparency and accountability, corporations must report on their sustainability performance in their corporate strategy and global investment decisions.

More than 90% of the global economy has country-level net zero targets, and more corporations are revealing climate-related information in financial filings and annual reports.

MENA’s private sector must respond to global market pressure on enterprises to reduce their products’ carbon footprint. From 2026, the European Union’s (EU) Carbon Border Adjustment Mechanism will tax non-EU products’ carbon. The EU may affect Egypt, Algeria, the UAE, and Morocco due to their high export volumes of fertiliser, aluminium, and cement.

To compete in global markets, MENA enterprises seeking global finance or customers should enhance their operations and sustainability reporting. Despite their motivation, many organisations struggle due to the complexity of the global reporting framework, regional regulatory uncertainty, and cost constraints.

Many industry leaders believe regulations are still changing and ambiguous, despite recent sustainability measures by some of the region’s governments. Clarity deficits complicate strategic planning and sustainability efforts.

Why government leadership matters MENA governments can adopt rules and frameworks and incentivise first movers. Their leadership is crucial to inspiring best practices and guidelines formulation and in establishing an enabling climate that encourages sustainable business practices across industries and sectors to create significant outcomes.

Saudi Arabia’s “Vision 2030” and the “UAE Energy Strategy 2050” are ambitious national strategies that include renewable energy, waste management, and environmental conservation.

We also need to transition from traditional to new solutions, and knowledge sharing plays a crucial role in solving common problems. Egypt’s National Initiative for Smart Green Projects, UAE’s Circular Economy Policy, and Saudi Arabia’s Sustainability Champions initiative demonstrate how collaboration may mobilise local solutions to improve the value chain.

This collaborative strategy would connect regional and national projects next. A unified, regional approach to sustainability reporting standards that aligns with global sustainability goals and strengthens the MENA’s capacity to meet economic transformation and environmental stewardship would help companies understand reporting standards and prepare for sustainable climate action.

Building sustainable performance: next steps The World Economic Forum’s Leaders for a Sustainable MENA coalition will release new research in early November to help companies navigate the complex sustainability landscape.

The results will also help with the early planning of a regional reporting structure that is in line with the global sustainability accounting requirements (SASB) but fits the needs of the region.

By focusing on important material concerns, fostering the combined efforts of private and public sectors, and embracing knowledge exchange, MENA enterprises may lead to building a new age of sustainable economic growth and innovation—a transformation that will benefit everyone.

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