In recent years, the world has seen a boom in organisations keen to publicly proclaim their commitment to all manner of environmental, human rights, employee welfare, societal and ethical policies. While there remains a significant disconnect between the number of organisations making these proclamations and those committing to the hard yards that drive genuine impact on the ground, one element is indisputable – there are more jobs focusing on these issues than ever before.
The abbreviation and branding of environmental, social and governance (ESG) was coined by the United Nations Principles for Responsible Investment (PRI) in 2006 and while some specialists continue to see the true application of ESG as a component of risk management within the finance sector, it has become shorthand for many organisations policies and programmes encompassing the topics.
The Middle East, like most emerging markets, has only started to play catch-up with jurisdictions such as Western Europe and North America, but the appetite is visible across all manner of sectors.
Governments across the region seem to prefer to let market forces drive corporate adoption of ESG rather than proactively intervening or driving its adoption. One notable impact of this is that the motivation for the incorporation or development of ESG policies varies significantly from one organisation to another.
The reasons are myriad but some of the triggers that we have witnessed include those organisations that are exporting product to the EU compelled to reduce their carbon footprint to comply with the EU’s Carbon Border Adjustment Measure (CBAM); regional partners to global PLC’s being dictated that they need to align with the company’s corporate ESG and sustainability targets or to risk losing the regional franchise; and companies that are looking to IPO or raise capital identifying that they can only do so at the desired price point if they commit to attaining specific ESG ratings or criteria.
The logical outcome from such a varied range of trigger points is that there is not a cookie-cutter typical profile of the staff working in Middle East ESG jobs. This is a good thing. While in previous decades, sustainability jobs remained the preserve of those personnel coming from an environmental/ecological academic background, the breadth and variety of material impacts that different organisations are trying to address is creating pathways for those from a range of backgrounds to work in the sector.
However, there are still some barriers to entry. For instance, someone looking to undertake a chief sustainability officer or head of ESG role within an oil & gas or industrial manufacturer is likely to still find that there is a preference for appointing someone with a clear understanding of the science behind greenhouse gas emissions and decarbonisation.
Equally, banks and private equity funds are likely to look for personnel who have qualifications and understanding of ESG principles, but also understand how financiers think and act – do ESG factors pose a risk, an opportunity or a marketing opportunity in their industry?
With COP27 and COP28 Climate Conferences hosted by Egypt and the UAE over the next 13 months, there will be increased scrutiny upon the “E” of ESG upon and within the region. While the region’s industrial powerhouses are heavily focused upon the challenges of the energy transition, there is a strong argument that the region will only be successful if the SMEs that form the backbone of the regional job market see an advantage – or an imperative – to address their own footprints.
Since January 2021, the UAE Securities & Commodities Authority has required all companies subject to the Joint Stock Companies Governance to complete a sustainability report. In an ideal world, we would see a phased approach for all companies in the UAE and beyond, requiring organisations to report upon a set of industry-relevant ESG criteria. As Peter Drucker famously quipped, “you can’t improve what you don’t measure”. While some will fear a neglect of other ESG components if organisations suffer from tunnel-vision upon carbon, this is the first regulatory step undertaken by many other countries, so it is not without precedent.
In June 2022, Kite Insights published their first report on employee engagement and climate readiness. Compiling data from more than 7,000 companies across the world, they found eight out of 10 employees are ready and willing to take action on climate change in their jobs. But I’d argue that this interest in employees taking a more activist role is not just limited to climate, but to seeing strong social and governance management within their organisations.
There is a fundamental (I’d personally argue fiduciary) responsibility for C-suite and executive management to either upskill or enlist new human resources to tackle the full suite of ESG challenges. And that’s only going to be a good thing for those passionate about working in the sector.
By Simon Bangs, Partner & Co-founder, Sustainable Recruitment Solutions (SRS)