As global temperatures continue to rise, businesses cannot afford to maintain the current trajectory in their operations. Efforts to reduce greenhouse gas emissions need to step up to ensure that the global temperature increase is below 2C by 2030 and ideally closer to 1.5C — the goal set in the Paris Agreement reached in 2015, according to a new report from the United Nations Framework Convention on Climate Change. More than 3.3 billion people are estimated to be severely impacted by climate change events in the coming few years as per the findings from the Intergovernmental Panel on Climate Change (IPCC).
To mitigate the effects of climate change, carbon management is key for every business to support governments in meeting climate targets set locally, regionally and globally. These plans allow a company to understand and manage the tangible impacts that operating their business has on the environment around it and reduce those impacts to the lowest possible amount. With the UAE’s recent update to their second Nationally Determined Contribution, in response to the Glasgow Climate Pact that called for more aggressive emission reduction targets, saw them increase their 2030 reduction target to 31% (from 23.5%) against a business-as-usual scenario. The call for the private sector to take action is surely imminent. After all, can we rely on the foresight of individual business owners to triumph over the comfort and security of business-as-usual continuity, without the introduction of legislation, mandates and penalties?
The UAE and MENA region have been increasingly put under the glare of the global ESG spotlight since their ambitious climate targets and bold clean energy investments started making international headlines. As wealthy oil-rich states, the pressure to green their economy and transition to a non-oil dependent economy has surged massive interest and investments in renewable energy and circular economy solutions. In 2021, the UAE announced plans to invest over 160 billion dollars in clean energy sources over the next 30 years. Legislation has slowly followed suit. While the MENA region maintains its voluntary status on the carbon markets, meaning it is not governed by law to cap carbon emissions like its Annex I counterparts such as Canada, Germany and Switzerland, ESG laws for certain groups of companies are slowly coming in to play. In 2020 to 2021 the Abu Dhabi Stock Exchange and Dubai Financial Markets both announced ESG reporting guidelines for listed companies, followed by a new decree from their federal regulators, the Securities and Commodities Authority (SCA), that annual ESG disclosure through an annual report was now mandatory for all listed companies. This could come in response to increasing pressure from investors all over the world looking for a strong ESG position in a company as a sign of reduced risk and increased longevity for their investment (as transparency about a company’s material ESG issues, such as its efforts to decarbonise its operations and supply chain, is becoming an essential part of a company’s equity story) or it could be a sign of things to come, and support the hypothesis that the legislation is coming. And soon.
With the UAE hosting COP28 next year, it will once again take a central position on the global ESG stage. Another opportunity to showcase its innovation, commitment, and willingness for change for the preservation of its environment. It’s an opportunity for every business in the region to follow suit. Measure, manage and disclose your carbon emissions. Identify the emission leaks in your business and establish how to reduce them to their absolute minimum. Not only does it protect the environment, it also saves you money. Afterall, carbon costs money. Every emission released into the atmosphere has an associated dollar cost to it, be it through the purchase and consumption of electricity, or the purchase and use of paper and toner in your printers. Reducing emissions always results in reducing operational costs. So, start today and manage your carbon; measure it, reduce it, and report on your performance. Hold yourself accountable and encourage your suppliers and your peers to do the same; let’s all follow this nation’s leaders and be a part of the greatest march to net zero.
By: Dahlia Haleem, Co-Founder and Partner at elementsix