Currently, the Mena is centering itself in global climate discourse by holding successive COP summits, hosting a plethora of climate-focused conferences and exhibits, and positioning itself at the forefront of technological innovation.
Climate action efforts have certainly ramped up in recent years; however, to tackle the energy trilemma and realise the objectives of COP28, participation and collaboration are required from a wide cross-section of society. The private sector has been identified as playing a key role here.
The push for more private sector participation
It is increasingly apparent that the decisions and business deals that occur in the private sector today, will be the ones that dictate the future of tomorrow. Sustainable and climate-focused operations and solutions have never been more important, and within the MENA, there is a concerted effort to assist the sector in realising the role it plays here.
In a recent meeting held by Dubai Chambers, which brought together Dubai’s business community, for example, a great emphasis was placed on the importance of private sector efforts. Similarly, at Abu Dhabi Sustainability Week, which connected government representatives, private sector leaders and civil society activists, private sector participation was again highlighted as an imperative for change.
Another key factor in facilitating the private sector’s contribution to climate action is finance. UNEP FI estimates show that to achieve the Sustainable Development Goals worldwide, between 5 to 7 trillion USD per year until 2030 are required, and a significant portion of this must come from banks, investors and private companies. Marwan Al Sarkal, Strategic Advisor, Dake Rechsand, said that the financial sector has a “crucial role” in addressing climate change in the MENA region. “Financing sustainable solutions is vital in order to mitigate desert conditions, water and food scarcity, and arid/semi-arid climate. The financial sector can support young entrepreneurs and innovators to foster new ideas in addressing climate change,” he said.
Coinciding with the Year of Sustainability, the UAE is also ushering in a plethora of initiatives aiming to drive forward more private sector participation in efforts to achieve climate goals. The Entrepreneurial Nation, for example, is an award-winning initiative by the UAE Ministry of Economy that aims to facilitate the growth of UAE-based enterprises and their global expansion. So far, 800 SMEs have joined, and its long-term objectives are to provide support to over 8,000 startups and SMEs and enable the growth of unicorns in the UAE. Phase two of the project, which was launched last year, is based on the largest public-private sector partnerships of their kind, and seeks to develop the tools required to foster the culture and practices of entrepreneurship in the country. It has been recognised as a “leading example” for the public-private partnership (PPP) model, which serves as a tool to drive forward the country’s vision for a sustainable, competitive economy.
The potential of public-private partnerships
At the Dubai Chambers meeting in December, Maha Al Gargawi, Executive Director of Business Advocacy at Dubai Chambers, told the private sector that it needed to work “in lockstep” with the government, with these kinds of partnerships “more important than ever.” Across the board, it is increasingly being highlighted that public-private partnerships can help support and facilitate collaboration across a range of areas, whether that’s finance or policy, leading to further innovation and developments in climate solutions.
Schneider Electric is one of the companies embracing PPPs and is now working with the Ministry of Industry and Advanced Technology (MoIAT) and the Ministry of Energy and Infrastructure (MoEI) to enhance energy efficiency in the industrial sector ahead of COP28. As part of this partnership, a nationwide assessment of industrial companies was conducted, where 46 manufacturing facilities in the UAE operating across different sectors were surveyed to provide manufacturers with a roadmap for transformation towards sustainability and net zero.
Ashraf Abdelkhalek, Gulf Sustainability Leader, Schneider Electric, told ESG Mena that each of us has an instrumental role to play in ensuring a collective sustainable future: “Private sector investments and the innovation of new technologies are crucial to driving such change and to accelerating an inclusive energy transition,” said Abdelkhalek. Adding: “As a global leader in digital transformation and sustainability, we work towards achieving a climate-positive mindset through strategic partnerships and initiatives in the best interest of people and the planet. As the UAE looks toward COP28 and the realisation of the 17 SDGs, we believe private sector-led innovation and closer cooperation remain more important than ever in the MENA region.”
The path ahead for the private sector
A recent energy sector outlook report by consultants Frost & Sullivan, predicts that there will be “multi-fold” growth for small to medium enterprises, with a collaborative approach between governments and the private sector required to facilitate the inflow and adoption of new technologies for the energy mix to “evolve appropriately.” Further, with commitments such as the UAE plan to invest Dh600 billion ($163.5 billion) in clean and renewable energy projects across the next 30 years, there is ample opportunity for the public and private sectors to depoliticise the issue and work together for the common goal of achieving net zero.
Commenting on the private sector’s energy transition approach, and what lies ahead, Dr Waddah S. Ghanem Al Hashmi, Fellow & Chairman, Board Directors Institute – GCC UAE Chapter Advisory Committee, said that things are clearly changing and “changing fast.” “Perhaps initially not driven purely by the SDGs and the compliance to national targets in different countries, which saw SOEs taking the lead and making pledges on reducing their carbon footprint and addressing climate change matters, but now from an ESG reporting perspective and for economic reasons,” he said.
“The price of energy around the world saw a massive leap in the past 18 months; a post-COVID 19 world where demand started increasing again and the subsequent economic impacts of the Ukraine political crisis. The changes in approach have come with more requirements for integrated reporting, more partnerships between public and private organisations, and the access to capital becoming more challenging for conventional energy projects,” he said.
Further, Al Hashmi explained: “In the wake of all these multitudes of challenges including accessing capital, stakeholder/shareholder activism, access to cheaper energy and with the COP 28 promising to be one in which serious decisions will be made to balance energy source dynamics for the transition, Directors and CEOs will need to rethink their short and long-term strategies.”
Meanwhile, Al Sarkal, speaking about how the private sector can build toward the COP28 vision, said there is a range of sustainable practices that can be implemented within companies’ own operations. This, he said, includes reducing company carbon footprints, investing in renewable energy, and adopting sustainable business models. Further to this, Al Sarkal said to effectively address the challenges of climate change in the MENA region, a multistakeholder approach “is essential,” with the private sector a crucial component. He noted Dake Rechsand’s IDer Sponge City and Breathable Sand solutions as good examples of how the private sector can contribute to addressing the climate change challenges in the region.
While these projects show encouraging signs of progress in the private sector, on a global scale, the world is currently not on track to achieve its climate goals, and the road ahead will not be without its challenges. Climate experts have stressed that dramatic steps are required for real transformation, and the private sector must be at the centre of this, leading the way with ambitious sustainability initiatives and continued investments in green solutions.