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November 03, 2023

The UAE looks to sustainability to meet its growth goals

The UAE is a top implementer of digital tools to improve the sustainability of internal business operations, according to our recent study.

Amid fast growth, deep-pocketed investment, an expanding population and an ambitious goal to diversify its economy beyond oil, sustainability has become top-of-mind for businesses in the United Arab Emirates (UAE).

Abu Dhabi National Oil Company (ADNOC) has made substantial investments in alternative energy sources. Masdar City, planned as a model for sustainable urban development, is expected to be completed in 2024. In early October, the Abu Dhabi Future Energy Company (Masdar) officially launched the UAE Wind Program, a 103.5-megawatt project expected to power over 23,000 homes a year in the country, with an impact equivalent to removing 26,000 petrol-powered cards from the road annually.

Sustainability is also key to meeting UAE’s aggressive growth plans, where the average temperature is already 34°C (94°F) and has soared to 51°C in recent months. With a growing influx of tourists, business startups and expatriates, clean energy is essential to cooling all the new factories, facilities, resorts and airports being built to support them.

It’s no wonder, then, that in our recent study of 3,000 executives globally, including 174 in UAE, 95% of UAE respondents said their business was using digital tools to improve the sustainability of their internal operations—higher than any other region surveyed and 14 percentage points higher than the global average. One client, for instance, is using Internet of Things (IoT) sensors and intelligent automation to optimize the use of its refrigeration systems.

UAE businesses are displaying an increasing level of organizational maturity when it comes to sustainability. Many companies have hired a chief sustainability officer, either linked to the human resources function or operations. Businesses in the country realize that, beyond regulatory compliance, sustainability is key to growing market share among increasingly environmentally aware customers and consumers, hiring and retaining the talent needed to stay competitive and attracting and retaining shareholder capital.

In our study, conducted with Oxford Economics, we devised five recommendations for how UAE businesses can outperform their markets by embedding sustainability at their core.

#1 Boost sustainability investments to realize full business value

Source: Cognizant Research
Figure 1

Convinced by the benefits of sustainability transformation, businesses across the UAE have been given the green light to increase investment in their initiatives. Average budget growth is expected to increase from an annual rate of 5.7% between 2018 and 2020 to 11.3% between 2025 and 2030. Dubai-based logistics giant DP World, for example, last year announced plans to invest $500 million to slash its carbon emissions by 700,000 tonnes in the five subsequent years.

#2 Elevate your internally focused sustainability initiatives for even greater returns

Source: Cognizant Research
Figure 2

Two of the top three initiatives UAE businesses are pursuing to advance their sustainability transformation are energy-oriented and enabled by technology: using digital tools to make operations more efficient (95%) and generating energy through sustainable means such as solar panels (67%). The former is the highest of all countries surveyed. Encouraged by the UAE Green Agenda 2030—a strategy to boost growth while cutting emissions—businesses in the country recognize that digital tools are fundamental to success in sustainability efforts.

Looking ahead to 2025, many have plans to make premises more sustainable (47%), while just over 40% will start using digital twins and data analytics to identify green process improvements, reflecting the acknowledged power of digital to meet sustainability goals.

#3 Expand your sphere of influence, upstream and downstream, to achieve greater business benefits

Source: Cognizant Research
Figure 3

Just over half (53%) of UAE businesses said their sustainability strategy is greatly focused on internal operations, compared with 42% for supply chain and 37% for products and services. This emphasis on internal operations is completely justifiable as it stems from the confidence and control businesses can exert in this area.

Conversely, it’s more difficult to effect change in areas traditionally out of their own control, such as the complexities of modern supply chains or the afterlife of a product once in the customer’s hands. Today’s technology, however, extends business reach, providing visibility and influence across the entire value chain when deployed effectively.

#4 Explore new ways to apply and deploy mature and emerging technology

Source: Cognizant Research
Figure 4

Data analytics, cloud and intelligent automation are the most commonly implemented technologies to stimulate sustainability efforts, but some lesser deployed technologies may be more impactful. Although only 44% of businesses in the UAE have applied artificial intelligence, for example, over seven in 10 say it’s effective.

#5 Evolve power structures to allow for necessary shifts in culture and accountability

Source: Cognizant Research
Figure 5

While at least two-thirds of CEOs in the UAE provide budget and sign-off for their sustainability strategy, less than 15% are accountable or have performance measured against the strategy’s success. Instead, it’s the chief sustainability officer (CSO) and senior managers who are responsible for outcomes, despite their absence at the strategy table.

To embed sustainability into company culture, businesses must clarify roles and responsibilities, and clearly connect these to an incentives system to encourage senior leaders and all employees to participate in sustainability endeavors.

Learn how your business (or you) can become sustainable to the core in our report “Deep Green: How data, technology and collaboration will drive the next phase of sustainability in business.”

For even more on this topic, visit our Sustainability & Resilience webpage

Maged Wassim

VP – Middle East Market Lead

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Maged Wassim brings his 25+ years of expertise to lead regional transition in the ME and Africa toward a knowledge-based economy focused on digital transformation, data and AI solutions and enterprise application implementation.

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