How to cut direct emissions in MENA by 2030

Climate action in the Middle East and North Africa (MENA) has been under the global magnifying glass for the past two years, with successive hosting of COP27 in Sharm El Sheikh and COP28 in Dubai.

Warming at twice the global average, the MENA region is highly vulnerable to the negative impacts of climate change, particularly as rising temperatures impact water-stress and agriculture in the region.

While national governments in the region have begun taking proactive steps, with 60% of emissions falling under net-zero pledges in the last two years, the corporate sector lags behind global counterparts in MENA.

A mere 12% of the region's largest businesses embrace a net-zero ambition, with only 6% charting a roadmap towards this goal. This stark reality necessitates an elevation of corporate ambitions and execution capabilities to support bold, transformative action.

However, a group of top business leaders from MENA are taking this challenge head on.

Fourteen companies have signed the Joint Communique for Climate Action in MENA and pledged a bold collective climate commitment to eliminate 200 MT of CO2e by 2030 (equivalent to the group’s current annual emissions) and reach net-zero by 2050 or earlier.

By taking these steps, these companies are leading by example and driving transformative change by working along the entire value chain.

Some of the top leaders from this community tell us their top challenges and recommendations for how to increase climate action among the private sector in MENA.

Here’s what they had to say:

Majid Al Futtaim is the first MENA company whose near and long-term greenhouse gas emissions targets have been validated by the Science Based Targets Initiative (SBTi) to support a transition to net positive.

Yet Ahmed Galal Ismail, Chief Executive Officer of Majid Al Futtaim, acknowledges there were many challenges to overcome when starting their sustainability journey. “The lack of clarity on the most suitable standardization frameworks, especially in scope 1, 2, and 3 emissions, has led to varied approaches among companies,” he said.

“Internal challenges, like the lack of technical capabilities, made it difficult to introduce and scale environment reporting rapidly. Initially, it was a learning curve with resistance from middle management and competing priorities for sustainability initiatives.”

For Majid Al Futtaim, the first step was to launch a carbon study to help calculate and track their output and developed a carbon assessment tool for all their assets. From there, they established SBTI-validated targets for their operating companies and established regular audits to monitor progress on these goals.

This uncertainty in emissions assessment is a problem that Hatem Dowidar, Group Chief Executive Officer of e&, seeks to address. By offering a greenhouse gas accounting service, e& helps other organizations to assess their environmental impact and create a game plan to reach net zero.

Due to the global nature of supply chains, companies may not have direct control over the largest source of emissions.

For example, Ahmed Kadous, Head of Supply Chain Personal Care, Middle East & Türkiye at Unilever, acknowledged that “raw materials and ingredients represent the largest proportion of our GHG emissions at 59%”, which are outside the company’s direct control.

For Unilever, which is committed to reducing net zero emissions across their value chain by 2039, operating across many categories, product formats and geographies, means that the pathway to net zero will consist of a variety of initiatives, including ones that work directly with suppliers and “decarbonizing of shared supply chains across raw materials and ingredients and packaging material”.

Mohammed Al Ardhi, Executive Chairman of Investcorp, highlights the challenge of demonstrating financial value from sustainability practices within the typical five-year investment period.

"One of the biggest impediments to the large-scale uptake of sustainable investing within the private equity industry is the question of whether such practices can contribute to financial value over a typical investment hold period of five years," he says.

"Delivering outperformance resulting from sustainability factors could sometimes take longer than that, and when competing with other priorities can present a challenge.”

Despite this, Al Ardhi argues that sustainable investing offers both risk mitigation and value creation opportunities. However, realizing these benefits requires investors “to develop rigorous methods for evaluating and prioritizing sustainability interventions”, demanding “time, effort, and resources”.

Collaboration is needed to bridge the green financing gap between financially strong companies and smaller entities, urges Ismail.

“Companies with strong balance sheets and a BBB credit rating that are able to tap the global debt capital market need to support smaller companies that don’t have access to debt financing,” he says.

Only two in five youths in MENA are concerned about climate change, according to World Economic Forum report Closing the Climate Action Gap in MENA.

“This is a gap we can address now by taking collaborative action to scale up educational programmes to create awareness and equip the climate leaders of tomorrow with essential skills and knowledge to drive systemic change,” says Ismail.

The signatories of the Joint Communique welcome the efforts of policy-makers to create an enabling ecosystem to drive concrete climate action.

“Scaling climate action is not simply about doing things faster, cheaper or better – it needs to also be about developing the right enabling environment that helps investors to back founders with businesses that have the potential for breakout,” says Al Ardhi.

Meanwhile, Ismail states: “Stronger regulations, taxes, and fiscal instruments are crucial. In addition, we also need green frameworks in place to provide the right incentives for the private sector to continue to invest in sustainability.

"Collaborative efforts involving private, public, non-governmental organizations and academia are essential to drive sustainability agendas aligned with the Paris Agreement."

And with optimism for the UN climate change conference process, Kadous at Unilever agrees that outcomes at COP "can catalyse the market level changes needed to achieve our climate and business aims.

“There is a strong business case for addressing wider climate change: reducing risks, cost efficiencies, boosting trust and driving business growth,” he adds.

To see all signatories of the Joint Communique on Climate Action in MENA and to learn more about how Leaders for a Sustainable MENA is jumpstarting climate-resilient growth in the region, click here.