Uniting for sustainability: How regional cooperation can keep MENA businesses competitive

Recent global events have reinforced the urgency of addressing climate challenges head-on, and there are few regions where this is more apparent than in the Middle East and North Africa (MENA). From record-breaking heatwaves in Iraq and Kuwait, to unprecedented wildfires in Algeria, and severe flooding in Libya, the region is experiencing increasingly visible effects of climate change, which are intensifying existing vulnerabilities.

At the same time, the region is under mounting pressure to advance its sustainability efforts. During the 2023 UN Climate Change Conference in Dubai (COP28), the region was put under the microscope, as global actors and activists called for a new accelerated era of climate action.

And with the high-profile commitments made at the conference – including, but not limited to the COP28 presidency’s historic UAE Consensus to transition away from all fossil fuels in energy systems, in a just, orderly and equitable manner to reach net zero emissions by 2050 – the region succeeded in outlining a vision to lead this movement.

Now is the time for MENA’s private sector to mobilize as well and do its part in the transition to more sustainable business models. But doing so in a way that is truly sustainable – including within the social and economic context of the region – requires a coordinated approach that spans across the entire value chain.

As climate change accelerates, the need to act goes beyond environmental responsibility alone – it has become an imperative to remain competitive in the global marketplace.

Sustainability is now a key aspect of corporate strategy and global investment decisions worldwide, with companies expected to report on their sustainability performance to meet both regulatory requirements and rising stakeholder demand for transparency and accountability. Indeed, more than 90% of the global economy is now covered by country-level net zero targets and a growing number of companies are disclosing climate-related information in financial filings or annual reports.

Meanwhile, global markets are putting pressure on companies to cut the carbon footprint of their products and MENA’s private sector must be equipped to respond. The European Union’s Carbon Border Adjustment Mechanism, for example, will impose a carbon tariff on products from non-EU countries from 2026. This will likely affect Egypt, Algeria, the UAE and Morocco due to their significant export volumes of targeted sectors such as fertilizer, aluminium and cement.

Therefore, MENA companies looking to tap into global financing or to serve a global customer base should not only plan to improve the sustainability of their operations, but also sustainability reporting efforts, in order to stay competitive within these global markets. Yet despite having the motivation, many companies struggle with this due to the complexity of global reporting frameworks, lack of regional regulatory clarity and financial constraints.

Despite the launch of significant sustainability policies programmes by some of the region’s governments in recent years, there is a perception by many business leaders that regulations are still evolving and often unclear. This lack of clarity adds complexity to strategic planning and sustainability efforts.

Governments in MENA can play a central role in developing policies and frameworks and providing incentives to first-movers.

Their leadership is pivotal to inspire best practice and guidelines setting, and in creating an enabling environment that fosters sustainable business practices across industries and sectors to drive impactful outcomes.

Saudi Arabia’s Vision 2030 and the UAE Energy Strategy 2050 are both models of ambitious national strategies that integrate renewable energy targets, waste management and ecosystem conservation.

At the same time, a shift from traditional to innovative solutions is also imperative and knowledge sharing is key to addressing common challenges. Initiatives such as Egypt’s National Initiative for Smart Green Projects, UAE’s Circular Economy Policy and Saudi Arabia’s Sustainability Champions programme highlight how collaborative efforts can successfully mobilize local solutions to transform all steps of the value chain

The next step of this collaborative model would be to connect the dots between national initiatives across the region. A unified, regional approach to sustainability reporting standards – that aligns with global sustainability goals but also enhances the MENA’s capacity to meet the evolving demands of economic transformation and environmental stewardship – would help companies demystify the complexities of reporting standards and lay the groundwork for sustainable climate action.

In a bid to help address these challenges, the World Economic Forum’s Leaders for a Sustainable MENA coalition will in early November release new research that aims to provide a roadmap for how companies can navigate the complex sustainability landscape.

The findings will also provide an intellectual framework for early efforts to establish a regional reporting framework, aligned to global Sustainability Accounting Standards Board (SASB) standards, but adapted to the regional landscape.

By focusing on key material issues, fostering the combined efforts of private and public sectors and embracing knowledge sharing, MENA businesses can the lead on creating a new era of sustainable economic growth and innovation – change that will benefit everyone.