UAE exporters face Dh439b loss for failing to curb carbon emissions

The UAE-based exporters who fail to transition alongside their multinational (MNC) partners to curb carbon emissions could face a loss of $119.6 billion (Dh439 billion) in revenues, according to a new study released on Monday.

The new study by Standard Chartered bank found that 78 per cent of MNCs plan to remove suppliers that endanger their carbon transition plan by 2025.

However, the study revealed a $1.6 trillion market opportunity for suppliers who decarbonise in line with MNC net zero plans.

It found that 89 per cent of MNCs with a supply chain in UAE have set emission reduction targets for their suppliers, asking for an average reduction of 31 per cent by 2025.

“The global push for net-zero is a critical opportunity for industry to re-assess the impact of their emissions including those that originate from their supply chain. The UAE is a vital global trading and supply chain hub,” said Rola Abu Manneh, CEO for Standard Chartered Bank in the UAE.

Around 15 per cent of MNCs have already begun removing suppliers that might scupper their transition plans. In total, MNCs expect to exclude 35 per cent of their current suppliers as they move away from carbon, according to Carbon Dated, which looks at the risks and opportunities for suppliers in emerging and fast-growing markets as large corporates transition to net zero.

Some 64 per cent of multinationals believe that emerging market suppliers are struggling more than developed market suppliers with their net-zero transition, and 57 per cent are prepared to replace emerging market suppliers with developed market suppliers to aid their transition.

MNCs are concerned that emerging market suppliers are failing to keep pace with for two key reasons; insufficient knowledge and inadequate data. Some 56 per cent of MNCs believe that the lack of knowledge among emerging market suppliers (41 per cent for developed market suppliers) is a barrier to decarbonisation.

In fact, MNCs are exploring ways to help their suppliers’ transition to net zero. Some 47 per cent are offering preferred supplier status – a sales advantage – to sustainable suppliers, and 30 per cent are offering preferential pricing. Some are offering grants or loans to their suppliers to invest in reducing emissions or data collection.

The study found that China’s exporters could lose $512.3 billion in revenues who fail to transition alongside their partners to curb carbon emissions. Second comes Indian exporters at $273.7 billion, Hong Kong traders at $2.05.5 billion, Singapore exporters at $146.6 billion, South Korea exporters at $142.5 billion and the UAE-based exporters at $119.6 billion.

— waheedabbas@khaleejtimes.com