Steps demonstrate our commitment to sustainability in global business operations: Raja Atoui

Raja Atoui, partner, Middle East, Bain & Company, is a core member in the global management consultancy firm’s Energy & Natural Resources and Sustainability & Responsibility practices with over 10 years of consulting experience in the region. He has led engagements across energy, utilities, manufacturing, and real estate sectors. He has advised clients on a range of topics including growth strategies, operating model and organisation design, and sustainability-driven value creation (particularly solutions such as carbon management and hydrogen). He holds an MSc in Civil & Environmental Engineering from the University of California, Berkeley, and a BEng degree in Civil & Environmental Engineering from the American University of Beirut.

Raja spoke to Khaleej Times about his abiding interest in sustainability measures, which have become a hot-button global issue, as the UAE gears up to host COP28 in Dubai later this year.

Edited excerpts from the interview:

Climate change & decarbonisation goals are being pushed on a global scale. How important are these goals to achieve the long-term vision of the UAE and the region in general?

No region will evade the consequences of a warming planet, but the Middle East and North Africa (MENA) region is among the most vulnerable to its effects, including food security and drought.

Climate change and decarbonisation is indeed becoming a top priority for governments and corporations around the world. Countries in the region have incorporated this imperative into their long-term vision as evidenced in the net-zero ambition announcements by the UAE (2050), Oman (2050), and the Kingdom of Saudi Arabia (KSA) (2060). Another key evidence is the fact that the current and next COP events are taking place in our region (COP27 Egypt and COP28 UAE)

Although MENA represents emerging economies, countries in the region are striving to play a leading role in decarbonisation and deploying transformative programmes including decarbonising their energy mix with renewable and nuclear energy, deploying carbon capture in hard-to-electrify sectors, pushing the envelope on clean-hydrogen fuel production & applications, and rolling-out ambitious afforestation initiatives.

There is a global momentum on environmental, social and governance (ESG). How far has the Middle East on this front? Is it becoming commonplace in business strategies in the region?

We’re starting to see the early stages of acceleration among companies in MENA to incorporate ESG as a key component of their business strategies. The link between ESG leadership and long-term business success is becoming increasingly intertwined given the growing pressures from employees, customers, and regulators.

Bain & Company evaluated over 200 of the largest companies in MENA for their disclosures and sustainability measures. Encouraging signs of progress are reflected in the actions of several corporate houses implementing initiatives designed to reduce emissions, increase renewables, or scale nascent low-carbon technologies such as green hydrogen and sustainable aviation fuel. However, of the overall sample analysed, only half have started ESG reporting, with 40 per cent disclosing their Scope 1 & 2 emissions. Approximately 12 per cent have announced net-zero ambitions and only 6 per cent have defined their roadmap. Therefore, there is vast room for improvement, particularly in terms of transparent and globally consistent emissions disclosure policies, credible reduction roadmaps, and science-based target setting.

How does incorporating ESG in business strategies support revenue growth and help in navigating uncertain business climates?

What we’ve seen is that the most successful companies look at ESG in terms of its long-term value creation potential. ESG can create value across multiple dimensions including:

a) Green premiums for low-carbon products

b) Introduction of new ESG-driven products & services

c) Creation of competitive advantage relative to peers for attracting ESG-conscious employees and selling to ESG-conscious customers

d) Increased efficiency & circularity leading to significant cost savings

e) Access to lower cost of capital (eg green sukuks)

Aligned with the goals of the UAE, the KSA and governments in the region, organisations across the board have started to include ESG as a main strategic pillar. So, what’s required from Chief Executive Officers (CEOs) to accelerate the adoption of these practices and meet the guidelines?

Most CEOs admit that ESG is important, but few give it as much time as they do to other priorities. Executives in MENA will need to apply some of the same rigour towards an ESG transformation journey that they apply to other issues critical to their business. In many ways, an ESG transformation is like a cost transformation, requiring a defined ambition, a data-driven assessment of the current state, identification of opportunities and priorities, and a well-executed change programme. Taking these steps can help CEOs break the inertia that hampers so many ESG programmes, and achieve lasting change.

Bain & Company has made large-scale global commitments to ESG. How does that translate to the company’s growth?

At Bain & Company, we believe in leading by example and have therefore remained deeply committed to maintaining environmental standards in everything we do. Over the past 11 years, we’ve managed to reduce our Scope 1 and 2 direct emissions by 84 per cent, by converting to renewable electricity, improving the energy efficiency of our offices, and finding innovative solutions for our operations.

This year, we announced an industry-leading move to achieve net-negative carbon status in 2022. We will support nature-based projects to remove more than 100 per cent of its 2021 scope 1, 2, and 3 carbon emissions, and aim at maintaining a net-negative status every year going forward.

Additionally, we are offering an accelerated and specialised, post-graduate-level global ESG training programme, to upskill all our consultants across the firm.

These steps demonstrate our commitment to sustainability and the priority that we place on minimising the environmental impact of our global business operations.

• UAE
• MENA