The business of the environment is a hard subject to avoid at present, and it is becoming increasingly important for the Gulf in general and the UAE in particular.
Regulatory changes mean that the environment now has a price, and as a result the carbon market is booming worldwide – it is already estimated to be worth $30 billion (Dh110bn). The Climate Change Road Map decided on in Bali at the end of 2007 will almost certainly apply to all countries in the world, including the GCC markets.
There are very obvious financial implications surrounding the tackling of environmental issues, involving not only the costs but also the profits to be made out of this new and growing market. The environment now has a price. ‘Sustainability’ and how it is tackled is firmly embedded in the business strategies of multinationals. Government regulation is ensuring that changes are made. Failure to ignore regulatory changes or acknowledge new opportunities reveals a lack of executive foresight, and could even be construed as neglect of responsibility to produce long-term sustainable returns for shareholders.
Investment banking studies have shown that a company which adopts and communicates responsible business practices is more likely to attract investors, gain cheaper access to capital, improve brand recognition and become an employer of choice. In addition, there are the new revenue streams and markets, as well as substantial cost savings to be gained through promoting energy efficiency.
It is increasingly recognised that sound management of sustainability issues is a key indicator of a good management team, and that sustainable principles enforce trust, which adds a substantial amount of value to a brand.
As Dubai forges its way as a major global commercial and financial centre, it is vital that sustainability is included in the blueprint for the emirate’s development. Rapid development and natural climate conditions mean that there is the potential for the country to generate high levels of emissions, and have water and waste management problems. But companies also have the chance to ensure they are helping Dubai develop in sustainability, as well as a global centre for transparency and best practice in business.
Regulatory initiatives have already been put in place, particularly relating to construction, including the formation of the Emirates Green Building Council, the certification of the first Platinum Leed building in Dubai and Dubai World’s rules on green building. The creation of the Masdar Initiative in Abu Dhabi also shows innovation in the UAE when developing new revenue streams through clean technologies and carbon management techniques.
Dubai’s ambition to increase standards of corporate governance and transparency should also apply to sustainability issues. This also allows the communication of goals achieved and goals being targeted, to ensure success can be measured.
While environmental NGOs may criticise for lack of action, companies may also be left vulnerable to criticism from climate change sceptics, but what cannot be debated is that it is now an investment issue and potentially represents a very lucrative market.
Failure to acknowledge this may cost companies, the region and the global economy dear. Sir Nicholas Stern, author of the Review on the Economics of Climate Change in 2006, predicted that doing nothing about climate change would shrink the global economy by 20 per cent.
(The author is a sustainability consultant with Capital MS&L)
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