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ESG Reporting in the Middle East: Trends and Best Practices

In recent years, sustainable investing has surged to unprecedented levels, with the global value of assets devoted to this cause reaching $35 trillion in 2020—an increase of over 1,000% since 2002. While Europe and the US have traditionally led the charge, the Middle East is rapidly emerging as a key player in the ESG (Environmental, Social, and Governance) landscape. As a leading Sustainability report design agency Dubai, we’re here to explore the trends and best practices in ESG reporting within the Middle East, helping businesses align with global standards and enhance their sustainability reporting.

The Evolution of ESG Reporting in the Middle East

The journey of ESG reporting in the Middle East is marked by rapid development. Although the region has a long history of trade and environmental stewardship, modern ESG practices began gaining momentum in the 2010s. A significant turning point was the Paris Agreement of 2015, which catalyzed many Middle Eastern countries to enhance their sustainability policies.

Key milestones in the region include:

• December 2016: Qatar Stock Exchange released its ESG guidelines, setting the stage for formal sustainability reporting in the region.
• June 2020: Bahrain introduced ESG reporting guidelines, signaling its commitment to greater transparency.
• September 2020: Egypt issued a green sovereign bond, marking a notable step in sustainable finance.
• January 2021: The UAE implemented non-mandatory sustainability reporting requirements.
• November 2021: The Saudi Exchange published ESG disclosure guidelines, pushing for more robust reporting standards.

These developments have increased the demand for comprehensive ESG reporting, making it essential for companies in the region to adopt best practices and effective reporting strategies. As a prominent Sustainability Report Writing Service Dubai, we help businesses navigate these evolving standards.

Trends in ESG Reporting in the Middle East

1. ESG as a C-Suite Priority

In 2022, only 18% of companies had dedicated ESG teams. Today, this figure has risen significantly. The latest PwC survey reveals that 27% of companies now have a Chief Sustainability Officer (CSO) or equivalent position at the C-suite level. This shift underscores the growing importance of sustainability within the highest echelons of corporate management.

Our Sustainability Report Writing Agency helps organizations integrate ESG responsibilities into their executive strategies, ensuring that sustainability is a core focus of their business operations.

2. Formal ESG Policies Becoming Standard

As of 2023, 64% of Middle Eastern companies have established formal ESG policies. While this is still behind the global average of 81%, it represents a substantial improvement. Companies are increasingly recognizing ESG as a critical business function, leading to greater investments in sustainability efforts and the development of comprehensive strategies.

For businesses seeking to create effective ESG policies, our Design Sustainability Report Service offers expert guidance in drafting and implementing robust sustainability frameworks.

3. Slow Progress in Formal ESG Reporting

Despite advancements in ESG strategies, formal ESG reporting remains a challenge. According to PwC, only 25% of companies produced standalone ESG reports in the past year. About 66% combined ESG reporting with other reporting forms, while 28% did not report on ESG at all. This gap highlights the need for more rigorous and transparent reporting practices.

To address this, many companies are moving towards established reporting frameworks like GRI (Global Reporting Initiative) and SASB (Sustainability Accounting Standards Board). Our Sustainability Report Writing Dubai services assist businesses in adopting these frameworks and ensuring their reports meet international standards.

4. Stock Exchanges Driving ESG Reporting

Stock exchanges in the Middle East are playing a crucial role in advancing ESG reporting. For instance:

• The Saudi Arabian stock exchange Tadawul now mandates listed companies to disclose material ESG information.
• The Dubai Financial Market and Abu Dhabi Securities Exchange have also required listed companies to produce annual ESG reports.

These regulatory changes are encouraging companies to enhance their sustainability disclosures and attract ESG-focused investors. Our Sustainability Report Design Company supports clients in aligning with these stock exchange requirements, helping them meet disclosure obligations effectively.

5. Challenges in Accessing Green Financing

One of the significant challenges for Middle Eastern companies is accessing green financing. Limited ESG information has made global investors cautious, impacting the flow of funds into sustainable projects. For example, while renewable energy met 46% of Germany’s demand in 2022, it constituted less than 1% of Saudi Arabia’s energy mix.

To overcome these barriers, companies need to improve transparency in their ESG reporting. By providing detailed sustainability data, businesses can attract more green financing and support their sustainable development goals.

It’s Time To Get Serious About Sustainability

At Sandpaper, we’re incredibly optimistic about the Middle East’s progression toward a sustainable future. All signs point to an increased focus on renewable energy, green financing, and equitable business environments.

If you’re ready to start disclosing sustainability data through ESG reports, Sandpaper can help. We’ve helped clients from around the MENA region produce reports that win over investors, inspire consumers, and support sustainability initiatives.

Contact us today to learn more about our services.