Setting sustainability targets is already a significant step toward achieving a greener future. However, the challenge of achieving and sustaining those targets remains. In our interview with Samer Bohsali, Middle East head of social and public sector practice, Bain & Company, he identifies key hurdles organizations face in their quest for sustainability, particularly in the Middle East and North Africa region. Bohsali also discusses the broader implications for achieving the United Nations Sustainable Development Goals in the MENA region and globally.
Your research found that nearly 70 percent of organizations in MENA have bold sustainability ambitions with clear targets, but only 3 percent are on track to achieve those. What accounts for this gap?
Organizations face four significant challenges that contribute to the intention-action gap. One such challenge is that many organizations fail to integrate sustainability within their organizational strategy, as evidenced by 40 percent of them reporting that sustainability is not a part of their strategy. There is also a notable lack of cross-functional collaboration, with 80 percent of organizations indicating insufficient collaboration across departments, resulting in sustainability often being treated as an isolated consideration rather than an integral part of operations.
In addition, there exists a disconnect between goal setting and implementation regarding sustainability initiatives, with less than 20 percent of organizations ensuring the feasibility of sustainability goals set at the top with the teams responsible for execution. Finally, excessive caution within organizations may hinder their willingness to adapt operations to incorporate sustainability in a meaningful manner, as only 55 percent of surveyed organizations believe they are adaptable enough to embrace sustainable practices fully. These challenges underscore the complexities organizations face in bridging the gap between intentions and actions towards sustainability.
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Nearly two-thirds of investors take sustainability performance into account when making investment decisions. Consumers also “favor” companies with a strong sustainability track record. Are companies turning a deaf ear and a blind eye to these growing trends?
On the contrary, recent shifts in consumer trends toward adopting more sustainable behavior, alongside the increasing importance that investors place on sustainability, have incentivized and pushed organizations toward prioritizing sustainability and setting ambitious sustainability targets. This can be seen from the 70 percent of organizations that have set bold sustainability ambitions with clear targets.
This goes to show that companies have the intention to embed sustainability within their operations, the struggle is with successfully being able to do so. Our report highlights four key practical steps that can support organizations in this journey to achieve the sustainability ambitions and targets that they have set.
On a broader scale, the U.N. says only 15 percent of SDGs are on track – and many are moving in reverse. How can organizations contribute to the attainment of the U.N. SDGs?
One of the key ways in which organizations can contribute to the attainment of the U.N. SDGs is through embedding sustainability within their ways of working and operations. This can be done practically through the following four steps:
Organizations play a pivotal role in advancing the U.N. Sustainable Development Goals by integrating sustainability into their operations and approach to work. This integration involves several critical steps. One is aligning sustainability with the organization’s overarching strategy, thereby shifting the perspective from viewing sustainability merely as a risk management tool to recognizing it as a platform for value creation. Another is to foster collaboration among cross-functional teams which is essential to transcending traditional hierarchical structures and eliminating barriers to enable employees to collaborate effectively towards sustainable goals.
A third step is to implement tangible sustainability initiatives which involves a two-way planning process to ensure their feasibility and effectiveness. Finally, organizations must prioritize innovation, swiftly scaling up successful sustainable solutions, and committing to continuous investment in innovative practices. By embracing these measures, organizations can significantly contribute to the global sustainability agenda while also enhancing their own resilience and competitiveness in the long term.
However, organizations cannot achieve this alone. Shifting to sustainable operating models involves upfront transition costs and some risks that governments will need to step in to support. Governments can help solve these lingering challenges through various levels of interventions, including issuing mandates, enacting soft laws, pursuing multistakeholder partnerships and building awareness and capacity of organizations.
Does having a good sustainability practice align with having a profitable, competitive business?
Our research underscores the myriad advantages that come with prioritizing sustainability within an organization. Notably, companies that embrace sustainable practices tend to experience accelerated revenue growth. Sustainable solutions consistently outperform others, boasting a Compound Annual Growth Rate approximately 5 percent higher.
Moreover, integrating sustainability measures leads to substantial cost savings, particularly in areas such as energy consumption, thanks to enhanced efficiency. This not only bolsters the bottom line but also contributes to a more environmentally responsible operation.
Beyond financial gains, fostering a sustainable ethos cultivates a more positive and contented workplace culture. Organizations committed to sustainability report notably high levels of employee satisfaction. In fact, around 90 percent of Human Resources leaders concur that prioritizing sustainability enhances employee retention rates.
Furthermore, embracing sustainability isn’t just good for morale—it’s also beneficial for the company’s financial standing. Forward-thinking sustainable organizations typically command higher valuations, often ranging between 1 to 2 times Total Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization when compared to industry norms. Additionally, these companies enjoy lower financing costs, propelled by the popularity of sustainability-linked loans and green bonds within the investment community.
Are new startups more likely to be sustainability-focused and committed?
Startups today are increasingly embracing sustainability as a core aspect of their business models. This shift is largely influenced by several key factors driving the trend.
For instance, consumer demand plays a significant role. Over the past five years, there has been a notable shift in consumer behavior, with 85 percent of consumers showing a preference for more sustainable products and services. This heightened awareness among consumers has prompted startups to prioritize sustainability in their offerings.
Furthermore, investor interest has also fueled this movement. Personal investors are increasingly considering sustainability performance when making investment decisions, with 60 percent of them factoring it into their portfolios. This shift reflects a growing recognition among investors that sustainable practices not only align with their values but also contribute to long-term financial gains.
Moreover, regulatory pressures are shaping the landscape for startups. Governments worldwide are implementing stricter regulations and reporting requirements to ensure compliance with sustainability commitments. This regulatory environment creates both challenges and opportunities for startups, compelling them to integrate sustainable practices into their operations to stay competitive and compliant.
Lastly, cost efficiency serves as a compelling incentive for startups to adopt sustainable practices. While there may be initial investment costs, sustainable approaches often lead to significant long-term savings. Given the typically limited resources of startups, minimizing costs and maximizing efficiency are paramount, making sustainability an attractive proposition.
Recognizing the importance of fostering a more sustainable approach to business, our report LEAD outlines four practical steps that startups can take to integrate sustainability into their operations. By following these steps, startups can not only meet consumer demands, investor expectations, and regulatory requirements but also achieve long-term success in a rapidly evolving business landscape.
About Samer Bohsali
Samer Bohsali is the leader of the Social & Public Sector practice for the Middle East at Bain. With over 20 years of experience in management consulting and industry, he brings valuable expertise to his role.
At Bain, Samer advises government leaders and senior policy-makers on a range of areas, including policy definition, organizational restructuring and governance, national vision development, and sector and ministry strategy. He has a deep understanding of government modernization and digital transformation, providing insights and guidance in these areas.
Before joining Bain, Samer was a partner at another top consulting firm. He also co-founded and served as the Chief Operating Officer of Cyberia Holdings.
Samer holds an MBA from INSEAD and bachelor’s and master’s degrees in engineering from the American University of Beirut.
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