A new report on how the Middle East and North Africa (MENA) region can prioritize sustainability in critical industries such as oil and gas, retail, finance and utilities was released on Thursday.
The report, by the World Economic Forum in collaboration with Bain & Company, found that MENA faces increasing expectations to adopt more sustainable business practices.
“With 70 percent of the global economy expected to face mandatory sustainability reporting within the next two years, regional businesses urgently need to improve sustainability performance and transparency to remain competitive globally,” the report said.
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The paper ‘Prioritizing Sustainability in MENA: Mapping Critical Environmental Issues for Regional Businesses’ aims to empower companies in key industries to enhance their sustainability performance, meet market demands and help build a greener, more sustainable future for the region and beyond.
“With its natural endowments of solar and wind energy, a ready supply of capital and a long-term focus among many of its governments, MENA is well-placed to leapfrog traditional development phases and integrate sustainability directly into its agenda for economic diversification and growth,” said Maroun Kairouz, head of Middle East and North Africa, World Economic Forum. “The proactive adoption of sustainability practices, supported by clear regulatory frameworks and incentives, is essential for the region to navigate this complex landscape successfully,” Kairouz added.
Tackling barriers
The report also highlighted key barriers that the region is facing for taking a leading role in transition, such as complexity of global sustainability reporting frameworks.
“The challenge of adhering to a diverse range of global reporting standards adds significant obstacles for companies and investors. Within this complex landscape, the International Sustainability Standards Board (ISSB) of the International Financial Reporting Standards (IFRS) Foundation is aiming to provide a global standard that consolidates and aligns with the progress made by similar existing frameworks. Their first standard (IFRS S1) focuses on general requirements for sustainability-related financial disclosures, while their second standard (IFRS S2) addresses climate-related disclosures in particular,” the report said.
The report also cited lack of regional regulatory clarity as another hurdle.
“One of the main challenges for companies seeking to become more sustainable is a lack of regulatory clarity. In a 2024 survey of LSM community members (C-suite executives from some of the largest companies in the region), 73 percent of respondents recognized the lack of clear sustainability-related regulations as a key barrier – up from 64 percent in the same survey in 2023,” the report added.
Financial constraints
More than 80 percent of respondents highlighted market-related challenges, such as market volatility and international competition, as barriers they face in implementing their sustainability programmes.
Respondents also pointed to financial constraints, despite considerable growth in pioneering sustainable finance in the region.
“Even with the value of sustainability-linked bonds in 2023 reaching more than $29 billion,14 companies are not sufficiently tapping into green funding sources to fund sustainable initiatives. This financial struggle is highlighted by the fact that nearly two-thirds of companies report they are struggling to secure adequate funding for their low-carbon transition initiatives,” the report said.
Starting point
The report emphasizes the importance of environmental materiality assessments as a critical starting point for companies aiming to meet sustainability goals.
“By prioritizing issues that are most relevant to their industry and sector, such as greenhouse gas emissions, water management and biodiversity, MENA businesses can improve risk management, transparency and investor confidence. To assist businesses at various stages of their sustainability journey, the report outlines sector-based roadmaps, including tailored recommendations on how to measure and disclose environmental impacts,” the report said.
Despite 70 percent of the region’s emissions falling under net-zero pledges, many businesses still lack clear guidelines to effectively navigate these ambitious climate goals. The report provides a comprehensive roadmap to help MENA companies align their practices with global sustainability standards, address specific regional challenges and ultimately strengthen resilience. By adapting to these standards, businesses can enhance investor confidence and play a vital role in the global fight against climate change.
Government role
Government leadership remains crucial in achieving these goals and fostering sustainability in MENA more broadly. The report analyses the national sustainability efforts of nine countries in the region, going beyond emissions calculations to examine the policy ambition and the maturity of the enabling environments. It also recommends that policymakers must continue to set clear regulations, provide financial incentives and support collaboration between public and private sectors to accelerate the region’s transition to a more sustainable economy.
Akram Alami, Middle East head of utilities, aviation, and sustainability and responsibility practices at Bain & Company, said: “The MENA region is at a crossroads, where the choices made today will determine the sustainability and resilience of its economy in the coming decades. This report provides businesses with the tools and insights they need to navigate the complex sustainability landscape and take decisive action.”
Best practices
The paper also identifies best practices from public and private sectors in the region not only to embed sustainability into core operations but also to use their influence to transition the region to more sustainable business models. These include UAE’s Majid Al Futtaim for a sustainable procurement policy and green sukuk (green Islamic finance); UAE’s Emirates Global Aluminium for CelestiAL (low-carbon aluminium programme) and green finance framework; Bahrain’s Gulf International Bank for a sustainable finance framework and sustainability linked loans; Saudi Arabia’s ACWA Power for partnership with IRENA and initiative to increase renewable energy capacity; Saudi Aramco for its Taleed programme and sustainability fund, among others.
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