The power of sustainable business governance in Abu Dhabi

News

The power of sustainable business governance in Abu Dhabi

Even though it was officially introduced to global business dictionaries in a 2006 United Nations report, the history of environmental social governance (ESG) dates back to the 18th century, picking up pace in the United States in the 1960s.
 
With the formation of the United Arab Emirates (UAE) in 1971, the first 50 years of Abu Dhabi’s development have been interwoven with the fabric of well-directed sustainability and socially responsible governance.
 
The emirate’s journey in its first half a century demonstrates the value of strategic, government-directed policies in paving the way for a variety of fields, with the private sector working alongside the government to raise the bar higher.
 
Today, Abu Dhabi is one of the first cities in the world to incorporate ESG requirements in its governance and business models.
 
This comes with a deep understanding that integrating ESG considerations helps companies in the emirate identify a broader range of opportunities and risks, drives performance gains and increases competitiveness both locally and globally.
 
The first 50 years of transformation
 
The UAE’s 50th anniversary not only commemorates the country’s progression but also speaks to the care that was put into paving the road for the next fifty years.
 
From its early days, Abu Dhabi has built its outlook on progression through sustainability, care for nature, future-oriented innovation and deep respect for humanity.
 
The Abu Dhabi government has incorporated long-term impact into its strategic vision, forging a futuristic business ecosystem and an environmentally conscious society.
 
Responsible investment in technology-led companies, infrastructure and associated procurement have had a positive impact on Abu Dhabi’s progression.
 
Today, ESG is embedded in the socio-economic fabric of the emirate and the country.
 
Across Abu Dhabi, various government entities are following up with initiatives that translate overarching policies into corporate action. Its addition to the emirate’s journey has been formalised with the creation of the UAE Vision 2021, the Abu Dhabi Economic Vision 2030, the UAE Securities and Commodities Authority Master Plan for Sustainable Markets, Abu Dhabi Sustainable Finance Declaration and ADIOs ESG policy.  
 
Under the Abu Dhabi Economic Vision 2030, the emirate has deployed extensive efforts towards advancing sustainability in line with the UN Sustainable Development Goals (SDGs):
 
- ADGM’s Abu Dhabi Sustainable Finance Declaration calls for collective action to create a thriving sustainable finance industry, backed by 40 financial institutions.
- ADX has published a disclosure guidance to support the voluntary disclosure of ESG information by listed companies.
- In 2020, Etihad Airways issued a AED 2.2 billion ‘green’ sukuk focused on carbon neutrality, with the funds allowing the UAE’s flag carrier to make great strides towards its sustainability targets.
 
ESG as ADIO’s business blueprint
 
At ADIO, we are providing a boost to companies that have embedded sustainability principles, and inspiring others that have yet to set ESG standards. We aim to foster opportunities for local and international companies with sustainability at the heart of their work.
 
ADIO recently launched a policy for partners to integrate ESG standards into business decision-making under the new PPP framework and Innovation Programme.
 
ADIO encourages applicants to its programmes to focus on the potential for innovation, disruption, and value creation posed by ESG activities in the marketplace, such as:
 
- Technologies that accelerate the sharing economy
- Infrastructure in cities to support increasing levels of urbanisation
- Solutions for a low carbon world including energy storage, energy efficiency and renewable energy generation
- Access to education, affordable housing and financial services to decrease inequality
- Health and well-being, including healthy food consumption, activity services and healthy lifestyle choices

In 2020, ADIO’s Innovation Programme supported seven leading agriculture technology companies pursuing cutting-edge projects to solve global food security challenges. We committed AED 1b to leading AgTech companies, including Madar Farms, Responsive Drip Irrigation (RDI), AeroFarms, FreshtoHome and PureHarvest.

This was followed by ADIO’s further efforts in ‘greening the desert’. By partnering with Nanoracks – the world’s largest provider of commercial access to space stations, we added a realm of new capabilities to Abu Dhabi’s ecosystem across land, sea and space. 
 
These investments are focussed on the future of food and agriculture and aim to turn the desert green while creating a sustainable platform for food production on a local, regional and global level.

Conclusion

Responsible investment in technology-led companies, infrastructure and associated procurement is an opportunity to create a positive impact on the economy, the environment and society. 

Looking ahead at the next 50 years, I am confident that Abu Dhabi’s ESG vision will propel regional development across the entire value chain with more companies joining the movement that will result in increased ESG dividends that benefit the people and environment of Abu Dhabi and beyond. 


Sources:
ADIO’s ESG value proposition paper (June 2020)
Jamie Levy’s op-ed on ESG
https://corpgov.law.harvard.edu/2020/03/02/top-10-esg-trends-for-the-new-decade/
https://www.gbm.hsbc.com/solutions/sustainable-financing?pid=HBEU:BW:BPFP21:CAM:XAW:CAM:0121:001:INSIGHT:
https://www.gbm.hsbc.com/solutions/sustainable-financing/sfi-survey-middle-east
https://www.investopedia.com/news/history-impact-investing/
https://www.forbes.com/sites/betsyatkins/2020/06/08/demystifying-esgits-history--current-status/?sh=2e33a4282cdd
http://www.gsi-alliance.org/trends-report-2018/