In the Middle East and North African region (MENA), there is an opportunity to embrace sustainability as part of a broader effort to develop new sectors and build new engines of growth in developing economies. These efforts include huge transformational shifts, such as large-scale adoption of low-carbon oil and gas, renewables, solar and hydrogen power.

Additionally, Environmental, Social, and Governance (ESG) policies allow companies in the MENA region to further boost their competitiveness by future-proofing themselves against the sometimes-overlooked sustainability challenges, such as water scarcity and waste management (including household, commercial, or industrial). As we have seen time and time again with issues related to ESG, in order to future-proof our economies, we have to take stock of the past and the present. 

The regional history of ESG 

Historically, the business landscape in this region has been primarily focused on financial matters. The gradual emergence of social and environmental issues in the MENA was driven largely by Corporate Social Responsibility (CSR) movements, which consisted mostly of voluntary efforts by certain government bodies and stock exchange authorities to encourage compliance. Like many of their contemporaries across the world, businesses in the MENA viewed ESG as less of a necessity and more as a “nice to have”. 

Over time, the concept of ‘sustainability’ began to emerge as the banner of ESG, bringing with it the attention of both the general public and the international investor class.

Eventually, CSR became only a minor component of the overall sustainability movement, as singular concepts, such as community performance, expanded into the wider and more measurable economic impact. Sustainability has been further enhanced by a number of related frameworks, including the UN Sustainable Development Goals (SDGs), the Global Reporting Initiative (GRI), and national development plans according to the jurisdictions. These frameworks have pushed various companies in the region towards publishing sustainability reports, reflecting their performance in these areas. 

The current climate 

The collective shift towards a focus on ESG has created the most drastic evolution in the MENA business landscape over the years. The most surprising development is how enthusiastically businesses have embraced the idea of managing their own ESG ratings. As a result, a number of ESG rating firms have suddenly found themselves with a tremendous amount of influence. These include Morgan Stanley Capital International (MSCI), Standard & Poor’s (S&P) Global / SAM, Morningstar Sustainalytics, Moody’s, Refinitiv, and the Carbon Disclosure Project (CDP). 

ESG ratings firms like these have been engaging with companies in the MENA, collecting their documentation (including sustainability reports and surveys), assessing them against the ratings firms’ own criteria, and consolidating this data into ESG ratings of the issuer firms. 

These ratings are often available to the public, the ratings firms’ subscribers, and investors. Therefore, companies in the MENA, have been keen to assess their performance against these standards, implement any related improvements, and adequately and transparently report on their performance against these standards and disclosures. 

Now, let’s take a look at the ESG challenges currently facing the MENA region. 


Environmental issues in the MENA come down to the specific sectors, and the magnitude of these impacts depend on the size and scope of a company’s operations. For example, the most common environmental issues within banking and service-oriented sectors are tied to matters such as grid electricity, water, and the consumption and recycling of certain resources, including paper, plastic, and electronics. 

The real estate sector sees the same issues, in addition to the costs associated with the manufacture and disposal (or recycling) of construction-related materials. This sector would have to further consider environmental matters from any associated standards they must adhere to, such as the Global Real Estate Sustainability Benchmark (GRESB), or Leadership in Energy and Environmental Design (LEED) accreditation. 

The primary environmental challenge for the MENA will be in “playing catch-up” with other regions, in terms of reporting and reaction. Across this region, there is a growing interest in addressing environmental issues. However, the assessment, reporting, and ensuing action in this area is not as mature compared to other more developed countries, especially those in Europe. 


Generally, social issues in this region can be compartmentalised into three related domains: workplace, marketplace, and community. Workplace reporting covers a wide variety of areas. These include employee demographic diversity, training and development, performance management and appraisals, retention and turnover, compensation and benefits, nationalisation, and overall compliance with each jurisdiction’s labour laws. 

On paper, marketplace compliance generally has to do with how responsibly businesses are adhering to regulations and standards. However, a common understanding here is being tied to how well a business treats its customers. Marketplace compliance revolves around their quality of service. How does the firm engage clients? What is their level of satisfaction? What kind of feedback do they get? How do their procurement practices affect social impact? Do they hire local suppliers? These are all questions that find their way into marketplace reporting. 

Finally, there is community engagement, which includes a variety of different actions and behaviours. Community initiatives and sponsorships are taken into account, as are any philanthropic ventures the business may be engaged in. Some companies provide training and internships to local communities, while others take engagement into the realm of financial investment. The goal is to have an overall positive impact on the surrounding community and anywhere else the company conducts its business. 


Governance covers the overall management of business practices and operations, which may include things such as demographic diversity in management, hiring policies, risk management, business continuity, and even succession planning. However, while social and environmental concerns are mostly uniform across the board, matters of governance can depend heavily on the context. 

As such, businesses in the MENA face some unique challenges. Governance reporting can reach past ethics compliance into other matters. Businesses are focusing their efforts on fighting corruption, anti-money laundering (AML) initiatives, fraud, and bribery, among others. 

Taking action 

If a business has any concerns over governance matters, the key take-away would be that certain efforts are recommended in order to mitigate those concerns. These may or may not include conducting an ESG maturity assessment. This exercise would involve a current state assessment of the business in relation to the identified ESG standards, and then forming a gap analysis. Based on the findings, certain actions would be put in place and prioritised across time into an action plan. Eventually, the business would implement said action plan in order to close the related gaps and concerns. 

A more engaging approach sees businesses further assessing and publicly reporting on their ESG performance through the development of sustainability reports. This would adequately disclose their performance to form a baseline, against which future progress would be reported. 

Driving wealth management growth in MENA 

ESG-focused products are the most important factors driving wealth management growth across the MENA region. Recent research by behavioural finance experts from Oxford Risk tells us that ESG has become a key factor for investment providers in the MENA region. These researchers interviewed a host of independent financial advisers and wealth managers in the United Arab Emirates, Saudi Arabia, Bahrain, Qatar, Oman, Egypt, and Kuwait. These entities are collectively responsible for managing assets of around £250 billion. This tells us that the region is not only taking ESG very seriously, but that they are also putting their money where their mouth is. 

MENA means business 

As the ESG movement continues its march across the globe, we are seeing varying degrees of progress and success. The general consensus seems to be that some businesses are significantly ahead, while others are scrambling to keep up. Like most regions, the MENA is a mix of both. 

Fortunately, “sustainability” seems to have outgrown its buzzword status and become an opportunity for companies to build new and more evolved growth strategies. ESG is shaping the future of global access to capital and will increasingly influence companies’ access to foreign markets. Like most other regions around the world, MENA is seeing the business appeal of ESG. It is just a matter of implementation now.


Kareem Abu Eid
Kareem Abu Eid
Partner and Sustainability Services expert
RSM Kuwait