Why Tech Companies in the Middle East Are Making Esgs a Priority Today:
Environmental, Social and Governance (ESG) investments have gained momentum across companies. The principles offered by ESGs have helped investors and CEOs maintain a conscientious approach to running their companies. These principles are achieved by presenting a form of investment that prioritizes the environment, human well-being, and the economy.Technology has a significant influence on our world today. With this position, tech companies can be leaders in promoting ESG practices.
Why ESGs are a priority for Tech companies in the Middle East
However, several other factors influence tech companies’ prioritization of ESGs. Some perspectives behind why tech companies are making ESGs a priority today include:
- Governmental perspective: As technological innovations rise, the move to establish policies that foster sustainable technological growth has also increased. With the move from Middle Eastern governments to take action against climate change, the focus on ESGs has now come to the limelight. For example, the United Arab Emirates (UAE) aims for net-zero emissions by 2050, while Bahrain and Saudi Arabia hope to achieve net-zero emissions by 2060.
- Consumer perspective: A survey conducted by PwC Global Consumer Index 2022 – Middle East revealed that 60% of the respondents considered sustainable factors when considering what to buy. 53% opined that they always or frequently shop for sustainable products. This survey points to how many consumers aim to implement eco-friendly habits into their lifestyles. Thus, they tend to look out for companies that prioritize ESG practices when purchasing or investing in a tech product.
- Value creation perspective: The long-term benefits of prioritizing ESGs outweigh today’s perceived limitations. Seeing that some tech companies produce disruptive and innovative technologies, ESG principles can help to accelerate their growth. Following the Middle East governmental policies taking a stance against climate change, as mentioned above, many more regulations are bound to emerge. By encouraging ESG practices, tech companies are more likely to withstand future regulatory policies.
- Employee perspective: Tech employers in the Middle East are now setting ESG goals to attract good talent and a motivated workforce. A study by Gartner revealed that employees now seek a renewed sense of purpose in their work life. In addition, the future of Work survey conducted by HSBC also revealed that a company’s sustainable credentials and ethos could be a valuable tool for attracting and retaining the best talents, especially in the tech industry.
- Investment perspective: Middle Eastern tech companies also set ESG goals to access lucrative investment opportunities. The prioritization of sustainable practices by banks and investors also contributes to this perspective. For example, the region’s first green bond was issued in 2017 by The First Abu Dhabi Bank. Furthermore, this bank has financed over $10 billion in sustainable projects. There is also the S&P’s ESG Index for the MENA region and the UAE ESG Index that ranks companies based on their ESG practices.
Bottom line, Looking at the above perspectives, we can understand why Middle Eastern tech companies are making ESGs a priority today. Since ESGs are gaining global prominence, incorporating values promoting sustainable investing is more important than ever for every sector, including tech companies.
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