UAE IT and telecom businesses initiate sustainability reporting
Since the emergence of public sustainability reporting over 25 years ago, mostly in the form of environment reports, the role of companies in society has changed dramatically. There are now increased expectations from companies to operate in a responsible manner. The focus on sustainability by governments and companies around the globe is driving various development agendas and initiatives, aimed at the long-term sustainability of society, environment and the economy at large. Organisations across the globe are now expected to understand and manage the risks and opportunities arising out of their business practices and operations.
Government authorities and decision- making entities are also becoming increasingly aware of the need for generating positive impacts for society and creating a sustainable environment now and for future generations – and, as a result, are now mandating corporations to act on sustainability-related issues. Sustainability in the UAE continues to grow in importance. From announcing its objective of creating a sustainable environment and infrastructure as a part of the UAE Vision 2021 to sustainability being one of the core themes for Expo 2020, the UAE is focused on establishing its presence as a global sustainability leader.
IT and telecom initiatives in UAE
The UAE National Telecommunications policy highlights the country’s objective of ensuring the adequacy of telecommunications services, including enhancing the quality and variety of available services. The policy also supports the development of the country’s human capital and encourages research and development initiatives across the nation. Further, the local Telecommunications Regulatory Authority also plays an active role in establishing the basis for e-governance at the federal level and promoting an increasingly digitally-reliant lifestyle in the UAE.
One of its key strategic goals in fact reinforces its commitment towards ensuring all services are delivered in accordance with recommended international practices, codes and standards and promote quality, transparency and efficiency.
According to World Economic Forum’s Global Information Technology Report published in 2016, the UAE maintains its position as a world leader in terms of network readiness. This bears testimony to the government’s active efforts towards leveraging advancements in the information and communication technology sectors and help drive the economic productivity and social development and welfare in the country.
Further, the UAE government constantly strives towards promoting green IT so as to minimise the negative environmental impacts resulting from the production and use of IT equipment and related products and services. The government has been focusing on developing sustainable and innovative approaches to mitigate the negative impacts resulting from different phases in the lifecycle of a product – the development, production, usage and eventually the disposal of e-waste in a sustainable and environmentally friendly manner.
For example, a recent endeavor undertaken by the Dubai municipality is the Digital Refurbishment Center for Information Technology that repairs old computers and donates them to underprivileged children, as well as diverts electronic waste from going to landfill. Considering the initiatives launched by the UAE government towards developing this sector, it is crucial for organisations in this sector to align their business strategies with the overall national level development objectives. Further, they should work towards publicly disclosing on how they are supporting and acting as enablers in relation to the sustainable development agenda to stakeholders.
With the kind of environmental impacts generated by this sector, it is extremely important for the organisations operating within this sector to focus on understanding and disclosing the material sustainability metrics. These include parameters such as carbon-footprint and carbon- reduction targets, strategy for addressing business risks arising due to issues such as climate change, approach towards achieving the global sustainable development goals, among others.
Governments and business leaders across the world are increasingly urged to respond to global sustainability megaforces, including climate change, resource and water scarcity, population growth, human rights, urbanisation and food security. Both public and private organisations now recognise that they have a responsibility to the individuals, groups and stakeholders which their activities and operations impact, and an overall responsibility to society at large.
This is important, especially for a country like the UAE. Governments, at both federal and emirate level, are committed to ensuring the UAE maintains its position as one of the global leaders in sustainable development across three fundamental pillars – environmental, social and economic. The sustainable use of resources, diversification of the economy, and improving and uplifting the overall quality of life of residents are some of the key focus areas for the UAE.
This has resulted in sustainability driving various national development agendas and charters, details of which are provided as follows:
- UAE Vision 2021, where the focus on improving the quality of air, preserving resources and implementing green growth plans is central. The agenda aims to drive sustainable development while preserving the environment and achieving a perfect balance between economic and social development.
- UAE Energy Plan 2050 aims to cut carbon dioxide emissions by 70%, increase the contribution of clean energy in the total energy mix to 50%, and improve energy efficiency by 40% by 2050, subsequently leading to a targeted saving of approx. AED 700 billion.
- UAE Green Agenda 2015-2030 is a significant framework which was launched by the UAE government in 2015 as an action plan under the Green Economy for Sustainable Development initiative.
- Year of Giving 2017, announced by His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, the Emir of Abu Dhabi and the Supreme Commander of the Union Defence Force, to demonstrate the UAE’s sustainability-led agenda, and in support of an inclusive development plan for the people of UAE. This announcement aims to promote giving as being not only equivalent to monetary contributions, but can also be associated with the positive impact individuals can make in each other’s lives.
- National Innovation Strategy, launched in October 2014 by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, aims at positioning the UAE as one of the most innovative nations in the world within seven years. Of the seven sectors targeted for driving innovation, two foci on renewable energy and sustainable transportation.
- Other emirate-level developments include Abu Dhabi Economic Vision 2030, Dubai Plan 2021, Dubai Integrated Energy Strategy 2030, Dubai 10X Goals, Expo 2020, Dubai Green Building Regulations, Estidama building rating systems, Environment Protection and Development Authority Ras Al Khaimah Strategic Plan, and Sharjah Environment and Protected Areas Authority Strategy among others.
This heightened level of activity clearly highlights the UAE’s vision to create a truly sustainable future. This also extends to the role of the private sector in driving the sustainable development agenda. Corporate leaders are encouraged to develop an innovative and shared commitment towards creating a holistic business strategy that goes beyond the sole focus of economic profitability and instead, aim for a plan of action that considers broader impacts and the overall welfare of people and the planet.
The UAE government has also committed to various global sustainability objectives, notably the 2030 Agenda for Sustainable Development, which includes a commitment to the United Nations Agenda’s 17 Sustainable Development Goals. Further, the UAE government has signed and ratified its commitment to the Paris Agreement on Climate Change. To meet the objectives defined by such commitments, it will be just as important for the private sector to play its role by aligning its business strategy, operations and decision- making to include sustainability- related considerations.
UAE was ranked as the third-most change-ready nation in the world, according to the global Change Readiness Index CRI 2017. The index ranks countries on the ability of their respective governments, private and public enterprises as well as the general public, to anticipate and manage risk, and cultivate opportunities. Embedding sustainability as part of the overall company strategy enables businesses to maximise value by focusing holistically on the key areas of risks and opportunities.
Companies in the UAE are now realising the benefits of incorporating sustainability in their business operations. More and more companies have, in their own way, contributed to the vision of sustainability through various initiatives, simultaneously reflecting and supporting the national development agendas, and connecting the organisations bottom line to overall societal welfare, together realising the ability to create positive impacts, while supporting a sustainable future.
Objectives of the survey
KPMG’s corporate responsibility reporting survey 2017 is targeted at business leaders and decision- making authorities such as CEOs, CFOs and CSOs of organisations, company boards and corporate responsibility and sustainability professionals. It provides the latest trends in corporate responsibility reporting, while providing KPMG insights on how the top 100 companies perform. The results of the survey can be widely used by UAE companies in assessing and benchmarking their sustainability performance and help inform the responses and approaches to sustainability reporting.
The report also intends to provide a useful reflection of the current state of sustainability reporting for a broader audience which may have a growing interest in sustainability. These include regulators, public agencies and civil society organisations, NGOs, investors and community stakeholders. The survey reflects how sustainability or corporate responsibility – these terms are used interchangeably throughout this document is perceived by the top 100 companies in the UAE, and the level of importance given to an array of sustainability-related areas including human rights, supply chain, climate related risks and carbon targets – to name a few.
The report focuses on the top 100 companies in the UAE, selected based on their economic revenue, and provides analysis of key emerging sustainability reporting trends in the country, drawing on comparisons in sustainability reporting and performance with global industry trends.
Overall the findings suggest a cautiously optimistic upward trend in sustainability reporting by both public and private entities in the UAE. This trend is reflective of the growing focus and sustainability vision set out by the UAE government in its national development agendas and charters. Although less than half of the 100 companies analysed report their sustainability performance, this still reflects an increase of 22% compared to last year.
KPMG’s research found that an increasing number of organisations had moved to incorporating a more holistic view of sustainability in their disclosures, including details on areas such as human rights, supply chain and environmental stewardship. However, the opportunity exists for UAE Governments and companies to do more.
The increase in corporate responsibility reporting by the top 100 UAE companies can be linked to a growing awareness and focus on sustainable development practices – a possible reflection of the sustainable development agenda initiated by the UAE government, notably to position the UAE as one of the global leaders in the sustainability. A key trend observed in the analysis was the increase in reporting by the top 100 companies in the UAE – in 2017, 44 of the top 100 companies were observed to be reporting on their sustainability performance, compared to 36 in 2016, an increase of 22% in the reporting rates.
These trends highlight an increasing level of maturity and sophistication in sustainability-related disclosures, and more specifically, a shift from historical philanthropic disclosures to a more risk-based approach, with the inclusion of materiality applications. Furthermore, we noted an increasing trend for organisations to align their existing sustainability strategies to those advocated by global sustainability agendas, such as the United Nations 2030 Agenda for Sustainable Development and the associated 17 Sustainable Development Goals. Of the 44 companies reporting on their sustainability performance, ten of them have adopted these global goals as a part of their business strategy.
The survey also revealed that organisations in the UAE have become increasingly aware of the application of internationally accepted reporting frameworks and guidelines for disclosing non-financial performance. The most common reporting framework adopted was the Global Reporting Initiative reporting guidelines, with 27% of the reporting companies using the GRI G4 guidelines. Notable was the increased focus of organisations in the UAE towards disclosing sustainability performance using the latest GRI Standards reporting guidelines.
11% of the reporting companies were found to follow the latest GRI Standards framework when reporting their sustainability performance, though the new guidelines are slated to become mandatory in 2018. Further trends observed in KPMG’s analysis are highlighted on this page. The percentage values calculated for the number of companies is reflective of the respective indicator trend out of the 44 N100 companies reporting on their sustainability performance.
66% of UAE IT, telecom, media companies report their sustainability efforts compared to 80% globally, according to KPMG’s Hanife Ymer and Raajeev B Batra.