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Urgent action and funding from the public and private sectors are needed to successfully push countries towards net-zero carbon emissions and support economic recovery. That was the view of experts at the ICAEW International Economic Forum, held virtually on 14 September.
While many countries are less ambitious in their green transition and could make stronger and more transparent commitments to ESG goals, the UAE is taking the lead in addressing climate change and the environmental crisis in the Middle East.
The country recently set an even more ambitious target of reducing greenhouse gas emissions by 31% by 2030, compared with the 23.5% pledge it made in December 2020 as part of its pledge to the Paris Agreement on Climate Change. %.
switch away
Changing the way business is done and ditching polluting fuels, rather than reducing production and consumption, is critical to meeting the challenge of environmental degradation. In many countries, including China and the rest of Asia, coal is still king, according to panelists. While the government is supporting companies by offering alternatives, it is still reluctant to give up entirely.
The outbreak of Covid-19 and the fight against climate change are proving to be major inflection points for ESG investing. However, panelists said that the structural progress made over the past few years is only the beginning of the ESG journey and the pace must be accelerated.
Moderated by Scott Livermore, ICAEW Economic Advisor and Oxford Economics Middle East Chief Economist and Managing Director, the discussion focused on how the Middle East and China are responding to climate change and the investments needed to meet government commitments to sustainable development. He added:
• Ali Amer Al Hashimi, Chief Financial Officer and Head of Strategy, Dubai Financial Markets
• Tim Yu FCA, Partner, Financial Advisory Services, Mazars China
• Zoë Knight, Group Head of Sustainable Finance Center and Head of Climate Change, Middle East, North Africa and Turkey (Menat), HSBC
global investment
Experts believe that global green investment made over the past decade represents only a fraction of the $4.5 trillion needed annually. Reaching this level will require significant help from the private sector.
GCC countries are running budget surpluses, driven by rising oil production and prices, and private sector participation is crucial to the green transition. The situation is more challenging in Western countries, which face high recession risks.
Sustainable recovery and long-term growth can only be achieved through greater private sector cooperation and investment.
PP cooperation
Achieving the necessary level of public-private partnerships will require governments to create an enabling environment for ESG investing. In addition to incentivizing corporate support for raising capital and fostering healthy competition, regulatory support and setting targets are needed to drive supply and demand across industries.
Panelists explained that while the energy sector has the largest investment gap needed, their path is clearer because technologies such as solar and wind are known and available. Other industries that struggle to reduce emissions, such as automotive and petrochemicals, need clearer pathways and technologies to make the green transition. Greater cross-sectoral exchange of knowledge and practical experience between government and business will help them achieve their goals.
“Over the past two years, there hasn’t been much progress in the global economy, momentum has slowed globally, and GDP has fallen in part because of China’s struggle with Covid-19,” Livermore said. Commodities Prices and supply chain disruptions are driving up inflation, and recession is threatening the western world. Having said that, countries can choose where to spend their GDP dollars; instead of spending money on high-carbon recovery measures, governments can seize opportunities by Green deals and investing in a sustainable future in line with its net-zero commitment, leading to recovery.”
Experts also called on regional governments to develop global policies to help move closer to their ESG targets, as some reporting has been suboptimal, creating gaps in messaging.
— trade arab news agency
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