The ESG priorities of MENA businesses differ from those of regional governments –PwC survey: While businesses in our corner of the world have been getting better at adopting ESG goals and targets, there is a clear disconnect between what businesses and national governments in the region are prioritizing on the environment front, according to a survey (pdf) by PricewaterhouseCoopers (PwC) published earlier this year.

Private sector companies need a guiding hand on ESG: The survey, which looks at to what extent ESG strategies are embedded in the region’s private sector firms and where the challenges are in rolling them out, also showed that while climate change and covid have been key in mainstreaming ESG, most companies are still at an early-stage of planning and implementation and need more specific regulation to underpin their efforts.

This disconnect becomes evident when looking at things like water: Although USD bns are being invested in the region every year to build desalination capacity, addressing water scarcity challenges didn’t rank among the top ten ESG priorities for the survey respondents, for example. When it comes to companies’ environmental priorities alone, only 27% of respondents mentioned water scarcity and 16% listed biodiversity, though these factor heavily in national environmental policy frameworks.

MENA companies also named challenges in rolling out effective ESG strategies: Among the biggest challenges cited by survey respondents were workforce/culture issues (which 45% of respondents reported), covid-19 (36%), the lack of a well-defined company ESG strategy and the lack of effective ROI measurement (both of which were reported by 31%). Other challenges include a lack of shareholder demand for ESG policies, lack of leadership buy-in and regional economic uncertainty.

Businesses say they want to take more action on ESG, but need more government support: Some 86% of large companies surveyed said more regulation would accelerate the implementation of their ESG strategies. Having the right signals, policies and regulations from governments would prompt more action from businesses to help achieve national ESG commitments, the survey found.

Particularly for environmental issues: Some 54% of survey respondents said they would welcome policies targeting sustainable procurement to spur environmentally-friendly production. Companies also want detailed policies and implementation plans for national net-zero plans — including energy efficiency, renewable energy investment, measuring carbon emissions, and water conservation.

There are, however, some positives: Waste and climate change top the environmental priorities for regional businesses, the report tells us. Looking ahead to the next 12 months, 54% of all surveyed companies plan to focus on waste, 54% on climate change, 42% on air pollution, 27% on water, 16% on biodiversity, and 15% on other unnamed topics. Only 4% of the firms surveyed had no plans to focus on any environmental issues within 12 months.

Sustainability is also becoming more important as a factor in consumer purchasing decisions, according to PwC’s most recent Global Consumer Index Survey. Some 53% of regional respondents say they always or frequently buy eco-friendly or sustainable products, compared to a global average of 42%.

Companies focused on sustainability will have the edge over competitors in attracting eco-conscious buyers, the report notes.

Who took part: Participants included executives from businesses headquartered in nine MENA countries as well as the US, France, Greece and Germany. Over 70% of respondents were C-suite level execs at MENA-headquartered companies, with 50% of all surveyed companies large (over USD 100 mn in annual revenue) and 50% small (less than USD 100 mn). Participants were in the manufacturing, retail and consumer, financial services, tech and energy sectors.