30 Asian Legal Business | November 2024 But what emerged from those twelve days of intense negotiations was something far more significant than symbolic gesture - the summit catalysed regional momentum. A 2024 PwC survey found that four in five executives in the region now report having formal sustainability strategies in place, while leadership resistance to ESG initiatives has plummeted by almost half. The UAE’s announcement of the ALTÉRRA climate investment fund, with its $30 billion commitment, sent a clear signal: The region isn’t just talking about change, it’s financing it. Legal experts in the region say the Middle East is experiencing a seismic shift in ESG integration in corporate governance, dealmaking and financing, and regulatory policy while looking to address challenges such as a lack of sustainability-related talent and a lack of investor faith in financial returns from sustainability-linked projects. ESG in the boardroom The conversation in Middle Eastern boardrooms has shifted dramatically from “why” to “how” when it comes to ESG implementation. PwC survey data reveals a transformative trend: more than half of companies report their sustainability strategies are now fully embedded across their organisations, marking a decisive shift from previous years when leadership support was less established. This evolution is particularly noteworthy given that leadership hesitation has plummeted, with only 16 percent of respondents citing a lack of leadership buy-in – nearly half the previous rate. “There is no doubt that the global movement around ESG investing has entered the boardroom in the Middle East and is high on the agenda,” notes Alishia Sullivan, a Dubai-based partner at Morgan, Lewis & Bockius. “Investors in the Middle East, like their counterparts around the world, are seeking opportunities that align with environmental and social responsibility goals,” she says. Regional CEOs are increasingly positioning climate change as a major concern, with 15 percent identifying it as a critical issue compared to the global average of 12 percent. More significantly, 36 percent of regional leaders view climate change as a key driver for corporate change in the next three years, outpacing the global average of 30 percent. These considerations are infiltrating deal-making decisions across the region, with sustainability metrics becoming crucial factors in valuations and due diligence processes. Sullivan explains that ESG factors are increasingly important in the procurement and due diligence process with organisations keeping a close eye on the supply chains and underlying assets of companies in which they invest. The surge in green finance options has been particularly notable, with 34 percent of companies now considering green loans and 33 percent looking at capital markets through instruments like green or blue bonds. The numbers in 2024 may not fully reflect this mindset shift. Total sustainable bond (green, social, sustainability, and sustainability-linked bonds) issuance in the Middle East reached $16.7 billion in the first nine months of 2024, In December 2023, delegates from 198 countries gathered in Dubai for the COP28 summit to take stock of the world’s efforts to address climate change under the accords of the Paris Agreement. The symbolism wasn’t lost on anyone: the world’s climate future was being debated in a nation built on oil wealth. ESG revolution The Middle East is rapidly embracing ESG integration in business and finance, driven by COP28, with executives adopting sustainability strategies while facing standardisation and talent challenges. By Nimitt Dixit • Middle Eastern executives increasingly prioritise sustainability in business strategies • Regulatory frameworks evolving to support ESG integration regionwide • Challenges remain in standardisation, data infrastructure, and sustainability expertise
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