CEOs in Saudi Arabia integrating sustainability into their strategies

27 January 2022 3 min. read

Acknowledging the growing risks and opportunities that come with climate change, a growing number of CEOs in Saudi Arabia will this year integrate sustainability into their business strategies, according to KPMG’s latest CEO Outlook.

For its study, the accounting and consulting firm surveyed over 50 CEOs in the Kingdom, asking them to reflect on their top priorities for the year ahead. With environmental risk now considered as the greatest threat to their company’s growth, not surprising then is that CEOs are keen on increasing investments into sustainability practices and to double down on results.

Over four out of ten CEOs intend to invest more than 10% of their revenues in becoming more sustainable. Investment is spurred by increased stakeholder pressure, but also by the firm belief that green can go hand in hand with financial improvement.

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In fact, over half of CEOs in the Kingdom told KPMG’s authors that their sustainability programs improve financial performance.

Making progress on climate change will also require action from the government. From governments, business leaders expect an equally strong commitment from central and local government, with 84% of Saudi-based CEOs stating that government stimulus is required to turbocharge climate investments being made by the business community.

The survey comes shortly after Saudi Arabia’s government unveiled its ambitions in the field. At the Saudi Green Initiative Forum in October 2021, his Royal Highness Crown Prince Mohammed bin Salman announced that the Kingdom will aim to achieve net carbon neutrality by 2060 – a massive goal given the heavy oil-focused nature of the Kingdom’s economy.

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According to KPMG’s study, adopting best practices in sustainability – and one step further, circular economy practices – can help companies not only polish their reputation, but also create new commercial opportunities and drive new investments in the process. Meanwhile, it can make companies more attractive from an investor perspective, and bolster a company’s reputation in the talent marketplace.

“The environment is gaining importance for CEOs. The survey results show corporates are ready to work closely with government to make good on their sustainability commitments and are prepared to be held accountable for delivering on them. It’s an encouraging sign, and one I am particularly pleased to see,” said Abdullah Al Fozan, Chairman of KPMG in Saudi Arabia.

However, a 2021 report found that a shockingly high percentage of companies (nearly 75% in Asia) tends to overstate their sustainability achievements, while another study by Boston Consulting Group warned that over 90% of companies globally fail to comprehensively measure their total greenhouse gas emissions, and as a result underreport on their sustainability footprint.

The CEOs surveyed by KPMG work mainly for large companies and corporates, with all respondents representing companies with revenues greater than $500 million and 60% of the companies having revenues greater than $1 billion.