Saudi Arabia embracing a more sustainable industrial development

20 July 2022 5 min. read

The industrial sector is the backbone of robust nations and a key development focus for humanity. But can the sector continue its advancements in a sustainable manner? Adham Sleiman and Amer Hage Chahine from Arthur D. Little share their views and outline how Saudi Arabia is leading the region by example.

Building on the legacy of the first three industrial revolutions and powered by state-of-the-art technologies – such as artificial intelligence and the internet of things – the 4th industrial revolution (or 4IR) is disrupting every economic sector at a blinding pace and transforming the way organizations and governments operate.

This new revolution brings a complex portfolio of digital, physical, and biological assets and offers an unparalleled opportunity for the development of the human race.

Adham Sleiman and Amer Hage Chahine - Arthur D Little

The 4th industrial revolution will however come at a hefty price, if not sustainably managed, since today’s supercharged pace of industrial production is coupled with a drainage of resources and rising emission levels. Key questions hence arise: For how long can our environment cater for such exponential industrial development? And what is needed from governments and organizations to ensure sustainable growth for all?

Fortunately, the answer is yet to be written depending on the actions that will be taken by key stakeholders.

Sustainable industrial inputs

When Covid-19 struck back in early 2020, the pandemic unearthed weaknesses in global industrial supply chains, such as severe shortages of vital materials, and created panic among manufacturers.

Now, an even greater challenge is emerging vis-a-vis industrial sustainability. The use of eco-friendly raw materials and a shift towards sustainable procurement are important steps in the quest for sustainability.

Transitioning from conventional utilities to renewable alternatives is also critical to success. A leading example is IKEA, which is promoting eco-friendly practices through its sustainability strategy, such as sourcing half of its wood from sustainable foresters and planning to adopt 100 percent renewable energy in its stores by 2030.

Refined manufacturing process

Manufacturers can strive for operational excellence by reducing their carbon footprint as part of a holistic “reduce, reuse, and recycle” philosophy.

BMW for instance, has been actively introducing automation, and intelligent advanced systems in several of its manufacturing facilities, leading to a 30 percent decrease in resource consumption and emissions during the last 10 years.

Efficient shipping and distribution

Green storage logistics can be rolled out and shipping optimized by adjusting routes and applying fuel-efficient processes.

UPS has introduced new trucks powered by compressed natural gas, and is using pioneering fuel consumption technology, such as satellite-optimized route planning, to eliminate excess mileage and reduce fuel consumption.

Green marketing

The promotion of eco-friendly products and a shift towards paperless marketing can earn industrials a sustainability edge. Green marketing can also be profitable, with consumers increasingly expressing a preference for eco-friendly alternatives.

Saudi Green Initiative

Leading by example, industrial giants are demonstrating how private stakeholders can make a positive impact when it comes to sustainability. However, without governmental enablement and regulation, their efforts remain limited.

From supporting green practices to enforcing eco-friendly requirements, governments have the power to initiate, accelerate – when necessary – and enforce, across the sustainability spectrum.

A prominent example is the Gulf Cooperation Council’s largest industrial powerhouse, Saudi Arabia. Committed to building a greener future, the Kingdom launched its Saudi Green Initiative, and is leading nation-wide industrial sustainability efforts through a number of strategic initiatives.

Support with green incentives and financing
Saudi Arabia is leading the transformation of the industrial and mineral resources sector through its Sustainability Council and is working to secure funding for industrial facilities with green transformation projects.

Enforce eco-friendly licensing requirements
The Kingdom is revamping its industrial licensing requirements by mandating criteria that promote the adoption of advanced technologies, which increases manufacturing efficiency and helps reduce greenhouse gas emissions.

Maximize collaborations and synergies in the energy transition
The government is unifying the region’s efforts through consistent collaboration between GCC countries, aiming to boost the sustainable development of industries and synergize the region’s fight against climate change. This includes efforts to reduce greenhouse gas emissions, waste management solutions, and raising awareness on industrial sustainability.

Enable the development of SMEs
Saudi Arabia is supporting industrial SMEs through the provision of incentives and services that enable their sustainable development, as they constitute around 90 percent of the Kingdom’s industrial sector.

Incentives include promoting the use of efficient technologies that reduce waste and securing funding to green-oriented startups. This will lead to sustainability of manufacturing operations and will promote the adoption of environmental, social, and corporate governance.

The way forward

Sustainable industrial development is a necessity for both companies and governments. However, countries are still far from achieving industrial sustainability and will need close collaboration between the public and private sectors through an integrated set of activities across the value chain. This will create a long-lasting impact and chart the course for a sustainable future.

Adham Sleiman is a Partner at Arthur D. Little in the Middle East, where Amer Hage Chahine is a Principal. Arthur D. Little is a leading strategy and management consulting firm with offices in Dubai, Riyadh, Bahrain and Beirut.