Building trust in the Middle East through quality information

12 April 2023 9 min. read

The importance and nature of trust is evolving in the Middle East, with accurate and quality information at its core, writes PwC partner Mohamed Elborno.

There are two imperatives driving the need to enhance trust for stakeholders in businesses across the region: digital transformation and the growing importance of ESG. Trust is valuable and it is not given or kept easily. And when it comes to trust, what matters to stakeholders is changing, with ESG sitting at the very heart of this new focus.

According to the Trust Barometer from Edelman, “information quality is the most powerful trust builder across government, business, non-profits and media, and 45% of respondents tend to distrust until they see evidence of something trustworthy.”

Mohamed Elborno, Partner, PwC

Today, companies are judged on more than financial outcomes. Performance in areas like ESG, diversity and cybersecurity can affect reputation, staff retention, access to capital, and ultimately, enterprise value. As a result companies are reporting much more beyond the financial information.

Redefining the trust equation

So, how is trust evolving in the Middle East? Today, the scope of trust solutions is much broader. Why does this matter? We are witnessing a fast evolution of the reporting landscape with non-financial reporting such as ESG – becoming essential, not just optional.

Further reading: PwC and Strategy& report: ESG is on the rise in the Middle East.

Stakeholders across the region today, including governments, regulators, consumers, and investors, are rightly demanding more transparency and enhanced reporting behind company commitments to address environmental, social and governance issues. They are demanding this in order to align themselves with companies that hold similar values. They want to know that companies are who they say they are, and do what they say they do.

That is why today, organisations are being judged on more than financial performance, with reporting on non-financial areas, playing a more important role in building stakeholder trust. This shift in the trust mindset is redefining enterprise value and is driving:

  • Access to capital and cost of funding
  • Reputation with customers
  • Relationships with suppliers and society
  • Attraction and retention of talent
  • Enterprise value and competitive advantage.

A recent PwC survey among investors found that stakeholders trust reported information more if it is subject to audit. However, there is currently a significant gap between what is reported and what is assured.

Trust and the people equation

One of the key stakeholder groups demanding transparency and trust today more than ever before is the workforce – and it’s Generation Z who are leading the charge in demanding this from their employers. It is therefore important for companies to assess how they can build trust and become an employer of choice, in order to attract and retain this dominant sector of the workforce.

According to research published by Bupa, one in three (31%) employees aged 26 and younger, would turn down roles in companies with poor ESG credentials, and over half (54%) would take a pay cut to work for a business that reflects their ethics, on average sacrificing more than a quarter (27%) of their salary. These results fit in with the fact that our largest cohort of graduates at the firm this year had chosen ESG-related majors that revolved around technology and innovation.

The 2022 Middle East Hopes and Fears report by PwC shows that employees in the region believe that their employers are more transparent about workplace health and safety, diversity and inclusion and economic and environmental impacts, and stressed the importance of transparency by employers on these issues.

The report also highlights that employers in the region must also develop the skills of their human workforce alongside their investment in technology. In doing this, organisations create a seamless link where technology can help augment human capabilities.

But how is this shaping the audit profession of the future? The continued digital upskilling of our audit teams allows us to build on our base skills with other technological capabilities to enhance audit quality, increase efficiency, and improve the experience of our people.

Today, stakeholders in business should recognise that preparing for the work of the future cannot be done in a simple step, nor does it centre solely around the introduction of technology. New technologies, data analytics and social networks are having a huge impact on how people communicate, collaborate and work. Equipping employees for increasingly digitalised workplaces and ensuring they have the skills they need to adapt and utilise new technologies is just as crucial.

As generations coexist and workforces become more diverse, building trust through an inclusive environment that allows people to reach their full potential is critical, in order to allow each individual the same opportunities to grow and develop.

How the Middle East is delivering on ESG

Though many of the rules of business have changed, the fundamentals have not. Meeting investor expectations begins with the completeness, accuracy and fair presentation of information in financial statements and disclosures. For example, in the ESG space, the majority of stock exchanges and regulators across the Middle East have issued guidance on reporting sustainability information.

In the UAE, ESG disclosure guidelines have been published by the Abu Dhabi Securities Exchange and Dubai Financial Market, which shows an increased trend towards greater disclosure and transparency.

Similar to the rest of the world, ESG has taken centre stage for economies in the Middle East and is at the top of the agenda for governments in the region, with mandates driving a new wave of laws and regulations.

Between holding the Conference of the Parties (COP27) in Egypt in 2022 and COP28 heading to the UAE later this year, as well as the fact that sustainability is being placed at the core of the UAE and Saudi visions of 2030, the region’s vast transformation is being reimagined through ESG. Now more than ever, it is time to start incorporating the assurance of non-financial data and start building trust for investors.

In PwC’s latest survey of 325 investors globally, nearly 80% said they trust reported ESG information more when it’s been assured and 70% said that companies should be required to obtain assurance on all ESG information. The presence of widespread assurance and ESG reporting is crucial in providing trust through reporting and helps avoid the potential of greenwashing.

Since most companies today are still in the early stages when it comes to tracking and reporting this data, they are now faced with the question of how reporting can be externally validated. Assurance in sustainability-related areas is still a new exercise for most and can build investors’ trust when it comes to monitoring performance.

As auditors, we understand how businesses work and have the independence, expertise and experience to provide integrated assurance over financial and non-financial reporting. Sustainability outcomes have become too important to investors for companies to treat them as mere add-ons. It’s absolutely critical to track and report sustainability performance with the same rigour and data quality as financial performance.

Importance of digital and quality to redefine stakeholder trust

Digital transformation is creating significant opportunities for businesses; whether this is for improving the quality of reporting and relieving the burden on company resources, optimising company processes, or providing stakeholders transparent and reliable information on corporate action. For assurance to provide the trust that stakeholders need, it must be focused on quality.

At PwC, we have continued to thrive in providing digitally upskilled audits that put quality first, by embracing cutting-edge technology that has now become part of how we work, in order to bring greater insights and value to our clients through innovation.

Focusing on quality requires auditors to have technical knowledge of what is being assured – whether that is financial information, greenhouse gas emissions, gender pay gaps or governance structures. Employees working in an Assurance practice also need to do all this in the context of a regulated professional ethical framework that reinforces assurer independence, integrity and objectivity – blending industry-leading technologies, innovative thinking and focused knowledge.

At PwC, we provide efficient, robust and independent assurance and insights across financial and non-financial information through an integrated, multi-disciplinary team of tech-powered audit, technical and sector specialists. Trust through rigour – no gaps, no repetition, no misalignment.

Today, companies should bring sustainability and finance teams together to review data sources and embed ESG reporting standards in their strategy and operations. Audit quality is foundational to establishing trust in markets. This is why at PwC, we have been consistent in supporting our clients in their digital transformation journeys and helping them build trust in what matters.

The future of trust in the Middle East

Now is the time to build trust and sustained outcomes in areas of critical importance to business, capital markets and society. Today, I truly believe in the capabilities of our upcoming generation to drive this agenda forward in the Middle East, combining human-led, tech-powered solutions to solve, collectively, for the future.

What matters for the future will be different for every company, country and industry, but what doesn’t change is the value and power of quality information – relevant, reliable, transparent and assured. In a complex and changing environment subject to intense stakeholder scrutiny, robust assurance is important.