Five steps that Middle East companies can take to reduce carbon footprint

The year 2021 was about ambition setting. The number of companies establishing science-based targets for decarbonisation had strongly increased since 2015, but it rose dramatically from 2020 to 2021, in the run-up to COP26, the United Nations Climate Change Conference.

In the Middle East, the UAE and Saudi Arabia are leading the decarbonisation conversation with pivotal government initiatives that encourage businesses to reduce their carbon footprint. Now, 2022 and beyond will be about delivering on and monetising those ambitions.

The world will eventually get to net zero, but the critical issue is getting there in time to limit global warming to 1.5 degrees Celsius. The urgency is real, reaching net zero by 2050 requires halving emissions between 2020 and 2030.

Many CEOs feel overwhelmed as they face the impacts of climate challenge. They are trying to pursue their decarbonisation targets during a period of uncertainty. They are grappling with ways to make an orderly carbon transition amid an unsettling geopolitical atmosphere, chronic supply chain disruptions and rampant inflation.

To translate ambition into delivery, companies need to adopt a mindset that we call visionary pragmatism and get five things right.

Put a premium on strategic adaptability
Companies don’t need more climate scenarios but, rather, clarity on the relevant ones. They also need to watch the signposts that will indicate what’s coming net and embrace an adaptable approach to strategy. For example, instead of viewing it as a five-year exercise with some additional yearly refreshes, winners proactively need to drive the delivery and the development agenda. Continuous assessment of signposts guides, quarterly discussions within the executive team need to be ongoing.

Proactively address investor dissonance
Executives need to strengthen the investor dialogue. That means focusing on strategic clarity, with both concrete near-term plans to achieve decarbonisation commitments and pathways to net zero. They should emphasise specific proof points which contributes to making the business more valuable. Companies also need to demonstrate progress in everything on green products and meaningful portfolio shifts.

Decarbonise customer-back
In both B2B and B2C situations, visionary pragmatists will know how to promote their green credentials and innovate with customers toward a lower-carbon, circular world. They will ask, what are the customer’s own ambitions, and how can the company support them? Decarbonisation will have very clear implications for how products are designed and used, as well as for emissions in production and across the value chain.

Collaborate where it matters and for results
Carbon transition is a problem far too big to be solved by any company on its own, and the need to engage the wider ecosystem of customers, suppliers, peers, governments, and civil society is increasing. Executives must decide where to collaborate vs. compete, picking the few partnerships that can make a difference. They should forge those partnerships across the value chain, or with peers or NGOs, to reach a critical mass for change.

Create ‘net heroes’ in middle management
How can they become net-zero heroes? The only way to create effective green middle management is to be extremely clear about which decisions to make differently and how to resolve trade-offs. The organisation needs to be trained, guided, and aligned to embed their goals as realistic deliverables. The whole organisation needs to be upskilled and given specifications need clear guidance on how to reflect carbon in procurement decisions, next to specs and price, plus the tools to pragmatically assess where in the supply chain to push.

The writer is the Managing Partner of Bain & Company Middle East

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