BUSINESS REPORTER
MUSCAT, APRIL 29
Ahead of the May 17 Tejarah Talks session ‘Oman’s Journey to Net Zero: An Environment for Enterprise’, we sat down with Ministry of Commerce, Industry and Investment Promotion, Director, Maymuna al Adawi (pictured) and organiser of the popular discussion series to consider 2050 Net Zero targets and why making efforts to be more sustainable is a necessity if Omani businesses want to remain competitive.
Tejarah Talks is organised by Oman Business Forum in association with the Ministry of Commerce, Industry and Investment Promotion. It is generously supported by Jindal Shadeed, Sustainable City – Yiti and Nortal.
With His Highness Sayyid Dr Adham al Said moderating proceedings, Tejarah Talks welcomes three experts on green issues and sustainability to lead discussions, they are: KPMG partner and ESG Services Lead, Fadi al Shihabi; Talabat Director, Sustainability, Dimitra Theodoropulos; and Hilal al Ghaithi, Director, Energy, Authority for Public Services Regulation.
Q: What role can local SMEs play in helping Oman achieve its 2050 Net Zero target?
A: Headlines are usually dominated by the contributions of big companies to reducing carbon emissions and so forth. However, like a large iceberg, what goes on beneath the surface can be more important.
According to the World Bank small businesses more than pull their weight in the global economy — responsible for 50 per cent of employment worldwide as well as up to 40 per cent of GDP in emerging markets — and their environmental efforts, though perhaps less visible, are hugely important.
So Omani SMEs, like their counterparts around the world, have a crucial role to play in the collective corporate effort to address the climate crisis and achieve Net Zero emissions by 2050.
Something we are going to look at in this edition of Tejarah Talks is not just the role and responsibilities of SMEs but the opportunities and benefits they can gain from taking meaningful climate action sooner rather than later.
Q: How do you see green legislation impacting Omani businesses?
A: This is going to be a consideration not just for our exporters, but also for those who are part of value chains for goods sold overseas. For example, proposed US regulations would require companies to disclose information about their direct greenhouse gas emissions (Scope 1) and indirect emissions from purchased electricity or other forms of energy (Scope 2).
In addition, companies would be required to disclose greenhouse gas emissions from upstream and downstream activities in their value chain (Scope 3).
If an Omani company large or small is selling their goods in US markets, or is part of a supply chain, they will need to provide information about any GHG emissions back up the chain. So local businesses capitalising on the Oman-US free trade agreement should be taking time to get prepared for these changes.
Similarly, Omani enterprises doing business in the EU should prepare themselves as its Corporate Sustainability Reporting Directive (CSRD) will make it mandatory for companies already subject to the non-financial reporting directive to disclose green information in their sustainability reports from January 1, 2024.
There is two years’ breathing room until 2026 to comply with CSRD requirements, with the first reports due in 2027. But the message is loud and clear, we should be gearing up for these changes now.
Q: Net Zero targets give opportunities for building new green businesses but aren’t these limited?
A: In fact, the opportunities it presents are wide-ranging and lucrative. This is not a small niche corner of the market, focused on the decarbonisation of polluting industries.
Today the green economy is the fifth largest industrial sector by market capitalisation, larger than the oil and gas industry. When looking at future growth estimates, it could grow to be the first or second largest industry worldwide.
In fact, a report from Arup and Oxford Economics estimates that new green industries could be worth $10.3 trillion to the global economy by 2050, equivalent to 5.2 per cent of global GDP that year.
So yes, the opportunities are vast but what we really must keep at the forefront of our minds is that if we fail to tackle climate change the results will be devastating.
This is what matters most. Higher concentrations of CO2 will push average temperatures up across the world, causing rising sea levels and extreme weather events that will in turn bring significant human suffering.
Putting that in perspective, uncontrolled climate change could cost the global economy $178 trillion over the next 50 years, or a 7.6-per cent cut to global GDP in the year 2070 alone.
If global warming reaches around 3°C towards the century’s end, the toll on human lives could be significant, leading to loss of productivity and employment, food and water scarcity, worsening health and well-being, ushering in a lower standard of living globally.
The time for debate is over. We need swift, bold and widespread action now across all sectors and that is something Oman is proudly doing.
Q: Do you think consumers are more likely to buy from environmentally focused businesses?
A: As Omani consumers become more eco-conscious, any company seen as being green will be at an advantage. Research by the Pennsylvania-based Natural Marketing Institute already shows that consumers are 58 per cent more likely to buy a company’s products or services when they know the business pays attention to its impact on society and the environment.
While an Accenture study revealed products that can be reused or recycled can demand higher price-tags, with half of consumers saying they would pay a premium for such items.
However, in order to benefit from this competitive advantage, Omani manufacturers and service providers need to ensure they are making customers here at home and overseas aware of their green credentials.
Highlighting sustainability initiatives on social media or adding details to product packaging and having a dedicated sustainability section on the website can all help raise awareness of green efforts being made.
Q: Green credentials attract customers it seems but is it a consideration when people are looking for employment?
A: Much like consumers, employees, particularly millennials and Gen Z are increasingly attracted to companies with green credentials.
Studies indicates that 60 per cent of job hunters research a potential employer’s sustainability commitments before accepting a position, while 18 per cent of workers overall and 34 per cent of millennials would not work for a company they felt was harming the environment.
It is the same here in Oman as anywhere else on that front. So if Omani employers want to attract and keep the best talent and avoid the costs associated with high employee turnover, they should be taking clear steps to go green.
Q: Isn’t going green too expensive for small companies and start-ups?
A: While making sustainability improvements can require upfront investment, it can without doubt lead to savings in the long-term.
For instance, improving energy efficiency with LED lighting can significantly reduce energy bills.
Also, renewable energy technologies, such as solar panels, can pay for themselves in just a few years.
Simply having a more sustainable mind-set can also generate cost savings. Take going paperless, it saves on ink and paper, which could add up to substantial savings across the entire business.
Similarly, taking time to plan the most efficient routes for deliveries or business travel will reduce carbon emissions and fuel costs. Every small change, every small step, makes a difference.
Q: What would your final word of advice be?
A: Sadly, there is still a misperception that green issues are just for big companies. But as we have discussed being environmentally conscious can help strengthen the bottom line, attract talent, establish a competitive advantage and enhance brand reputation. By considering green matters today, Omani enterprises, organisations and institutions can set themselves up for long-term success and a more sustainable future.
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