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Where sustainability meets profitability - a new era in business

Sustainability, as a concept, is not new to the world. Where people across the globe are exploring the idea of sustainability at home and incorporating the same in their lifestyle, the commercial world, especially businesses who’s direct byproducts are not environment friendly have remained quite aloof from this concept. The same is the case with the concept of ‘sustainable business’ in the UAE.

 

“Sustainable Business means the business which strives to meet these three: bottom line people, planet and profit,” says Amruta Kshemkalyani, a sustainability consultant and founder of The Sustainability Tribe. “This kind of business adopts innovative ways to reduce its negative impacts on local or global ecosystem or environment and contributes to the growth of the local society in ethical ways.” One of UAE’s top evangelists, Amruta has developed sustainability policies and initiated dedicated sustainability departments in various organisations.

 

Throughout her extensive experience of dealing in the sustainability industry, she feels that in the UAE, businesses face two big challenges. “First is 'Greenwashing' and second is 'Substituting CSR in place of proper efforts to transform businesses into a sustainable business’." While some of the businesses take the first path, where the same business model and business practices are marketed as 'green' without taking much efforts to actually transform the business into making it more sustainable. Instead more efforts are taken into the marketing leg of the business. In the second path, instead of going on a longer term plan of assessing the business, creating a sustainability strategy and then implementing it to transform the business and adopt more sustainable ways; a short term plan of a few CSR activities are preferred where some positive efforts are taken on short term basis and promoted to facelift the image of the business. “In both cases, the business cannot be transformed into a more sustainable business in reality,” says Amruta.

 

While nearly half (44 per cent) of mid-market enterprises (MMEs) in the UAE, see a direct connection between sustainable business practices and commercial success, according to data from HSBC Commercial Banking, only 18% of them feel that sustainable business practices are important to their business today. We are also seeing a rise in CSR activities like donations, sponsorships and so on, which though good, has taken the attention away from the main topic - implementing sustainable practices in the day to day running of the business to reduce negative impact on the environment.

 

Myths and Challenges

 

“Yes, it (sustainable business) is a relatively new term in the UAE market but we have seen a surprising number of businesses choosing to go solar,” says Shivaram Reddy, Business Development Manager of SunScope Technologies, UAE. “Initially, the business owners or decision makers in the organization are usually skeptical about the solar panels on the roof. But, in our company’s model, we give a free feasibility report to the customers to help them decide if going solar is the right option for them. The savings part of the report surprises and attracts the people as they usually don’t expect to save as much.”

 

This is not unusual as most people assume that implementation of green practices might cost them a fortune, which is actually not true. “There are financial institutions in the solar industry which help business owners fund their solar plant for the roof initially and charge the client monthly, based on the energy generated from the plant. This charge is usually lower than the DEWA’s tariff rate for electricity. Hence, the business owners can start saving up on electricity right from the first year of installation, without any upfront payment,” says Shivaram.

 

In-fact, in 2016, DEWA created the Dh100 billion Dubai Green Fund to finance environmentally-friendly projects at favourable interest rates. In the private sector, First Abu Dhabi Bank issued a five-year $587 million (Dh2.16bn) green bond - the region’s first - in March 2017, and has set aside $10bn for financing green businesses over the course of 10 years. With so much support from the Government and the private sector, businesses have an incentive in going green. But as Shivaram notes, this is not their first priority.

“Going solar unfortunately is still the secondary decision business owners want to take apart from their expansion and other business related aspects,” he notes. What businesses are failing to understand is that in due course of time, these sustainable techniques would only help them sustain in the market for long and maintain an edge over their competitors through rising profits because electricity through fossil fuel, as predicted, is not going to get any cheaper. Using solar energy can, however, turn the tables for them.

 

The second myth is that only a few industry sectors can be sustainable. As Amruta notes, every possible business sector be it the primary sector (where we need more sustainable and circular raw materials), secondary sector (where we need more environmentally friendly, clean and ethical manufacturing processes and methods) or the service sectors (where we need more sustainable service providers) can be sustainable. “To reduce the adverse impacts on climate change and to progress towards circular economy, we need every business sector to take part and do their bit in terms of sustainability. That is the only way forward,” she says.

 

Thirdly, as seen over the last two years where companies have tackled reduced economic sentiment linked to lower oil prices, some argue the focus has been on cost cutting rather than sustainability strategies. It is important to note that cutting costs can also be done by getting cheaper raw materials but the impact on the environment remains the same. Profitability does not necessarily equate to sustainability but conversely, sustainability does equate to profitability in the long run.

 

The future of sustainability in the UAE

 

As far as the UAE is concerned, the Government has initiated quite a few campaigns to encourage sustainability. For instance, one of Dubai’s major green projects under development is the Mohammed bin Rashid Al Maktoum Solar Park, the world’s largest single-site solar park. The Government has also launched the National Climate Change Plan, which targets ‘green’ energy to meet 27 per cent of the country’s energy needs by 2021 and 50 per cent by 2050.

 

There are also many examples of companies who’re not primarily associated with environment friendly activities committing to sustainability initiatives. For example, Emirates National Oil Company (ENOC) has committed to an expansive agenda, with $16.3m invested towards implementing initiatives over the 2014-2017 period. In 2017, the company published its first sustainability report following guidelines of the independent Global Reporting Initiative (GRI).

 

Another notable example is Dubai Properties, which said that it had completed the instalments of energy-saving systems from Honeywell and Signify in its communities that will offset an estimated 1,450 tonnes of CO2 emissions annually. This proves that businesses do see the need of following ethical business practices but there is a need to increase awareness about such projects and how various businesses can go green.

 

“The primary aspect one fails to notice is the very source of electricity that lights up the offices and runs the printers. We can save paper by printing less and going digital but as long as we choose to go with the energy generated from fossil fuels, it is going to have a massive impact on the environment,” concludes Shivaram.