Building better ESG compliance in construction
This article was originally published on MEED (Middle East business intelligence) website on 8 March 2023 and is reproduced with permission from the publisher.
Construction companies in the Middle East understand that if they are to successfully secure profitable work and retain talent in the future, they will have to satisfy new environmental, social and governance (ESG) criteria.
Will this understanding be enough to drive positive change to the construction industry's ESG impacts? The sector accounts for 30 per cent of total greenhouse gas emissions, using up to 50 per cent of the world’s natural resources and employing 7 per cent of the global workforce, with 10 million construction workers alone in the Middle East.
ESG compliance is frequently demanded in the regional industries of Europe and North America. But new market entrants in the Middle East are attracted by lighter regulation here. Stakeholders have been able to prioritise economic growth and ambitious timescales, often to the detriment of ESG matters.
“By prioritising ESG, a business can improve its corporate reputation, access funding more easily, attract and retain better talent, and increase profits and share prices.”
Myriad global players in one geographical space and a regulatory system in its infancy have led to a complex landscape of compliance and regulation.
Very limited compulsory reporting obligations in the Middle East have paved the way for inconsistency among stakeholders. EU-based entities must comply with the strict standards of the EU even outside their home jurisdiction, but UAE-registered companies, for example, are not held to the same standards.
Though the Middle East’s ESG regulations are not yet as stringent as those of other regions, the appetite for improvement is growing steadily as stakeholders understand the importance of ESG better. Organisations must recognise that promoting and protecting ESG practices is not just morally right; it is also a smart business move.
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