Saudi Green Initiative: a bold path outlined but bigger steps needed by Corporate Saudi Arabia.

A Saudi statesman, almost half a century ago, is reported to have said of the Kingdom, that it was his country’s “moment in the sun”. And so, it must have seemed back then, in the 1970’s when high oil prices brought transformative wealth to his nation. But today, those of us who have had the privilege of being a regular visitor to Saudi Arabia are amazed by the jaw-dropping pace of social change, national ambition and pride. The transformations going on today seem far more significant than anything known hitherto. For young Saudis this really is their “moment in the sun”. And the outside world is coming to visit and discovering both the beauty of the land and the warmth of its people. These are exciting times and there is much to celebrate.

However, for Saudi Arabia to take its place amongst the nations, in the struggle that links all of humanity – the fight for a sustainable environment – much more needs to be done, and much quicker than has been the case, thus far.  Back in 2021 the leadership of the country inaugurated the bold ‘Saudi Green Initiative’. The vision outlined was crystal clear: reduce emissions, green the country, protect the land and the sea. But to make this happen it needs not just youth engagement but for businesses to step up and play their part. Right now, our research suggests that corporate Saudi Arabia, with some notable exceptions (e.g Olayan Saudi Holding Company, Olayan Financing Company) is the laggard versus the UAE, Europe and the United States. 

Using a simple metric, of the percentage of Saudi companies having a proper Chief Sustainability Officer (CSO), compared to a wider international peer group, the extent of the challenge today becomes very clear. Here is what our Firm’s research shows:

Percentage of companies having a CSO[1]

            It is, at this juncture, worth considering why it makes sense for a company to have a proper CSO to drive environmental, social and governance (ESG) initiatives. The first thing to stress is that the CSO is not just this year’s corporate fashion. Nor is it just a way of assuaging our conscience for the sake of our children and grandchildren. It’s a bottom line imperative.  CEOs who do not appoint a CSO with teeth should, in my opinion, be fired for failing their shareholders. Indeed in the US some shareholders have sued management for failing on ESG. It is very clear that most companies that get sustainability right can expect a boost in profits. McKinsey & Co’s excellent report: Five ways that ESG creates value by Witold Henisz, Tim Koller, and Robin Nuttall (2019) shows that the right ESG strategy can enhance the bottom line in the following ways: top line growth through consumer and community preference vs competitors; cost reductions – less waste; government support; productivity uplift through more engaged employees – remembering that generation Z wants to be doing something meaningful; better investment returns.

I have referred to a proper ‘CSO’.  What I mean by this is the executive who has the following attributes: empowerment, credibility, influence, coaching skills and critically – direct reporting line to the CEO or, more radically, to the Board, in the manner of a Chief Internal Auditor.

Empowerment & Reporting: a CSO without the authority to work across and down the organization, is pointless.  The ability to make change will come, in part,  from the hierarchical positioning of the CSO – either through direct reporting line to the CEO or to the Board. The legitimacy of seniority and access to the CEO and/or to shareholders should allow the CSO to work with function and division heads to drive,  corporation wide,  the organizations’ ESG strategy.

Credibility: the individual appointed does not necessarily have to be an ESG specialist – but they have to understand and care passionately about the subject and come from functions that understand business inside out. Thus finance, marketing and operational executives, with a successful track record behind them  can make fine CSOs.

Influence & Coaching: ESG should not be a police function but an enabling function to help an organization and its executives reach its environmental goals. The skills of a real coach and influencer are required to nurture performance and encourage change of ethos and behaviour rather than ensuring stick beating compliance with  dry rule book procedures that makes everyone’s eyes glaze over and ultimately prove counterproductive.

Here is what you can expect your CSO to do for you: design and implement sustainability initiatives; lead the sustainability team; manage the sustainability budget; stay updated on the government’s ESG initiatives, plans and regulations; coach and teach colleagues on achieving positive outcomes for the environment and for the organization; track environmental impact and increase profitability through ESG initiatives.

However, the CSO cannot do it alone, the whole organization needs to be involved and play its part and every employee needs to contribute to the discipline of sustainability. As they say, ‘there is no planet B’.

The Kingdom has the leadership, the resources and the ambition to be a regional role model in the existential struggle for sustainability – but the business community needs to move  much faster. Appointing a strong CSO is a first step in this mission critical journey.

For further reading and viewing we recommend the following excellent papers and online tutorials: 

1. Chief Sustainability Officer: What Does a CSO Do?, https://www.masterclass.com/articles/chief-sustainability-officer#2UE2nvAqUCv82tGs3PbLTr Last updated: Mar 10, 2022
2. “The Future of Chief Sustainability Officer” by Deloitte and the Institute of International Finance, https://www2.deloitte.com/xe/en/pages/financial-services/articles/the-future-of-the-chief-sustainability-officer.html
3. “Empowered Chief Sustainability Officers” by Strategy&, https://www.strategyand.pwc.com/de/en/functions/esg-strategy/empowered-chief-sustainability-officers.html
4. “ Reimagining our region through ESG – The 2022 Middle East report” by PwC, https://www.pwc.com/m1/en/esg/survey.html#:~:text=Our%20region%20is%20undergoing%20a,aspect%20of%20Middle%20Eastern%20society.

Dr. Metin Mitchell