Stakeholders and Leadership Drive ESG Disclosure in GCC, Sustainable Square’s 2023 State of ESG in the GCC Report Reveals

Dubai, UAE, December 11, 2023 – Sustainable Square, a leading ESG advisory firm headquartered in the UAE, has unveiled its 2023 State of ESG in the GCC Report, providing critical insights into the evolving sustainability landscape across the Gulf Cooperation Council (GCC) over the last six years. The report highlights a significant shift toward stakeholder-driven and leadership-led ESG transparency, underscoring the region’s maturing approach to sustainability. 

ESG Transparency 

According to the report, stakeholder expectations have emerged as the dominant driver for ESG disclosure in 2023, with an overwhelming 83% of companies identifying it as a key factor. Regulatory compliance comes second, with 67% of respondents acknowledging its influence, underlining the importance of robust regulatory frameworks in advancing ESG transparency. 

Among the stakeholders, internal leadership is playing an increasingly prominent role in driving ESG accountability. The Board of Directors (69%) and Top Management (63%) were identified as the primary forces behind ESG transparency in GCC organisations, indicating a strong internal commitment to aligning business strategies with sustainability goals. The influence of Leadership is followed by the push from Investors (61%) and Government/Regulators (58%). 

ESG Integration 

According to the report, improving reputation—a historically significant driver for ESG integration—has declined from 21% in 2018 to just 10% in 2023, signalling a move away from superficial ESG efforts toward deeper, more impactful commitments. Compliance with regulations and policies has grown steadily as a motivation for ESG integration, rising from 14% in 2018 to 65% in 2023. Stakeholder demands have similarly increased from 16% to 31% over the same period, highlighting the dual influence of internal and external expectations on sustainability adoption.   

ESG Standards & Frameworks 

Global frameworks continue to play a critical role in shaping ESG practices in the GCC. Adoption of the GRI Standards has surged from 57% in 2018 to 79% in 2023, making it the dominant reporting standard in the region. Similarly, participation in the UN Global Compact (UNGC) has grown from 17% to 42%, reflecting an increasing alignment with global principles of corporate responsibility. ESG disclosure, a key metric of transparency, has risen sharply, with 91% of companies now publicly sharing sustainability-related information compared to 75% in 2018. 

“Organisations in the GCC are at a pivotal moment where embracing ESG is about future-proofing their businesses and creating lasting value. The rising influence of boards and top management demonstrate a deeper understanding of sustainability as a business imperative. This evolution is not only transforming the region’s corporate culture but also positioning GCC businesses as credible players in the global ESG landscape.” said Monaem Ben Lellahom, Founding Partner and Group CEO of Sustainable Square. 

According to the report, 67% of GCC companies are aware of the new IFRS Sustainability Standards, with 51% planning to adopt them, signalling growing alignment with global ESG trends. Meanwhile, awareness of the European Union’s Corporate Sustainability Reporting Directive (CSRD) remains limited, with 44% of respondents unaware of its implications. As well, only 14% of respondents reported understanding the potential implications of EU’s Carbon Border Adjustment Mechanism (CBAM), highlighting the need for increased education on how global policies could impact GCC businesses. 

Progress and Challenges in Net Zero and Climate Action 

The report highlights that UAE, Saudi Arabia, and Oman are leading the way in net-zero initiatives. Companies are adopting strategies such as developing long-term transition plans, implementing energy efficiency measures, and leveraging innovative technologies. However, the high cost of transition remains a significant barrier, cited by 68% of respondents as a primary challenge. 

The Business Case for ESG 

ESG integration continues to yield tangible benefits. Enhanced brand reputation (72%) and improved investor relations (68%) were the most cited advantages of adopting ESG practices. Furthermore, 70% of companies reported a clear shift in consumer preferences toward businesses adhering to ESG standards. However, challenges persist, with 49% of respondents identifying a lack of standardisation as a major hurdle and 42% struggling to quantify the return on investment from ESG initiatives. 

A Trusted Partner 

As a leading ESG advisory firm, Sustainable Square brings a wealth of expertise and a proven track record of delivering successful projects across more than 15 markets. The firm leverages innovative tools like SQUARELY an ESG tech platform that streamlines reporting processes, enabling companies to meet ambitious sustainability goals efficiently. With its deep regional knowledge and global perspective, Sustainable Square is uniquely positioned to guide GCC organisations through the complexities of ESG performance and disclosure. 

Reflecting on these findings, Monaem says, “At Sustainable Square, we remain committed to empowering organisations with the strategies, tools, and insights they need to thrive in this rapidly changing environment. Our report is designed to provide actionable insights that empower businesses to navigate the complexities of ESG while contributing to the region’s sustainable growth.” 

The 2023 State of ESG in the GCC Report not only celebrates the progress made by businesses in the region but also highlights critical areas for improvement, offering a roadmap for further strengthening ESG performance. The full report is available for download on Sustainable Square’s website.