New report renews focus on need for organizations' need to pursue green transformation strategies
Arthur D. Little (ADL), a management consultancy firm with a presence in the Middle East region, has released a report, The Green Gambit, that assesses how the current crisis has transformed the green investment environment and stresses that now is time for organizations to pursue bold green transformation strategies previously considered too risky.
The Green Gambit report urges companies to focus on two imperatives as they strive to take advantage of greater volumes of better-connected investment funding. Firstly, they should adopt new approaches to nurturing disruptive ventures that may be outside the normal core business. Secondly, they should work collaboratively to shift the entire business ecosystem, which is often needed to successfully deliver green initiatives. The report also explores the positive benefits that organizations can capitalize upon through innovative funding options like Special Purpose Acquisition Company (SPAC) which is an alternative way to raise capital and access public equity markets.
According to the report's findings, industrial companies should be well-positioned to capture success in this direction and contribute to the ecosystem as it addresses mega challenges based on three building blocks – winning technology on which breakthrough solutions critically depend, scale and scale-up capabilities to create lasting value, and capital to sustain rapid and successful development. Crucially, this cycle was far from perfect in pre-pandemic times but key players are now conducting comprehensive re-evaluations and pursuing new or improved strategies.
“Recent events stemming from the pandemic have encouraged governments, corporates, and investors to take a fresh look at their priorities, and we are now seeing new drivers for green growth emerge,” said Adnan Merhaba, Partner and Energy practice Lead at ADL MEI. “Governments are exploring green investments as they transition to cleaner economies, investors are advancing their strategies through sustainability targets, and private equity firms are allocating more funds and monitoring the carbon footprints of companies they work with. These are encouraging signs, with many examples and proof-points indicating a successful long-term transformation that the Middle East will witness in due course.”
The United Arab Emirates (UAE) and Kingdom of Saudi Arabia (KSA) are prominent regional examples where green investments continue to yield positive outcomes. The UAE is expected to provide 50 percent of power needs from renewable sources by 2050 due to nuclear and solar power contributions. Mubadala Investment Company, ADNOC, and ADQ recently finalized a Memorandum of Understanding to establish the Abu Dhabi Hydrogen Alliance.
Similarly, in KSA, the country’s leadership aims to invest up to USD 50 billion in the renewable energy sector by 2023 as part of its strategy to reduce oil dependency and diversify its energy mix. Moreover, NEOM has already launched the world’s largest Green Hydrogen Project, with 650 tons of carbon-free daily production by 2025, through a large consortium including ACWA Power and Air Products.