This report originally appeared in the World Economic Forum.

Executive Summary

Pressure is growing on companies in the Middle East and North Africa (MENA) to accelerate their progress on sustainability. To achieve this will require regional guidelines, materiality assessments, and political leadership.

Following the high-profile commitments made at the UN’s Climate Change Conference in Dubai in December 2023 (COP28) and in alignment with global trends, the MENA region faces increasing pressure from different stakeholders—including investors, regulators, and global markets—to enhance transparency around corporate sustainability practices and transition to more sustainable business models. The region needs to accelerate its progress and MENA companies must be prepared to remain competitive in the global economy, attract international investors, and support the region’s economic diversification goals.

Lack of region-specific guidelines

However, corporations in the MENA region often encounter significant challenges due to the lack of clear guidelines and best practice on reporting that are tailored to the region’s unique context. Many companies are still in the early stages of their sustainability journeys, grappling with awareness and capability gaps as well as financial constraints, particularly in understanding and implementing effective reporting practices.

Additionally, the region’s ambition to accelerate its progress and diversify the economy will involve the use of materials and resources, so it is crucial that this development is underpinned by robust principles of sustainability.

Towards effective environmental materiality assessments

To navigate this complex landscape, companies embarking on sustainability journeys should prioritize environmental topics that most significantly impact their operations, investor decision-making, and the broader ecosystem. These topics can be effectively defined through a “materiality assessment” exercise that enables companies to accurately understand and report on their sustainability performance, allowing for greater transparency among key stakeholders and more effective risk management, which in turn will result in increased investor confidence.

This report serves as a roadmap towards effective environmental materiality assessments in MENA, providing high-level guidance on material environmental topics and metrics that should be prioritized by companies based on their sector and stage in the environmental reporting journey.

Promising developments are emerging in the region, with organizations demonstrating notable progress in integrating sustainability into core business operations, recognizing the importance of sustainable development as a key driver of long-term resilience and growth. These examples can inspire organizations across MENA to contribute to a sustainable, resilient, and decarbonized MENA economy, covering critical areas such as reducing greenhouse gas (GHG) emissions, decarbonizing the value chain, small and medium enterprise support, and water management.

Government leadership is crucial

Governments in the region play a pivotal role in developing clear policies and frameworks and providing incentives. Their leadership is crucial in setting guidelines and best practice, and creating an enabling environment that fosters sustainable business practices across all sectors, thereby driving impactful sustainability outcomes. An examination of the main sustainability policies in the MENA region reveals several innovative programs, which act as inspiration for other countries seeking to enhance their sustainability efforts and adopt effective strategies.

The shift from traditional to innovative and sustainable solutions is imperative. By focusing on key material issues, embracing knowledge sharing, and fostering the combined efforts of the private and public sectors, MENA companies have the potential not only to overcome the region’s most pressing sustainability challenges but also to lead in creating a new era of sustainable economic growth and innovation.