The Sustainability Imperative – Middle East24 April 2023
"The country intends to lead, rather than simply follow others, when it comes to matters of sustainability and decarbonisation."
Watson Farley & Williams recently launched The Sustainability Imperative – Part 2, following on from the original report released in February 2021. The new survey, like its predecessor, explores the key issues and concerns facing the maritime sector regarding sustainability and ESG more generally.
In the EMEA region, there is more of an even spread across the top three ESG priorities than in other geographies, with “environmental targets – efficiency/emissions/carbon reduction” (ranked in the top three priorities by 26.3% of respondents) and “diversity targets/board constitution” (ranked in the top three priorities by 24.7% of respondents) being the two leading concerns, followed by social/crew welfare (17.2%) and “environmental targets – end of life assets/ship recycling” (16.2%).
As regards the Poseidon Principles, there has been no signatories from local or regional banks in the Middle East to date. Some international banks operating in the region have signed up, however, and we expect that any local or regional banks participating in broader (geographically speaking) syndicates may well be brought into compliance by implication and/or extension.
On a broader level, countries in the have started making net-zero emissions pledges which include 2050 for the UAE and 2060 for Saudi Arabia and Bahrain. These targets are well aligned with the national initiatives across the GCC that are driving the renewables agenda, as seen in the prioritisation of sustainability by the UAE Green Agenda 2015-2030 and Vision 2021, Saudi Arabia’s Vision 2030 and Kuwait’s Vision 2035.
"Expect that any local or regional banks participating in broader (geographically speaking) syndicates may well be brought into compliance by implication and/or extension."
There are many examples of major players in the maritime sector in the Middle East region taking active steps to progress their position and business on aspects relating to sustainability and decarbonisation, including:
- ADNOC recently announcing the formation of ADNOC Gas, its new world-scale gas processing, operations and marketing company;
- ADNOC earmarking US$15bn towards low-carbon initiatives to help accelerate delivery of its low-carbon growth strategy and the approval of its net-zero 2050 targets;
- ABS and the Suez Canal Authority (“SCA”) signing a Memorandum of Understanding (“MoU”) to develop a long-term sustainability roadmap and decarbonisation strategy for the canal, one of the world’s busiest shipping routes; and
- a number of regional maritime sector players seeking ESG gap analysis support from the likes of ABS, including a benchmarking exercise to assess performance compared to other industry peers on key ESG parameters, analysis using current industry best practices, resulting in short-, medium- and long-term recommendations to consider along with a roadmap for future sustainability actions.
There is also a desire and focus to expand the UAE’s hydrogen economy, as it seeks to position itself as a major exporting hub for the future, with mega projects such as the two-gigawatt green ammonia project by Taqa, the Abu Dhabi National Energy Company, and Abu Dhabi Ports intended to produce green hydrogen and process it into liquid ammonia, to be used both in ships as bunker fuel and for export.
Initiatives such as these dovetail well with reinforcing the UAE’s position as a key competitive maritime hub and a key driver on the road to decarbonisation and sustainability.