2023 Middle East Impact Report
Environmental
At Deloitte Middle East, not only do we care about the environment and climate change - we also care about being a part of the solution. Over the past year, Deloitte Middle East demonstrated how it harnesses ability, knowledge, and resources to leave a tangible footprint. As a team, we consistently worked to bring about impactful change and aimed to help lead the world’s path to a lower-carbon future.
The road to a more sustainable future
Sustainability is rapidly moving up the agenda in the Gulf region, with governments recently outlining net-zero visions 2050 in the UAE and 2060 in KSA, and experts discussing solutions at COP28. It was against this backdrop that a client, focused on fuelling road transport and building petrol stations, asked Deloitte Middle East to show its C-suite how a new strategic direction was needed.
Creating a case for change
The Deloitte Middle East team, including consultants from Monitor Deloitte and Corporate Finance Advisory, conducted research revealing the swift global shift towards more sustainable transport. The team analyzed government actions, consumer interests, popular automotive manufacturers, and fuel businesses, which all had a focus on sustainable transport, and especially electric vehicles (EVs). Since the policy for EVs was not yet available at the time, we benchmarked several countries that, like the UAE, had made a net-zero commitment by 2050.
This helped to identify three plausible scenarios for adoption based on a combination of policy, technology, and cultural factors. A model was built to show the potential increase in EV buyers and whether this could overtake the number of regular combustion engine car buyers. This helped to establish the urgency for change.
Embracing a new vision
After months of work, the team submitted the full report to the client in early 2022. The client’s leadership team welcomed the ideas raised, recognizing the opportunity for reinvention.
Strategic suggestions included rethinking the company’s initial plan to build significant additional petrol stations. Instead, the company could consider exploring new fuel station models, for example, by adding EV charging points and creating spaces so people could spend time while their car was plugged in. It’s also potentially exploring new ventures, like strategic partnerships with other providers and branching out into sustainable transport fuels. With the rising popularity of fuel cell EVs that use hydrogen, the client can consider playing in this space too.
The next stage of the journey
The collaboration continues as the client has asked for Deloitte Middle East’s support in potential future similar projects, which shows just how far the company has progressed on its journey.
In early July, the UAE announced the EV and hydrogen strategy; both will directly impact the client’s business and confirm the case for change. With Deloitte Middle East’s guidance, the client will be well-positioned to reinvent itself and actively contribute to the decarbonization of road transport.
The team was eager to participate in this project due to its potential for significant impact. The shift of one of the largest oil companies in a Gulf country towards EVs and clean fuels represents a significant shift in mindset. This project has the potential to impact everyone’s everyday life.
Reporting credible sustainability information in the region
Sustainability reporting has been a feature of company reporting for many years in mature financial markets, where demands from a wide range of stakeholders have been reflected in companies making great strides in developing their own practices. And with the development of specific sustainability reporting standards, companies have been able to present more detailed information.
The past year has witnessed significant shifts in the development of sustainability reporting across the Middle East, reflecting international initiatives.
Voluntary reporting
Over the past few years, Middle East stock exchanges have been gradually issuing guidance to listed companies on reporting sustainability information to investors. Some guides aim to provide sustainability reporting standards and approaches, while others are more prescriptive, offering lists of expected metrics.
In January 2023, the announcement by the GCC Exchanges Committee (a body representing 7 Middle East stock exchanges) to publish a list of 29 sustainability metrics was significant. It demonstrated a coordinated approach to raise the expectations of sustainability reporting consistently across the Middle East.
Mandatory reporting
Some countries have already moved beyond a voluntary standard with more explicit requirements for mandatory reporting by listed companies. The UAE put this requirement in place in 2021 and was joined by Jordan in early 2023 - both for the Global Reporting Initiative (GRI) reporting standard.
This has been the most widely used international sustainability reporting standard, which provides a framework for companies to engage with various stakeholders to identify a wide range of material sustainability topics and report against them. This results in a stand-alone sustainability report with a focus on the impact by the company on the environment and society, which is of use to many internal and external parties. This standard was updated (effective 1 January 2023) to emphasize its role as an impact reporting standard.
This has led to a growing demand to assist companies in the Middle East either develop a sustainability report for the first time or obtain independent third-party assurance on their claims of compliance with the reporting standard and on the robustness of their published Key Performance Indicators (KPIs). Deloitte Middle East has supported this by working with key clients across the region.
However, international investors increasingly seek more information about the impact of the environment on a company, particularly related to risks and opportunities, given its influence on enterprise value. With climate change posing a significant risk to companies, there has been a development of more investor-focused standards, particularly on climate-related aspects. Notable recent announcements include the International Sustainability Standards Board’s (ISSB) issuance of the new IFRS Sustainability Disclosures standards in June 2023 and the European Commission’s adoption of the European Sustainability Reporting Standards in July 2023. These have been significant steps forward in creating credible and robust reporting standards that effectively elevate sustainability reporting to the level of financial reporting.
The next stage in regional sustainability reporting development is the potential adoption of IFRS Sustainability Disclosures locally in each Middle East jurisdiction. Deloitte Middle East has presented to several regional regulators and local industry associations on the development of the IFRS standards to raise awareness of this adoption and consider the impact on local companies.
Private companies
The drive for increased sustainability reporting is not limited to listed companies, as many private companies across the Middle East utilize such reporting to reflect their business ethos, develop their brand, or position themselves for public listing amidst growing investor demands and increased reporting expectations. Over the past year, Deloitte Middle East has worked with several private companies in the Middle East to prepare for and report on their compliance with a new reporting standard, as well as with others to provide assurance over their IPO-related sustainability disclosures.
International exposure
All companies with an international footprint also need to be aware of local sustainability reporting requirements in those jurisdictions, adding to the complexity of international reporting. Deloitte Middle East has worked with a number of companies to consider the various sustainability reporting regimes across both the Middle East and Europe.
Sustainability reporting teams
There has been a noticeable rise in investment in sustainability reporting teams of Middle East companies, often bringing together sustainability expertise with financial accounting and reporting to reflect the new demands of reporting. Deloitte Middle East has engaged with various regional accountancy chapters in presentations at conferences to explain the development of sustainability reporting and the changing role of the finance professional, as the landscape continues to develop.
COP28
The international sustainability conference COP28, hosted by the UAE in 2023, provided a platform for international standard setters to showcase the development in sustainability reporting and for the region to step up and respond to the challenge of enhanced reporting. Deloitte Middle East participated and helped drive awareness, outlining the fundamental role that public and private sector organizations play, including firms like Deloitte Middle East, in developing and driving the sustainability ecosystem in the region.
Greenhouse gas emissions
Deloitte’s near-term (2030) greenhouse gas (GHG) reduction goals have been validated by the Science Based Targets initiative (SBTi) as 1.5°C-aligned, science-based targets. Deloitte has also committed to set long-term emissions reduction targets using the SBTi’s Net Zero Standard.
Our near-term goals are to:
- Reduce absolute Scope 1 and 2 GHG emissions 70% by 2030 from a 2019 base year
- Reduce Scope 3 GHG emissions from business travel by 50% per FTE by 2030 from a 2019 base year
- Engage with our suppliers with the goal of having 67% (by emissions) set science-based targets by 2025
- Invest in meaningful market solutions for emissions we cannot eliminate
Our additional 2030 goals to reduce emissions include:
- Sourcing 100% renewable energy for our buildings
- Converting 100% of our fleet to hybrid and electric vehicles
Deloitte’s near-term goals (2030) were validated in advance of the issuance of the SBTi Net-Zero Standard. The next step will be to set long-term emissions reduction targets following the SBTi standard to continue playing our part in achieving a net-zero world.
In FY2023, Deloitte Middle East’s Gross total emissions [1] [2] totaled 25,256 tCO2e emissions (6,329 tCO2e from business travel, 4,744 tCO2e from electricity (location-based) – eliminated due to the purchase of Renewable Energy Certificates (RECs), 3464 tCO2e from employee commuting and homeworking emissions,[3] and 15,463 tCO2e from purchased goods and services.[4] Deloitte Middle East has reduced business travel emissions per FTE[6] by 39.1% in FY2023, compared to the 2019 baseline, accelerating progress toward our goal of a 50% reduction in Scope 3 GHG emissions from business travel by 2030.
Creating impact beyond our value chain[5] - as we actively transform our business and prioritize emission reduction within our value chain, we are committed to furthering our efforts by investing in innovative solutions to accelerate the global transition to net zero. Our North and South Europe firm invested over £1 million in pro bono support and mentorship to finalists of The Earthshot Prize. We also purchased carbon credits, generated by projects aligned with our Purpose agenda, to offset the impact of operational and travel emissions that we have yet to eliminate. Looking ahead, we’re continuing to shift our focus from compensation for past emissions to understanding how we can actively contribute to societal decarbonization. This means using our reach and capabilities, skills, and financial investments to protect and restore nature, amplifying solutions that tackle emissions and boosting innovation.
Footnotes:
[1] Limited assurance was provided by BDO LLP at a consolidated Deloitte NSE level over all reported carbon metrics. This included consideration of the underlying country data in Belgium, Denmark, Finland, Greece, Iceland, Ireland, Italy, Malta, Middle East, Netherlands, Norway, Sweden, Switzerland and the UK plus Jersey, Guernsey, Isle of Man and Gibraltar.
[2] The FY2023 GHG Emissions Basis of Reporting - Deloitte North & South Europe is available here: https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/about-deloitte/deloitte-uk-annual-report-fy23-ghg-emissions-basis-of-reporting.pdf
[3] FY22 was the first year we calculated and reported emissions from employee commuting and homeworking. Before the Covid-19 pandemic, employee commuting and homeworking was deemed to be outside of our operational control and therefore not reported. Covid-19 has had significant implications for working patterns and consequently a hybrid working model became embedded during FY22. This means we consider commuting and homeworking now to be a fundamental part of our operating model and accordingly we now purchase offsets/ CERs to cover this emissions category and will continue to do so going forward. For transparency and comparability, we have retrospectively calculated emissions in this category and reflected this in the Gross and Net emissions totals for FY19 - FY21. Due to limitations on actual data, it should be noted that a proportion of the commuting and working from home calculation rests on assumptions and industry benchmarks. We will refine these assumptions and improve the methodology moving forwards as guidelines develop. We will continue to review our approach to Scope 3 reporting in the future, aiming to continually improve the accuracy of our disclosures. When these enhancements lead to a material change in a reported figure, we are committed to explaining the nature of the change, our reasoning for its appropriateness, and the percentage variance compared to previous methodologies.
[4] The PG&S methodology is based on procurement spend data for 5 NSE geographies. This spend data accounts for 74% of NSE PG&S emissions. As the Middle East geography does not have appropriate procurement spend data, all PG&S emissions data for this geography is extrapolated based on the NSE spend data we do have. We apply a number of assumptions to the spend data, including how we allocate spend into procurement categories, how we treat our suppliers’ reported Scope 3 emissions, the CDP sector emission factors we apply to each spend category, and the extrapolation factors. We continually review our approach to reduce the risks inherent in these assumptions and the impacts of year-on-year fluctuations. In FY2023, Deloitte revised the methodology for calculating real estate emissions included in reported purchased goods and services (PG&S) emissions to align with updated guidance from the real estate sector. As a result of the updated guidance, we have removed upfront embodied carbon real estate emissions from reported PG&S emissions. Reported FY2023 PG&S emissions for the Middle East would be approx. 2000 tonnes higher if using the previous methodology. Additional details on this restatement are provided in the Deloitte Global FY2023 Basis of Reporting. We will continue to review our approach to Scope 3 reporting in the future, aiming to continually improve the accuracy of our disclosures. When these enhancements lead to a material change in a reported figure, we are committed to explaining the nature of the change, our reasoning for its appropriateness, and the percentage variance compared to previous methodologies
[5] From FY23 we are taking a new approach to Beyond Value Chain Mitigation (BVCM). We are purchasing CERs ('carbon offsets) equivalent to our Scopes 1&2, business travel and homeworking/ commuting emissions; we are additionally providing direct investment and skills-based support to projects that will drive the net zero transition outside of our value chain. We are therefore no longer reporting 'net emissions' that solely factor in carbon credit purchases.
[6] For consistency across NSE, the Full-Time Equivalents (FTE) data used to normalize our environmental data is sourced from NSE internal management reporting. These FTE amounts vary slightly with those reported in statutory financial statements depending on country-specific reporting requirements.
At the heart of Deloitte Middle East’s sustainability strategy
Recognizing that the driving force behind impactful change resides within our people, we have placed them at the heart of our mission. Through Deloitte Middle East’s WorldClimate strategy, we aim to:
- Educate our people about climate change impacts and foster a culture of cooperation in sustainability;
- Enable our people to make environmentally conscious choices at home, at work, and in their communities; and
- Engage them year-round in climate action initiatives, resulting in measurable environmental and societal benefits.
Our commitment to empowering individuals to lead positive, sustainable change is brought to life through our seamless integration of sustainability into our employee journey. We ensure accessibility to networks, tools, resources, and engagement opportunities for everyone within our organization.
Our mission revolves around educating and engaging our Deloitte Middle East professionals on the profound impacts of climate change, instilling awareness about their choices in consumption, usage, and purchases. We empower them to make climate-conscious decisions both personally and professionally, amplifying these choices through their personal networks. Deloitte Middle East collaborates with world-leading experts to leverage the latest science and insights, and provides its professionals with continuous climate learning opportunities.
Our dedication to sustainability translates into actionable change. We have introduced a number of tools to help our people embed sustainability within their roles, but did not stop there. We've also equipped them with innovative platforms to comprehensively estimate, understand, and analyze their personal carbon footprint. These resources cover various aspects of their lives, from home and food to travel, pets, financial services, clothing, and more.
Going beyond knowledge and analysis, we provide our professionals with opportunities for active participation in climate action, sustainability challenges, volunteering opportunities, as well as internal climate champion networks. Such initiatives foster collaboration and community engagement, and provide our employees with platforms to exchange, ideate, and implement sustainability initiatives within and beyond our organization.
In this journey, we envision a future where sustainability is not just a concept but a way of life, and we are striving to empower our people to drive the transformation. Together, we are making strides toward a better, more sustainable world.
Empowering youth for a sustainable future
At Deloitte Middle East, we believe that mitigating the impacts of the climate crisis is a monumental task, yet progress is possible if we act collectively. We all have a role to play, especially the youth who are the leaders of the next generations. As a partner in the UN Global Compact Network Lebanon (UNGCNL) Sustainable Development Goals (SDG) Brain Lab, Deloitte Middle East actively participated in the seven-month program, which empowered youth to advance the 17 SDGs of the UN 2030 Agenda, inspiring university students on climate action, and showcasing how corporates can play their role in achieving a positive sustainable change.
By engaging with the youth in initiatives such as the SDG Brain Lab, Deloitte Middle East has the opportunity to share expertise and empower the youth to become active drivers of change for a more sustainable future. By involving them in discussions, and challenging them to act, we are fostering their passion, creativity, and problem-solving skills to inspire them to become a part of the solution.
As a company who understands the youth of today are the employers and employees of tomorrow, we took part in this journey because we firmly believe in the transformative power of young people. They possess a fresh perspective, innovative ideas, and a deep desire to make a positive impact. Engaging with youth allows us to contribute to their development, provide guidance, and learn from their unique insights and experiences.
Sustaining our buzz: A growing commitment to beehive adoption
Last year, Deloitte Middle East embarked on a mission to support bee preservation, sustainable honey production practices, and local communities through adopting beehives. This was in response to the decline of bees around the globe due to habitat devastation, deadly mites, and climate change. In line with Deloitte Middle East's WorldClimate commitment to drive responsible climate choices within and beyond our organization, our dedication to this important initiative remains firm.
Our professionals have had the unique opportunity to witness the incredible world of bees firsthand. Visits to the apiary have allowed them to delve into the fascinating intricacies of beekeeping and bee behavior, guided by a team of dedicated professional beekeepers. Bees are more than just insects; they are guardians of our ecosystem and champions of global food production. Their tireless efforts improve the livelihoods of billions of farmers worldwide, while simultaneously sustaining the delicate balance of our environment and offering invaluable medicinal benefits.
In a world facing a multitude of challenges, Deloitte Middle East is deeply proud to be part of a project that genuinely makes an impact that matters. By sustaining the buzz of these remarkable creatures, who are essential partners in our quest for a sustainable and harmonious world, we are actively contributing to the well-being of our planet and the prosperity of future generations.