Saudi Arabia's ESG Transformation

Sustainability has been a foundational element of Saudi Arabia's Vision 2030 from the outset. While Environmental, Social, and Governance (ESG) trends have gained traction globally, they remain relatively new concepts in Saudi Arabia and the wider Middle East. The Saudi government has launched various green energy generation projects to produce 3,300 megawatts (MW) of renewable energy, including the development of large-scale solar farms and wind farms.

The Kingdom's Sustainability Efforts

Saudi Arabia is taking comprehensive steps to promote ESG practices and achieve its 2060 net-zero target. The government, in collaboration with businesses and investors, is working toward building a more environmentally friendly, socially responsible, and transparent economy. The government is actively working towards mitigating climate change impacts. It has pledged to reduce its carbon emissions and has signed the 2015 Paris Agreement. Initiatives like the Saudi Green Initiative and the Middle East Green Initiative aim to combat climate change by promoting sustainable practices and investing in clean technologies.

ESG in Investment

ESG considerations are swiftly becoming a priority for investors in Saudi Arabia. Financial institutions and asset managers are incorporating ESG factors into their investment decision-making processes. The Saudi Stock Exchange (Tadawul) launched ESG disclosure guidelines in 2021, providing a framework for companies to report on their environmental, social, and governance performance.

Government Initiatives

The Saudi government has introduced several reforms to enhance corporate governance practices and transparency. Notably, the Capital Market Authority (CMA) has implemented the Corporate Governance Code, which outlines standards for boards of directors, disclosure requirements, and shareholder rights. As a result of these reforms, there has been a substantial 30% increase in foreign investment, reflecting growing investor confidence in the Kingdom's commitment to improved corporate governance and transparency.

Resilience through Digital Connectivity

Digital connectivity plays a critical role in ESG+R (Resilience) goals. Saudi Arabia has recognized the importance of improving digital infrastructure, Investments in digital infrastructure, such as fibre-optic networks and 5G technology, have substantially improved internet speeds and coverage. The Speedtest Global Index ranks the Kingdom’s mobile internet speeds as the 11th fastest in the world, while broadband speeds position the country in 41st position globally.