Gulf businesses at high risk, warns KPMG at Doha

In a keynote address at today’s WBCSD/ICC Global Business Day event at COP18, Doha, KPMG warned businesses in the Gulf region they face a perfect storm of climate-related risks and should be on red alert.

Yvo de Boer, KPMG’s Special Global Advisor on Climate Change and Sustainability said a unique combination of climate change, water scarcity, energy and fuel pressures pose particular risks to businesses in the Gulf Cooperation Council (GCC), calling on the region’s business leaders to act now.

“Countries in the GCC make up a region that currently has the lowest energy efficiency in the world, and arguably the most to gain from improvements in business strategy and innovation. We are not talking about green wash or PR, we are talking about serious innovation, growth, productivity and risk reduction in order for Gulf countries to remain profitable into the future,” urged Mr de Boer.

Launching a KPMG International study into the unique business risks facing the GCC region entitled, Future-proofing business in the GCC – Opportunities for Sustainable Growth, de Boer said: “Maintaining business as usual is not an option if GCC goods are to remain competitive and the region’s companies are to represent attractive opportunities for global investors and business partners alike.”

Calling it a “wake-up call” to businesses unaware of or not responding to the significant shifts happening in the region, de Boer said KPMG found that just 11 percent of the 75 largest companies in the GGC have a sustainability strategy, policy or vision compared to 95 percent in Europe and 85 percent in America. Per capita energy consumption in the region is already high with UAE, Qatar and Kuwait among highest in the world, and predicted to double between 2008 and 2020.

“The extraction of fossil fuels will never be completely environmentally friendly and it is unrealistic to expect a wholesale shift away from these resources in the short term. The challenge, therefore, is to put commodities and goods into the market in a way that minimizes damage.”

Mr de Boer said he was pleased with the proactive response from GCC governments on managing energy and water demand as well as new policies on renewable energy and green building codes. He further called for both government and business action to make the region a global model for water efficient processes through its innovation on solar powered desalination plants and the development of sustainable cities.

Key findings include:
Energy and fuel: domestic consumption is becoming a significant portion of daily production, e.g. around 30% in Saudi Arabia, affecting oil exports and financial returns for the government.

Environmental: The world is on course for a long term global temperature rise of 3.5 C – predicted to be 4 C by 2100 in the GCC region resulting in storms, cyclones and sea level rises which could threaten desalination plants.

Political: Governments and businesses in the region are coming under increased international pressure to reduce GHG emissions: Bahrain, Kuwait, Qatar and UAE are currently the world’s highest per capita carbon dioxide emitters.

Wealth: The GCC is one of the fastest growing regions in the world due to large hydrocarbon resources and strong performance of oil exports. However, in a resource-constrained world, companies relying on the strong regional spending power and luxury lifestyles face significant risks if that wealth is no longer sustainable.