When we reflect on the impact 2020 has had on our industries, we are quick to reference the role the pandemic has played in triggering a much broader adoption of new practices and approaches.
From focusing on sustainability, to new methods of using technology and addressing challenges, the past year has prompted us to think more deeply about the kind of organisations we want to create for the future.
Focus on sustainability
The significance of environmental, social and governance (ESG) agendas for both stakeholders and investors became more apparent over the past year, and its long-term importance is undeniable. According to the World Economic Forum, in the first four months of 2020, investors poured a record $12.2bn into ESG funds.
Businesses with dynamic management strategies, dedication to ESG priorities and institutional agility are expected to emerge as primary winners of this shifting landscape. The rising importance of the ESG agenda has also led companies to focus on sustainability to deal with pressing challenges.
In the Gulf, we have seen a flurry of initiatives that encourage sustainability, including the production and use of renewable energy, encouraging investment in the green economy and raising the environmental efficiency of infrastructure projects, among others. As Gulf countries have an abundance of sun, solar power is naturally the way of the future. While the drive to expand this sector is largely driven by commercial considerations – it is now cheaper than burning oil and, in some cases, than developing gas reserves – there is an increasing awareness among citizens of the importance of preserving the environment for future generations.
The UAE, particularly, has taken significant steps to become a global hub and a successful model of the new green economy. The UAE National Energy Plan 2050 aims for medium to long-term decarbonisation and sustainable development.
In line with this plan, the government has invested heavily in developing solar energy resources, which in turn has led to a continued reduction in tariffs for solar photovoltaic energy, which dropped to Dhs4.97 fils/kWh ($1.35 cents/kWh) in a recent announcement in the UAE capital.
The past year has also seen countries look inwards for economic growth, highlighting a shift towards deglobalisation. Factors that promote globalisation – such as an open society, the affluence of consumers, a consistent supply and demand for energy, and a functioning global supply chain – are all at stake.
One of the leading factors of this trend is the protectionist barriers that have been erected worldwide. Initiatives such as America-first had a ripple effect across the globe as many countries adopted similar protectionist measures.
Another important factor behind today’s deglobalisation trend is the fraying of global value chains, which itself is the result of China’s transformation from a small export-driven economy into a much larger economy more reliant on domestic demand. We are even seeing changes in the Gulf. As countries try to diversify their economies, we are seeing more self-production and manufacturing.
While self-sufficiency is important and these trends will only make Gulf countries stronger, we must not lose sight of the importance of multilateral and global cooperation. The UAE has really excelled at this. With its soft diplomacy and international outreach, it has formed lasting relationships with dozens of countries worldwide.
Technology to aid
2020 has further demonstrated the importance of digital readiness, which allowed businesses to continue operating during the pandemic. Building the necessary infrastructure to support a digitised world and stay current in the latest technology will be essential for any business or country to remain competitive in a post-Covid-19 world.
We have seen numerous tech-based innovations in 2020 that have allowed us to work remotely, enabled drug development using AI and even helped e-commerce explode. In 2020, it was estimated that global e-commerce sales reached $4.2 trillion and the GCC e-commerce sector grew by 600 per cent.
Looking locally, as part of the UAE’s 50-year Development Plan, the Ministry of Industry and Advanced Technology has said that it is working to establish a regulatory infrastructure capable of enabling and stimulating the utilisation of innovations and technologies of the fourth industrial age to drive the growth of the sector.
The challenges of the past year have given the global economy an unprecedented reality check. It also exposed structural weaknesses in institutions and highlighted the need for reform in some sectors. We need to understand there might be even more daunting days ahead for us, but we should recognise it as an opportunity to build a more sustainable and inclusive future.
Countries need to tackle vulnerabilities in their economies, embrace innovation and move towards a more digital future. I am happy to live in a country that recognises the importance of these actions and is leading by example to offer the future generation a better tomorrow.
Amira Sajwani is a Senior Vice President at DAMAC Properties