Climate crisis: the big disruption transforming business

With the UAE gearing up to host COP28, and 2023 having been declared by the country as the ‘Year of Sustainability’, initialisms such as ESG (Environmental, social, and governance), CSR (Corporate social responsibility), and terms such as climate action have gained more significance than ever before.

Sustainability Middle East (SME) recently had the opportunity to interview London Business School’s Dr Ioannis Ioannou, capturing his insights on the opportunities and challenges facing stakeholders in the important year ahead.

During the interview, Dr Ioannis discussed how climate change presents business with opportunities, not just challenges and how sustainability is one of the biggest disruptions facing the business community. He also talked about his expectations of COP28, and discussed energy transition and other crucial topics.

Here follows extracts from that interview:

Your thoughts on sustainability: business challenges versus business opportunities?

It totally depends on the approach that a company takes. Every company has a different approach. For example, Patagonia as a company is closer to environmental issues while Starbucks speaks of diversity.

There are two factors - first is the willingness, which is based on the values, culture, and norms of the organisation, but willingness alone is not enough.

The second factor is essentially capabilities or capacities. You also need to evaluate your abilities in terms of the cost and benefits of acting on an issue; whether you have the right resources, innovation potential, and change capabilities - right now and into the future.

What are your thoughts on ESG in the Middle East?

There has been a certain amount of hype and hype is not a bad thing, in the sense that there needs to be a hype in order to, ultimately mobilise. The problem arises when companies try to cheat their way through by greenwashing; when they exaggerate, and when they are not being sincere.

Otherwise, hype can be great. It creates momentum, which is particularly vital to the world - our world that is facing acute environmental issues when faced with rising temperatures.

For example, in the Middle East, and elsewhere in the world, we are beginning to see countries rise to the challenge of transitioning from oil and gas to renewables. Of course, different regions of the world move at different speeds, but let us not forget that we are very globally connected economies.

For example, if you have asset managers in the Middle East, but their asset owners are in the Nordic countries, you are going to see how the cascade mechanism works because they are going to demand operational integration of ESG, and they are going to ask about the company’s ESG credentials.


Therefore, one sees that because of the interconnectedness of the global financial systems, some of the demands are going to cascade and pressure is going to come from multiple sources. This confluence of factors is principally drawn from the region’s historical dependency on fossil fuels, and because of the interconnectedness of the global financial system.

The rest of the interview with Dr Ioannou may be viewed here.