The role of business leaders in Saudi Arabia’s sustainability transformation

To say that the challenges of the last few years have underscored the importance of sustainability in safeguarding the future would be an understatement. The onset of the COVID-19 pandemic, climate change and growing economic disparities have highlighted the need for greater collective action to spur real, lasting change, unifying global leaders and changemakers. This could be seen in the international push to achieve the United Nations Sustainable Development Goals.

Under the guidance of local leadership, Saudi Arabia is one of several nations setting the pace for purposeful entrepreneurship and community building. Steered by Vision 2030 — a strategic framework launched to enrich the Kingdom’s economy and communities — the country is well on its way to becoming a hub of sustainability.

With the global economic landscape evolving rapidly, presenting new, unprecedented challenges — and the UN climate conference in Egypt just around the corner — it has never been more important for businesses to embrace a more sustainable outlook. This presents business leaders an opportunity to take up the mantle as partners to the Kingdom: enablers of national plans and strategies such as the Saudi Green Initiative.

Having served as the general manager of IBM in Saudi Arabia for the past two years, I have seen how impactful government-aligned leaders, businesses and entities can be when committed to effecting change. Leveraging our resources, expertise and well-established ecosystems, we can bring the objectives of Vision 2030 and the SGI to bear.

Greener goals

Together, we can help the Kingdom increase its reliance on clean energy, offsetting emissions and protecting the environment to reach net-zero by 2060. We are committed to achieving net-zero greenhouse gas emissions at IBM by 2030. Our environmental justice programs — including the IBM Sustainability Accelerator — support organizations and communities to safeguard the environment.

To ensure that we accomplish these, however, business leaders must understand and empathize with sustainability and recognize the imperative for innovation across the business model.

IBM’s annual CEO study, “Own Your Impact: Practical Pathways to Transformational Sustainability,” surveyed more than 60 CEOs in the Kingdom and found that nearly half of respondents rank sustainability as a top priority for their organizations. This finding reveals that business leaders must now position sustainability at the core of business operations and strategy.

They should do so by outlining and actioning five business priorities, including a sustainability strategy and roadmap; environment, social and governance data; reporting and risk management; intelligent assets, facilities and infrastructure; responsible computing and green IT; and a sustainable supply chain and circularity.    

New metrics and key performance indicators must be created to help leaders understand how and when to reward new sustainability behaviors. Scenario planning as a regular leadership activity is critical. Having diverse stakeholder relations, including government, suppliers and community leaders, will bring insight into scenario planning.

Leaders can make the most of this insight to increase business agility and responsiveness to external shocks. Additionally, insights driven by artificial intelligence will encourage forward predictive planning rather than looking to the past.

In Saudi Arabia, there is a growing awareness of the importance of AI, with advanced technologies being identified as crucial to accelerating the nation’s transition from an oil and gas-dependent economy to a knowledge-based service economy.

For example, we just announced our strategic collaboration with the Saudi Data AI Authority and the Ministry of Energy to accelerate sustainability initiatives in Saudi Arabia using AI to detect, map and eventually reduce carbon emissions across the country.

Harboring innovation

Businesses must focus on the future to baseline their current operations and assess these against ESG objectives, GHG targets and UN SDG. Doing this provides immediate priorities and identifies areas for innovation, like a rapid transition to renewables.

Work with the business leaders and key external stakeholders to co-create an innovation strategy grounded in sustainability and aligned to the overall business plan, outlining how the organization will create, capture and share new value.

Reconsider the whole business model and reinvent it. The transition of business models needs to allow the new company to flourish alongside the old business that is slowly decommissioning.

Insulating the new business from old behaviors, metrics, processes and reporting norms will be challenging while allowing the new business full access to existing core competencies, expertise and networks.

Educating the society

State, national and international regulations are creating a broader market for sustainable products and services. It means businesses can help build customer-driven demand through education. When consumers become disconnected from the value chain of the products they buy, they are often unaware of the mix of raw materials, processing steps or the global supply chain that brought it to them. Consumers need to understand the true value of products, the effects of product waste, and the steps sustainable businesses take to create broader societal value.

Investing in business change and education programs is a priority. To build sustainability knowledge throughout the workforce, businesses must create new mental models for how work will now get done.

We recently signed a strategic agreement with King Saud University to educate young learners and advance skills development through AI. We will collaborate with KSU to set up upskilling programs that promote AI education.

Sustainability is a mindset change and needs significant leadership, behavioral, metrics, partnership and operating model change. Technology innovation is a key enabler to sustainable business models.

Empowering sustainability

Putting sustainability at the heart of business models drives complicated strategic change, and business leaders must be willing to compromise. Businesses must be willing to pare down their business models to a core value set and challenge who they are, how they operate, who they partner with and how they create and share value with the community.

First movers are demonstrating progress in sustainable solutions almost daily. The challenge is how to scale fast enough. Unfortunately, many incumbents will falter and continue exploiting their existing capabilities and assets, ignoring future-proof opportunities.

The world needs the first movers to succeed. We must champion sustainable societal and governance standards to build businesses that thrive in new sustainability-based markets with new terms of engagement and reduced environmental effects.

Companies that change their business models to create shared value will be the beacons of international business and the guardians of nascent “pay it forward” momentum.

Let’s turn sustainability into action.

• Fahad Alanazi is the general manager of IBM Saudi Arabia.