The move to sustainable products and services is a global trend, accelerating at different speeds across different regions. Driven by increasing awareness of environmental issues, ethical concerns, and a desire for healthier lifestyles, consumers are demanding more eco-friendly and socially responsible options.
The outcome is an increased demand that transcends sectors – from electric cars and eco-friendly tourism, to new approaches to ethical fashion and the transformation of the food and beverage sector.
But what does this trend look like in the UAE and wider GCC region? Are we behind or ahead of the curve? And what should entrepreneurs and businesses in our region be thinking about when they decide to enter the market with a sustainable product or service?
These are vital questions, because in my view there are some disconnects that are not always addressed. Let’s look at these now.
Sustainability: What do GCC customers really care about?
The first thing to understand is that there is growing awareness in the GCC around sustainability. A study of 23,000 regional consumers by Bain & Company showed that 64% of people reported high levels of concern about sustainability, and these concerns have increased over the past two years, prompted by extreme weather. In terms of age demographic, it was found that Generation Z (72%) and Baby Boomers (68%) in our region were almost equally concerned about the environment.
So what’s the problem? The issue is that consumer behaviour can evolve faster than many companies expect, often influenced by external factors such as government regulations. To take a couple of examples: China introduced financial incentives for electric vehicles in 2009, resulting in 19% of Chinese consumers now driving electric cars – far higher than the global average. In the UK, a requirement for retailers to charge customers for single-use plastic bags has reduced their usage by 98% since 2015.
So, it’s often consumers and governments taking the lead, with companies trying to keep up. The numbers back this up: over 60% of businesses are not on schedule to meet their sustainability objectives. However, there is reason for optimism, with research suggesting that consumers (and employees) could play a crucial role in guiding businesses towards their sustainability goals.
Businesses listening to their customers and employees will also help with another challenge – aligning a company’s sustainability metrics with those most relevant to customers. For example, consumers are often more concerned about how a product will be re-used or recycled. Meanwhile, businesses might measure sustainability based on factors such as how products are made, components used, and the supply chain. It’s the role of marketing and good external communication to bridge that gap.
The stakes are high. According to the Visa 2023 Sustainable Commerce Study – which focused on the UAE, Saudi Arabia, Kuwait and Qatar – between one-third to one-half of all consumers said they ‘consciously choose sustainable products’, even if they are more expensive.
Keeping up with regulations – how to stay current
To align yourself with what your customers care about, you need to stay up-to-date with government regulations, and where possible get ahead of them. The UAE has made remarkable progress in promoting sustainability through initiatives like UAE Vision 2021, UAE Water Security Strategy 2036, Abu Dhabi Sustainability Week, Dubai Clean Energy Strategy 2050. In Saudi Arabia, the Saudi Vision 2030 initiative, the National Renewable Energy Program, and the Sustainable Agriculture Initiative are just some of the programs in place.
These various endeavours have heightened awareness and influenced consumer behaviour towards more eco-friendly choices.
What sectors are most affected?
Almost all sectors are affected by the move to sustainability, but let’s focus on four crucial ones:
- Fashion: There is a growing demand for clothing made from organic or recycled materials, as well as for brands that prioritise ethical labour practices. Companies such as Patagonia have gained popularity for ‘greening’ their supply chain. In the UAE, Tamashee is a footwear brand that seeks to preserve culture and identity and has a charitable component for each pair of shoes sold.
- Food and beverage: Consumers increasingly choose organic, locally sourced, and plant-based options. This trend reflects concerns about health, animal welfare, and the environmental impact of intensive farming practices. Brands such as Oatly – a company producing alternatives to dairy products – was ranked by UK consumers as the country’s most sustainable food and drink brand. Meanwhile, Ripe Market in Dubai is dedicated to nurturing a vibrant community through innovative ideas, wholesome products, eco-friendly habits, and practices that promote well-being.
- Hospitality: There is a shift towards sustainable tourism practices, with hotels and resorts implementing energy-efficient measures, reducing single-use plastics, and supporting local communities. The UAE boasts many eco-friendly hotels, while the introduction of eco-tourism experiences in destinations like Ras Al Khaimah demonstrates a commitment to sustainable tourism development with wildlife sanctuaries and marine protected areas.
- Banking: One study discovered a significant trend among bank customers across UAE, Saudi Arabia, Kuwait and Qatar, with an average of 71% of those surveyed expressing a willingness to endorse banks that provide sustainable payment options. In fact, 66% of consumers reported choosing a bank based on its sustainability practices in the last 12 months. Consumers consider various factors such as simplified net banking, going paperless, and environmentally conscious operations as integral to their decision-making.
Sustainability strategies for businesses
I would recommend focusing on two key areas:
- Stay ahead of regulatory changes. As we have seen, government policies significantly impact consumer behaviour. Across all sectors, companies must take the lead in adapting to regulations that affect their operations. A company’s capacity to anticipate policy shifts and develop resilient strategies will determine its ability to outperform competitors.
- Formulate an agile strategy: Following on from the previous point, any plans made for the next decade need to incorporate strategies to cope with rapidly changing regulations and consumer behaviour. In such a dynamic landscape, companies can aggressively leverage marketing experiments, utilising digital tools to swiftly test sustainability messages and adapt to resonate with diverse consumer segments.
Conclusion
Research in the UAE, Saudi Arabia, and Kuwait reveals that 76% agree that a company’s sustainability efforts are likely to positively impact their choice when buying products. In addition, almost three-quarters said they would pay more for an item if the company selling it demonstrated sustainable practices. Companies in the GCC need to keep this in mind.
From fashion to food, and from transportation to tourism, businesses worldwide are adapting to meet this demand by offering eco-friendly alternatives and embracing sustainability practices. In our region, this trend is gaining momentum, supported by government initiatives and a growing awareness of environmental issues. As consumers become more discerning and conscious of their impact on the planet, the demand for sustainable solutions will continue to grow, shaping the future of commerce and consumption.
