Original content provided by BDO Canada
Environmental, social and governance (ESG) is rapidly becoming a core pillar of long-term growth and sustainability for organisations globally. In Oman, this shift aligns closely with Oman Vision 2040, which identifies sustainable development, environmental stewardship and effective governance as key pillars of the country's long-term economic transformation. Oman has also committed to achieving net-zero emissions by 2050, while targeting renewable energy to account for approximately 30% of total electricity generation by 2030. At the corporate level, ESG reporting expectations are accelerating, with the Muscat Stock Exchange (MSX) introducing mandatory disclosure of 30 ESG metrics for listed companies from 2025.
• Focusing on ESG has become an excellent defense to retain talent and a great offence to at-tract new talent.
• Organisations are focused on maturing equity, diversity and inclusion practices, enhancing em-ployee health and wellness programs and taking environmental action.
• Today, younger generations are considering an organisation's ESG actions with similar priority to financial compensation.
As a result, senior leaders are investing in ESG programs, initiatives and reporting today.
After factoring in these driving forces, climate change and environmental risks have moved from the bottom of senior leaders’ risk agendas to near the top, as they believe ESG efforts will be critical for long-term growth.
Not only are they committed to prioritising ESG risks and opportunities, but they are holding them-selves accountable by linking their direct compensation to ESG performance. To enable ESG programs, senior leaders are increasing their spending on ESG programs to set strategies, establish targets and commitments and create meaningful impact.
• Defines an innovative vision and purpose of an organisation by identifying non-financial drivers
• Improves access to credit and the ability to attract investment
• Systematically reports the link between strategy and financial performance, including impacts of ESG factors
• Identifies, monitors and manages non-financial risks correctly
• Improves data quality for more effective information management and decision making
BDO has identified a five-stage maturity roadmap that helps illustrate the sustainability integration journey. It aims to help simplify the complexities of sustainability and promote the value that sustain-ability integration can create for a business.
A business at this stage is looking to activate its sustainability agenda by assessing and priori-tising its materiality risks and opportunities through the lens of various stakeholders. The pro-cess involves education, training and a review of the business operations and governance.
• Compliant
A business at this stage has elements of a sustainability program in place, albeit on an ad hoc basis because of being reactive and narrowly focusing on responding to regulatory and stake-holder requirements.
• Proactive
A business at this stage has adopted a systematic, whole-of-business approach to its sustaina-bility program and is looking to boost value creation opportunities internally and externally.
• Strategic
A business at this stage has embedded sustainability across most parts of the company. It is de-veloping products and services, focusing on circularity and technology and ensuring they posi-tively impact the markets where they operate.
• Purpose-driven
A business at this stage has embedded sustainability across all parts of its business. It is using social, economic and environmental criteria beyond what is required by law to positively im-pact those in its value chain.
BDO Oman helps businesses navigate this transition by providing end-to-end ESG support, including materiality assessments, ESG strategy development, sustainability reporting, governance enhancement, risk management and assurance services. Combining deep local market knowledge with global ESG expertise, our professionals work closely with organisations to align sustainability objectives with busi-ness goals, strengthen stakeholder confidence and create long-term value while supporting the ambi-tions of Oman Vision 2040.
Environmental, social and governance (ESG) is rapidly becoming a core pillar of long-term growth and sustainability for organisations globally. In Oman, this shift aligns closely with Oman Vision 2040, which identifies sustainable development, environmental stewardship and effective governance as key pillars of the country's long-term economic transformation. Oman has also committed to achieving net-zero emissions by 2050, while targeting renewable energy to account for approximately 30% of total electricity generation by 2030. At the corporate level, ESG reporting expectations are accelerating, with the Muscat Stock Exchange (MSX) introducing mandatory disclosure of 30 ESG metrics for listed companies from 2025.
Investors increasingly prioritise ESG performance
Now, more than ever, investors believe that companies that prioritise ESG investment and action repre-sent better long-term returns. At the same time, financial institutions and asset managers are evaluat-ing ESG practices, which are directly impacting organisational risk profiles and resulting costs of capi-tal.Talent expectations are changing
• Organisations of all sizes are combating the “war on talent” and the “great resignation” era.• Focusing on ESG has become an excellent defense to retain talent and a great offence to at-tract new talent.
• Organisations are focused on maturing equity, diversity and inclusion practices, enhancing em-ployee health and wellness programs and taking environmental action.
• Today, younger generations are considering an organisation's ESG actions with similar priority to financial compensation.
As a result, senior leaders are investing in ESG programs, initiatives and reporting today.
After factoring in these driving forces, climate change and environmental risks have moved from the bottom of senior leaders’ risk agendas to near the top, as they believe ESG efforts will be critical for long-term growth.
Not only are they committed to prioritising ESG risks and opportunities, but they are holding them-selves accountable by linking their direct compensation to ESG performance. To enable ESG programs, senior leaders are increasing their spending on ESG programs to set strategies, establish targets and commitments and create meaningful impact.
Benefits of enabling sustainability programs
• Builds organisational image and reputation• Defines an innovative vision and purpose of an organisation by identifying non-financial drivers
• Improves access to credit and the ability to attract investment
• Systematically reports the link between strategy and financial performance, including impacts of ESG factors
• Identifies, monitors and manages non-financial risks correctly
• Improves data quality for more effective information management and decision making
How to get started
Part of the challenge for many organisations is understanding where to start. BDO's roadmap is not meant to be linear and the adoption and execution of sustainability will not be the same in any two businesses. In some cases, a company may leapfrog several steps or be forced to join in at the ‘compli-ant' stage. It is important to keep in mind that this is a journey that will continue to grow in value and importance.BDO has identified a five-stage maturity roadmap that helps illustrate the sustainability integration journey. It aims to help simplify the complexities of sustainability and promote the value that sustain-ability integration can create for a business.
BDO's sustainability integration roadmap
• ActivatingA business at this stage is looking to activate its sustainability agenda by assessing and priori-tising its materiality risks and opportunities through the lens of various stakeholders. The pro-cess involves education, training and a review of the business operations and governance.
• Compliant
A business at this stage has elements of a sustainability program in place, albeit on an ad hoc basis because of being reactive and narrowly focusing on responding to regulatory and stake-holder requirements.
• Proactive
A business at this stage has adopted a systematic, whole-of-business approach to its sustaina-bility program and is looking to boost value creation opportunities internally and externally.
• Strategic
A business at this stage has embedded sustainability across most parts of the company. It is de-veloping products and services, focusing on circularity and technology and ensuring they posi-tively impact the markets where they operate.
• Purpose-driven
A business at this stage has embedded sustainability across all parts of its business. It is using social, economic and environmental criteria beyond what is required by law to positively im-pact those in its value chain.
BDO Oman helps businesses navigate this transition by providing end-to-end ESG support, including materiality assessments, ESG strategy development, sustainability reporting, governance enhancement, risk management and assurance services. Combining deep local market knowledge with global ESG expertise, our professionals work closely with organisations to align sustainability objectives with busi-ness goals, strengthen stakeholder confidence and create long-term value while supporting the ambi-tions of Oman Vision 2040.