One of the Biggest Disruptions Facing Businesses in last 50 years is Sustainability: Dr Ioannis Ioannou

With the UAE gearing up to host the COP28 and 2023 having been declared by the country as the Year of Sustainability, the topics such as ESG, CSR, Climate Action and Environment have gained more significance than ever before.

Recently, Sustainability Middle East (SME) had the opportunity to interview, Dr Ioannis Ioannou from the London Business School to understand the opportunities and challenges facing stakeholders towards achieving these goals.

During the interview, Dr Ioannis highlighted - how climate change presents business with opportunities not just challenges and how sustainability is one of the biggest disruptions facing businesses. He also talks about his expectations from COP28, energy transition and other crucial topics. (Excerpts from the interview).

Your thoughts on Sustainability – Business challenges v/s 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.

Here comes in the second factor - 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.

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Therefore, based on these two factors, chances are that every company is going to give a different answer. There is a whole spectrum of answers for this particular question. So there are several companies who just stick to the compliances while there are some who go ahead and experiment with new things and ideas.

These experiments are done by those companies who have the capacity to venture into waste management, energy management and the likes - even though these are not a part of compliances, they reduce the cost in the long run.

However, I think the time to invest in sustainability was yesterday because these environmental and social challenges are not going to wait for anybody and by the time you start investing, it’s too late. It might be too late to start investing now.

What are your thoughts on ESG in the Middle East?

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 Green Washing; when they exaggerate, and when they are not being sincere.

Otherwise, hype is great. It creates momentum, which is particularly vital to the world - our world that is facing environmental issues like the climate change and especially for the regions where the temperature is rising faster.

For example, the Middle East and elsewhere in the world. These regions will have challenge of transitioning from the oil and gas to renewables; and certainly, there is increasing interest.

Different regions of the world move at different speed and 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 it’s going to cascade because they are going to demand integration of the ESG and they are going to ask about the company’s ESG credentials.

Therefore, you see that because of the interconnectedness of the global financial systems, some of the demands are going to cascade.

Therefore, pressure is going to come from multiple sources/ways - both because of their actual physical impact, their history of fossil fuels and because of the interconnectedness of the global financial systems.

COP28 is being hosted in Dubai and UAE has declared the year 2023 as the year of sustainability. Your thoughts?

Time will tell. What I do know is, this is going to be an absolutely crucial COP. And that’s because the process of the COP28 itself is in a flux because it’s being reformed.

Yes, we have the Paris agreement then we say 2 degrees and then we want 1.5 degrees - we have made some commitments but given the timeframes that we are facing we really quickly have to move into action.

The first question is whether a global forum like COP is the right platform to promote action as opposed to the commitments. I don’t think we know the answer to that question yet, because we are rethinking the very process of what COPs are and what they can do.

There are voices and I am sympathetic to some of them where the COP care too much about the fanfare and the symbol as opposed to the substance and I always say - we need to judge them by the results, the real results.

And I am worried because this is COP28 and if you skip the year of the pandemic, we have been discussing this for 29 years and still we haven’t been able to agree - in the final statement, that we need to phase out for fossil fuels.

So, even on the commitment front we need to align our commitments with the underlying science that would give me, at least, a very powerful signal that we are really serious about getting on track. Even the new president of COP28, in his talk in Abu Dhabi, is saying that we are way off track.

And I feel we are not only off track, we are riding in the opposite direction. We should be cutting our emissions and we are still increasing them.

So, there is a lot to do and I don’t think that we should talk about climate change and emission only during the days of the COP, everyone - governments, organisations, individuals, institutions and everyone needs to be involved because in my humble opinion we are at a point where we don’t have the luxury to choose.

We can’t say that oh! It’s only lifestyle change or only governments, we are at a point where we should do all of the above and hope for the best.

So, COP - yes it can align and bring diversity together. We shouldn’t be contesting instead we should be moving towards what science is telling us. So, actions will speak louder than words and symbols.

Were you or were you not okay with COP27’s outcome?

My expectations were low to begin with. My disappointment started with COP26 where instead of phase out, we went for phase down. Then COP27, I think - it did not deliver as it should have because the targets we have set are very high.

So, for example between COP26 & 27, we haven’t seen sufficient increase in ambitions of countries to make more commitments and that’s why we are at 2.5 or 2.7 degrees instead of the 1.5 degrees, we are not even close to 1.5 or even to 2 degrees - so how could I not be disappointed?

Did actually something happen? No, there were symbols and statements but on the ground it’s judged from the real action. Even loss and damages is a very contestable issue but it’s progressing very slowly.

Pakistan was already a third underwater when we were discussing Loss and damages. Pakistan is a country that contributed 0.8% of the carbon emission historically - suffering, huge consequences. I understand it’s a part of the process.

I mean 200 countries coming together. Trying to make a sense out of it. And that’s why I said there is no global governance and I do think and encourage every single government In addition to coordinating with other governments be as aggressive as it can on this issue.

Because you know these issues do not have borders. So on your question COP 27 may not be raising the level of ambition in getting us closer to the path where we should be.

It opens some issues for real action and now you see that your expectations are going down like that you just hope and pray that This COP will do at least better.

Please share with us your final words on energy transition?

Energy transition is absolutely, absolutely essential. I was worried after the invasion of Russia on Ukraine. As this sent us back but then was encouraged because of some reports which highlighted that the need to reduce dependence on gas has actually accelerated dependence on renewables.

So somehow, it did move in the right direction. Here, it forces us to think that energy transition- in general, might also be a way to mitigate some of the short-term crisis. For example, the cost of living crisis because if energy transition can be managed correctly, can create jobs in the process.

The transition is a huge thing. It is equivalent to a revolution. It’s kind of replacing all the fossil fuels with renewables so that energy transition can deal with the issue of climate change and with the issue of energy security. It can be decentralised and reduce our dependence on countries like Russia, for example.

Of course, these are huge issues that expect huge investments but why do you think some of the richest people are putting billions in the energy funds because it’s understood that in order to increase the reliability we need to invest much more - in energy storage, in finding innovative ways for energy transfers.

Energy transition is inevitable and it needs needs a lot of technological innovations and advancement.

But I’m very glad that a lot of investments are being put in that direction and not only is it a necessity but it will also bring in affordable energy and energy security besides creating job opportunities and help us address some of the current crisis.

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