As the devastating effects of the Covid-19 pandemic continue to play out globally, the major long-term threat facing humanity – climate change – has not vanished.
The World Economic Forum’s Global Risk Report 2021 identifies environmental risks, including extreme weather, climate action failure and human environmental damage as the biggest global risks by impact and likelihood.
This reminds us that climate change should be among the top priorities for policymakers in the year ahead. At the same time, it must also be top of agenda for business leaders. The climate debate has shifted. It has evolved into a global business imperative, as investors increasingly direct capital towards economies and organisations that adopt sustainable financing models and practices. The world is increasingly embracing the importance of stakeholder capitalism to address the world’s greatest challenges.
The Middle East is especially vulnerable to climate shocks, facing a range of risks such as: water scarcity, high levels of pollution, reduced rainfall, drought and a loss of biodiversity.
With growing a global population that will require investments in infrastructure to reach $90 trillion globally in 2030, there are opportunities for leaders of the public and private sectors to collaborate and build a more sustainable and resilient Middle East.
The UAE, for example, is serious about tackling the environment threat. In November last year, Dr Sultan Al Jaber was appointed as the UAE's special envoy for climate change. And the country has announced its aims to reduce carbon emissions by 23.5 per cent by the year 2030. That target is set to increase to 50 per cent by 2050, the UAE said. These goals are likely to be met through various means: increasing the capacity for clean energy, boosting energy efficiency, promoting sustainable agriculture, capturing more carbon and implementing environment-friendly waste management.
Across the world, 2021 is set to be crucial year for the global climate, ending with the COP26 summit in Glasgow in November. Even before that date, people across the world expect leaders to take decisive action on fighting the climate crisis.
Major economies and economic blocs, including the UK, China and Japan have already committed to net-zero targets.
In the US, President Joe Biden rejoining the Paris Agreement testifies that his administration will be serious about climate action.
In the EU, compliance with emission and waste targets is increasingly embedded within legislation and the private sector takes a major role in the green transition.
The momentum on the global level is amplified by changing signals from markets. Fund managers increasingly require environment, social and corporate governance (ESG) reports for major financial and investment decisions. And global investors expect companies to provide a clearly articulated vision to promote sustainable business, coupled with a solid ESG strategy for the entire value chain of their business operations. The sustainability debate has become a global business imperative. This marks a big shift from what used to be the norm till just a few years ago.
Given the urgency of the climate crisis and how it will effect the region, 2021 can be a year of opportunity
Some governments in the Mena region are taking critical measures to advance sustainability. Like the UAE's climate goals, Saudi Arabia, too, as the largest economy in the region, has made sustainability a pillar of its Vision 2030. As the Kingdom continues to transform from a carbon-based to a diversified economy, its government has launched many projects related to green energy – including in wind, solar and hydrogen power.
Egypt has issued a first-ever green sovereign bond, valued at $750 million, as part of its efforts to carry out renewable energy projects. In addition, to combat plastic pollution, a new waste management law puts curbs on the manufacture, import or export of single-use plastic bags.
These commitments to net-zero and sustainability efforts create the environment needed for companies to update their business models to meet new ESG standards.
Regional players are making sure that ESG targets are an integral part of their companies' strategies and that these positions are aligned with government policies.
By anticipating the emerging trend of legally binding norms and regulations on net-zero, and by implementing these priorities within business models and operations, such companies build on their relevance for investors in the long term.
Given these changing expectations, progressive companies must look at sustainability through the framework of the triple imperatives of adaptation, mitigation and risk assessment.
First, to design investment strategies for the long-term, regional companies must acquire a solid understanding of how climate variations have an effect on their business units. They must provide protection for shareholders, employees and the wider stakeholder community, and at the same time they must decrease unpredictability.
Second, they must identify metrics to reduce their greenhouse gas emissions, thereby increasing energy efficiency and cutting operation costs, while setting the stage for transitioning to the production of carbon-free energy.
Finally, they should assess future risks in a variety of areas, minimising waste, accessing resources, stabilising operating licenses, adapting to regulations, mitigating potential reputational risks and satisfying customer demand.
In taking these steps, private sector leaders do their bit to add to the information about sustainability practices that exist in the region in the form of educational campaigns and in the media.
Given the urgency of the climate crisis and how it will effect the region, 2021 can be a year of opportunity to drive the sustainability agenda forward and build on existing opportunities. This will be crucial to create a more sustainable and inclusive Middle East.
Mirek Dusek is head of Europe, Eurasia and the Middle East, World Economic Forum
(This article is part of the World Economic Forum’s The Davos Agenda, 25-29 January 2021)
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
'Ghostbusters: From Beyond'
Director: Jason Reitman
Starring: Paul Rudd, Carrie Coon, Finn Wolfhard, Mckenna Grace
Rating: 2/5
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Company Fact Box
Company name/date started: Abwaab Technologies / September 2019
Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO
Based: Amman, Jordan
Sector: Education Technology
Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed
Stage: early-stage startup
Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.
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