Environmental, Social, and Governance (ESG) is a framework that helps organizations understand and manage business risks across the E, S, and G pillars. This concept is a proactive and comprehensive framework adopted by small-sized to large-sized organizations to improve their operational impacts and to benefit the stakeholders.
In 2022, Qatar hosted the FIFA World Cup and implemented several measures outlined by the United Nations’ Sustainable Development Goals (UNSDGs) by following a few ESG initiatives, such as developing green infrastructure and mobility, carbon offsetting, and circular economy (the recyclable stadium built in Doha).
Even before the FIFA World Cup, ESG considerations were made in Qatar, specifically within its Qatar Vision 2030. Qatar’s Vision 2030 was launched in 2008 with an aim to balance five essential challenges that will improve the quality of life in the country. The country aims to balance the five challenges-- modernization and cultural preservation, intergenerational justice, management of growth and expansion, skill development, and social development and environmental management.
From an ESG perspective, the country’s focus on “E” and “S” is evident in its vision as it aims for skill development, social development, and environmental management in the region. In terms of skill development and social progress, the country aims to improve labor participation and aspires to offer world-class education by providing excellent training opportunities to its citizens. With respect to environmental management, the country’s goal is to prevent environmental degradation and protect its natural environment. However, considering the pace of development across its oil & gas and petrochemical industries, the country’s vision of achieving a balance between protecting the environment and addressing its developmental needs would be a challenge.
Qatar’s ESG momentum in “E” and “G” has been quicker compared to the social momentum in line with the country’s vision. In terms of the environment, the government of Qatar has taken several initiatives to address climate change. In 2021, the Government established a Ministry for Environment and Climate Change department, and it has set a target to reduce greenhouse gas (GHG) emissions by 25 percent by 2030. In August 2021, the state-owned oil & gas giant Qatar Petroleum also set a target of reducing its GHG emissions by 25 percent by 2030, and it earmarked USD 170 million to reduce the usage of non-renewable energy sources.
In October 2021, the oil giant was rebranded to "Qatar Energy," and it is focusing on the transition to greener energy alternatives, highlighting its commitment to environmental responsibility. In 2022, the country developed a fully reusable stadium using 974 shipping containers, which were built using recyclable materials to ensure environmental sustainability during the FIFA World Cup. The stadium was non-air conditioned, with a 40,000 seating capacity. Qatar’s progress towards managing its environment has been highlighted by solid pledges and green initiatives that improve environmental sustainability. Furthermore, in 2023, the GCC country was reported to be testing its solar technology across a 35,000 m2 facility by investing billions of dollars to promote sustainable technologies.
Qatar’s social momentum has been aided by its improved gender representation in the workforce, initiatives taken for fostering economic growth through job creation, and improving access to education. The World Bank estimate in 2022 shows that Qatar has 60% of women participating in the workforce and is the only country alongside the United Arab Emirates (UAE) (53% of women participating in the overall labor force) to have a higher percentage of women in the workforce compared to other countries in the Gulf Cooperation Council.
Besides, the country’s hospitality, real estate, and construction sector generated approximately 1.5 million jobsduring the FIFA World Cup. In addition, the Government allocated USD 4.8 billion to the education sector in 2021 (10.5% of the total budget) to enhance education in the country. Hence, Qatar’s contribution to the social pillar of ESG in the past couple of years has been mainly through job creation to achieve social development as a part of Vision 2030.
Qatar is continuing to develop ESG frameworks to promote sustainable finance. The foundation for this was laid in 2016 when the Qatar Stock Exchange (QSE) joined the United Nations Sustainable Stock Exchange (UNSSE) initiative. The QSE, in 2017, launched a voluntary ESG guidance for listed firms (public firms listed in the QSE) to help them integrate ESG into their reporting process, and in 2018, launched a sustainability reporting platform to encourage ESG reporting among firms.
In November 2021, the QSE launched a tradeable ESG index-- MQ 20 ESG Index-- in collaboration with Morgan Stanley Capital Investment (MSCI) for companies listed on its exchange. The index will help identify the top 20 securities that exhibit the best ESG practices. Overall, the QSE promotes fair governance in the region among public firms, encouraging them to report ESG information and prioritize responsible business practices.
Qatar has made several pledges to make substantial progress across ESG to ensure it achieves its goals under its vision 2030, mainly across the environmental pillar. However, the country’s ever-expanding gas extraction poses a severe threat to climate change and stalls progress toward its vision of managing its environment effectively.
Qatar made headlines in ESG when the FIFA World Cup hosted in 2022 in the region was promoted to be ‘Carbon-neutral.’ This led to a controversy, as the Swiss Advertising Authority found this claim untrue and later revealed that FIFA had grossly underestimated emissions coming from the event (including construction of the stadium and transportation). An independent environmentalist reported that the emissions from the event could be way more than 10 million tons of CO2, contrary to FIFA’s claim of the event being ‘Carbon-neutral.’
Most of the emissions from this event were believed to be due to infrastructure, transportation, and accommodation. Furthermore, despite initiatives to improve environmental sustainability during the FIFA World Cup in 2022 through using reusable stadiums and reducing the use of air-conditioners, the event still contributed to environmental concerns, such as heightened energy consumption, land use, and resource depletion.
Qatar has partnered with oil giants, such as Total, Exxon, Eni, and Shell, to boost oil production by 60 percent in the next five years. According to a Guardian report in 2022, “Should Qatar exploit all of its oil and gas reserves, it will eventually add an enormous 50 billion metric tons of carbon dioxide to the atmosphere once burned, which is more than the entire annual emissions of the whole world”. This statement creates a sense of urgency for Qatar to increase its focus on environmental sustainability. Overall, climate change due to high levels of emissions is a critical challenge for Qatar’s vision of balancing its environment with the needs of society.
From a social standpoint, Qatar’s labor practices have come under high scrutiny since the start of the 2022 FIFA World Cup in the nation. Ensuring ethical and fair labor practices and safe working conditions is essential for upholding social responsibility within ESG. Among the 1.5 million jobs created during the FIFA World Cup in 2022, nine out of 10 people on the job were reportedly foreign nationals. Some evidence suggests that Qatar’s migrant workers were treated unfairly, with little to no wages. In addition, a Guardian report in 2021 claimed that thousands of migrant workers have died in the country since Qatar won the right to host the World Cup in 2010. However, these claims were refuted, stating that the data was not based on migrant workers purely employed for the FIFA World Cup alone. Nevertheless, the country’s lack of structural equality in terms of labor reforms may create a stumbling block for firms and investors to engage in ESG efforts within the region actively.
In tackling Qatar's ESG challenges, Astra is well-equipped to execute ESG reporting, prioritizing environmental considerations through the development of strategies aimed at reducing emissions. This involves a quantitative assessment of the organization's emissions using the GHG GPC protocol scopes, with a focus on curbing carbon emissions significantly from gas extraction and oil production. Astra is capable of conducting stakeholder consultations, fostering transparency and the implementation of sustainable practices. Along with environmental considerations, our ESG report places a strong emphasis on social and governance strategies, promoting diversity, equity, and inclusion (DEI) within the organizations. By doing so, Astra aims to ensure accountability in the pursuit of Qatar's Vision 2030 objectives.
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