Capturing Untapped Opportunities in Sustainable Commerce
The global transition to a net zero economy includes businesses and consumers opting for sustainable commercial practices. Ahead of COP28, Visa and Emirates Nature-WWF have come together to produce a joint study analyzing consumer behavior and merchant readiness for sustainable commerce across four countries of the Gulf Cooperation Council (GCC) - the United Arab Emirates (UAE), Saudi Arabia, Kuwait, and Qatar.
Governments in the Middle East and North Africa (MENA) region have committed to the Paris Agreement on climate action. Between 2021 and 2023, an estimated 60% of the emissions and GDP in the region have come under net zero pledges.
The Middle East is especially vulnerable to the effects of human-caused climate change, experiencing heat waves, declining precipitation, extended droughts, sandstorms and floods, and rising sea levels. If global greenhouse gas emissions continue to grow at the current rate, climate modeling calculations show that average winter temperatures in the MENA will rise by 2 to 3 degrees Celsius and summer temperatures will rise by about 5 degrees Celsius by 2050.
Visa’s '2023 Sustainable Commerce' study highlights GCC consumers’ awareness of climate change as a threat and reinforces the urgency for all industry stakeholders to take decisive collective action to promote sustainability through responsible innovation for the benefit of consumers, businesses and the economy.
Visa’s new study found that:
- Consumers opt for sustainable commerce when the cost-benefit is clear – a third to half of all consumers say they consciously choose sustainable products, even if they have to pay a premium for them.
- Young consumers are major drivers of sustainable commerce – they have demonstrated a heightened receptiveness to sustainable practices and a greater environmental consciousness compared to other demographics. About half of the younger cohort consciously choose sustainable products, even when they pay more for them.
- Banks and payments companies can guide consumer choices – consumers are willing to choose banks and payment service providers based on their sustainability-linked options, from paperless statements, to rewards for sustainable behavior, to green mortgages. More than half of the surveyed consumers expect their bank to guide them in making sustainable financial choices (51%) and to help them understand the environmental impact of their purchases (53%).
- Large corporates have taken the lead on sustainability – larger companies in the UAE, KSA, Qatar, and Kuwait have pledged and implemented initiatives to reduce emissions, increase renewables, and scale low-carbon technologies, such as green hydrogen and sustainable aviation fuel.
- Cost and awareness have emerged as the main challenges - in the GCC, a significant barrier for most consumers (51%) lies in the perceived higher cost of sustainable products, and a lack of awareness (51%) regarding what is considered sustainable practice.
Positing a way forward, the study outlines a sustainability roadmap for businesses in the region and spotlights the significance of policies and laws in impacting the implementation of sustainable practices.
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