In a groundbreaking shift towards ESG (Environmental, Social and Governance) focus, the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) are not just introducing new regulations – they are redefining the business landscape.
The UAE’s Federal Climate Change Law, effective from 30 May 2025, and the Saudi Capital Market Authority’s (CMA) directive for ESG reporting are more than compliance requirements – they are the new battleground for business growth and brand dominance.
Regulatory shifts: what’s changing?
The UAE’s Federal Decree-Law No. 11 of 2024 is a game changer. It mandates that both public and private sector entities, including those in free zones, must measure, report and reduce carbon emissions. Companies are required to publish time-bound climate action plans, establish internal climate governance structures and align with national climate goals.
Meanwhile, the KSA CMA is planning to move from voluntary to mandatory ESG disclosures for listed companies. This directive aligns with global standards and aims to enhance transparency, investor confidence and long-term value creation. The anticipated shift to mandatory reporting signals a broader regional trend toward embedding sustainability into the core of corporate strategy.
Business impact: compliance and beyond
These regulations demand that businesses invest in ESG data infrastructure, including systems for emissions tracking, sustainability reporting, and third-party verification. Companies will need to upskill teams, engage with ESG consultants, and potentially restructure operations to meet new benchmarks.
But let’s be clear – this is not just a compliance burden. It’s a strategic opportunity. Businesses that proactively embrace these changes can differentiate themselves, attract impact investors, gain preferential access to green financing, diversify to new consumer segments and harness growth opportunities from a growing consumer sentiment that brands that do good are good brands.
And consumer sentiment towards social and environmental expectations on brands is steadily building. To help businesses navigate this evolving landscape, Kantar, the world’s leading data and analytics company, offers the Sustainability Sector Index report (SSI), that provides a robust understanding of consumer expectations on sustainability issues by sector across markets, enabling brands to strategically prioritise their focus and investment. In KSA, the SSI reveals that 79% of consumers believe that people like them need to do whatever they can to fight climate change. And 81% want to fight social inequality and injustice. This presents a significant opportunity for brands to align their strategies with these values.
Growth opportunities for brands
If businesses think about these regulatory shifts as more than just a compliance and risk reduction exercise, a world of opportunities and commercial gains opens up.
1. Access to capital. ESG-compliant firms are more attractive to institutional investors and sovereign wealth funds, many of which are aligning portfolios with ESG principles. Are you equipped to tap into this capital?
2. Public-private partnerships. Governments in both the UAE and KSA are offering incentives, grants, and carbon offset mechanisms to support climate-aligned business models. This creates fertile ground for collaboration and innovation. Are you ready to partner for progress?
3. Sustainable innovation. Brands that develop low-carbon products, circular economy models, or green technologies will be well-positioned to lead in a market increasingly driven by environmental performance. Are you ready to innovate or will you be left behind?
4. New market segments. The rise of green and socially conscious consumerism opens doors to new product lines – eco-friendly packaging, carbon-neutral services, and ethical sourcing are no longer niche but mainstream expectations. Is your brand ready to meet these consumer demands?
5. Reputation and trust. Transparent ESG reporting builds stakeholder trust. Companies that lead in sustainability can enhance brand equity, as consumer values are shifting. Is your brand ready to be a leader?
Visionary brand leaders
And there are already visionary brand leaders in the region that we can learn from.
Al Rajhi Bank, the most valuable brand in the 2024 Kantar BrandZ Most Valuable Emirati and Saudi Brands ranking, has leveraged its strong brand equity to integrate sustainability into its core operations. By focusing on sustainable finance and aligning with Vision 2030, the bank has enhanced its reputation and attracted sustainability-focused investors.
In response to the introduction of the sugar tax and VAT in KSA, PepsiCo has focused on sustainable product innovation and marketing strategies that resonate with health-conscious consumers. This approach has helped the brand regain market share and strengthen its position in the region.
As the fastest riser in the 2024 Kantar BrandZ Emirati and Saudi Brands rankings, Tawuniya has capitalised on the growing demand for sustainable insurance products. By offering eco-friendly insurance options and promoting sustainability initiatives, the company has enhanced its brand value and customer loyalty.
Using ESG commitments as a platform for brand growth
As the UAE and KSA position themselves as regional leaders in sustainability, businesses that act early will not only ensure compliance but also unlock competitive advantages. The shift toward mandatory ESG reporting is a clear signal – the future of business in the Gulf is green, transparent, and accountable.
For brands, this is a moment to lead – not just in meeting regulations, but in shaping sustainable brands and a more green, equitable and resilient economy. Are you ready to seize this opportunity?
Brands grow by being meaningfully different. Brands that are meaningfully different to more people command 5 times penetration today – and real advantage in penetration growth over time. Your brand perceptions on sustainability will either inspire or inhibit your brand growth. So how do you find your path to building Meaningful Difference on sustainability?
ESG strategies and internal sustainability commitments provide a foundation and a springboard. But brands can’t just take existing ESG initiatives and jump straight into brand communication or innovation, without connecting activation with consumer expectations, brand purpose and sector context – or efforts will fall flat.
Think of it like decorating a house without creating a solid structure. It may look good temporarily, but cracks will appear over time – and your audience will notice. Consumers today are savvy and they are fact checking brands. In fact, 50% of KSA consumers say they have seen, or heard, false or misleading information about sustainable actions taken by brands across sectors, affecting trust and consideration.
So, to reap commercial rewards, brands must bridge the gap between corporate level ESG commitments and brand level marketing activation, which starts by developing a sustainability-aligned brand strategy – a crucial step that too many businesses skip. This can be achieved through meaningfully different sustainable marketing.
What meaningfully different sustainable marketing looks like and how to get started
If your brand is ready to move from intention to action, here’s a roadmap to follow for meaningfully different sustainable marketing:
1. Start with ESG, but don’t stop there – use your existing corporate sustainability commitments as a starting point but recognise that not all issues and initiatives will be relevant to consumers.
2. Understand your sector – leverage validated data and insights from Kantar’s Sustainability Sector Index to evaluate consumer expectations, values and behaviours specific to your industry.
3. Know your brand – conduct an honest assessment of where your brand stands on environmental and social sustainability in consumers’ minds. Are you seen as part of the solution or part of the problem?
4. Build a sustainability-aligned brand strategy – this bridges the gap between ESG commitments and brand marketing, ensuring your efforts are credible and consumer-centric.
5. Activate Meaningful Difference – create communication, innovation, and experiences that resonate with consumer values and needs, backed by data and rooted in purpose.
6. Measure and iterate – track your progress with the right brand equity metrics and adjust your strategy as expectations and market dynamics evolve.
In markets like the UAE and Saudi Arabia, where regulatory landscapes are shifting and consumer sustainability expectations are rising, the stakes are high. Brands that act with intention and insight can not only navigate these changes but turn them into a competitive edge. Ultimately, the path to sustainable brand growth isn’t about doing everything that’s in your ESG strategy – it’s about doing the right things, in the right way, for the right reasons. And that starts with listening to what consumers are really asking for.
