Your Excellency, Ladies and Gentlemen, I am delighted to be able to join you today for this critically important C.F.O. Circle of Practice meeting brought about by my Accounting for Sustainability Project, the Abu Dhabi Sustainability Group and the Pearl Initiative.
Needless to say I am enormously grateful to the Abu Dhabi Sustainability Group for all of their efforts to organize today's meeting, as well as Etihad and Abu Dhabi Airports for their incredibly kind support.
And if I may say so it is a particular pleasure to see Her Excellency Razan Khalifa Al Mubarak, Secretary General of the Abu Dhabi Environment Agency, and Badr Jafar, founder of the Pearl Initiative, without whose leadership, I must emphasise, none of this work would be possible so I am hugely grateful to you both.
Badar has very kindly joined us in London on a number of occasions and he has picked up the disease I’m afraid and helped to transmit it here! Now I hope you wont mind if I take a few moments of your time to discuss with you why I feel it is so important that you have committed to participate in the G.C.C. Chief Financial Officer Leadership Circle of Practice.
Although I have been finding the struggle somewhat exhausting and frustrating over the past 25 to 30 years to overcome the deniers and sceptics, we are facing what I believe is perhaps the greatest challenge ever faced by our economy and society, and leadership from the finance community is absolutely vital if we are to find a solution. We are confronted by a terrifying combination of risks – the pollution and over-consumption of finite natural resources; the very real and rapidly accumulating risk of catastrophic climate change - this last year for example we broke the unprecedented barrier of 400 parts per million of CO2 in the atmosphere with the warmest temperatures on record; we are also confronted by unprecedented levels of financial indebtedness, and a population of seven billion that is rising unsustainably fast.
To take a local example, which you will know far better than me ladies and gentlemen, the U.A.E. has one of the largest ecological footprints of any nation, including a significant per capita use for water. This will only increase with population growth, and I understand Abu Dhabi has seen a 50% population rise since 2000. The Abu Dhabi Environment Agency has stated that current levels of water consumption are twenty six times the natural recharge rate of the groundwater and that, without changes, the main aquifer will be depleted in approximately fifty years. Investment has been made in desalination plants as a source of water; however this is costly, both financially and in terms of pollution, with greater carbon emissions and increased salination of the Gulf's waters themselves.
I was much encouraged by my visit to Masdar City earlier this afternoon to see some of the work going on in trying to develop all sorts of innovative approaches to tackling these particular issues.
If we are honest, we know all too clearly that we can’t go on as we are. It is plainly apparent that organizations will need to redefine their business models if they are to prosper in this very different world. Finance and accounting are a vital component to this change.
This is precisely why I set up my Accounting for Sustainability Project in 2004. Its extraordinary to think that when I had a cup of tea with the then chairman of the national audit office in the UK all those years ago and raised the whole question of the lack of systems to properly account for genuine sustainability this issue had never been considered seriously. I suppose this was considered another example of my interfering and meddling. However 12 years laster The core of A4S's work is to help organizations understand why they should embed environmental and social issues within their decision-making to improve long-term commercial outcomes, and importantly, to show them how to do this.
Over the years A4S has worked closely with C.F.O.s and their finance teams to explore what role they can and, indeed, must play in the creation of genuinely sustainable businesses. As a result of this work, the A4S Chief Financial Officer Leadership Network was launched to drive action forward.
I really am delighted and relieved to hear that a number of you have started to respond to the very real risks and opportunities faced by organizations in the Gulf. The case studies from Etihad, the National Bank of Abu Dhabi, Masdar and Abu Dhabi Airports included in the Arabic version of the A4S Guide to Managing Future Uncertainty show clearly that practical steps can be taken. These range from Etihad's investment in alternatives to fossil fuels, recognizing the long term risk faced by the business as Governments around the world take action on climate change, to Abu Dhabi Airports' cost benefit analysis to incorporate environmental considerations into capital investment decisions.
So I can only urge the C.F.O.s, finance professionals and senior business leaders among you to take inspiration from these examples, and act while there is still just time. At the risk of being a bore, I do encourage you all to support this Circle of Practice and to begin to embed sustainability into your organizations. And above all, to look carefully and seriously at the immense potential of what is known as the circular economy, incidentally, it should also have the added benefit of making your organization and the region as a whole more profitable!