Biological diversity is often understood in terms of the wide variety of plants, animals and microorganisms, but it also includes genetic differences within each species — for example, between varieties of crops and breeds of livestock — and the variety of ecosystems (lakes, forest, deserts, agricultural landscapes) that host multiple kind of interactions among their members (humans, plants, animals).

But loss of biodiversity threatens all, including our health. It has been proven that biodiversity loss could expand zoonoses - diseases transmitted from animals to humans- while, on the other hand, if we keep biodiversity intact, it offers excellent tools to fight against pandemics like those caused by coronaviruses.

While there is a growing recognition that biological diversity is a global asset of tremendous value to future generations, the number of species is being significantly reduced by certain human activities. Given the importance of public education and awareness about this issue, the UN decided to celebrate the International Day for Biological Diversity annually. The slogan for Biodiversity Day 2021, celebrated on May 22, is “We’re part of the solution #ForNature.”

Below are 10 key facts around biodiversity

• Fish provide 20 per cent of animal protein to about 3 billion people. Only ten species provide about 30 per cent of marine capture fisheries and ten species provide about 50 per cent of aquaculture production.
• Over 80 per cent of the human diet is provided by plants. Only three cereal crops – rice, maize and wheat – provide 60 per cent of energy intake.
• As many as 80 per cent of people living in rural areas in developing countries rely on traditional plant-¬‐based medicines for basic healthcare.
• Human activity has altered almost 75 per cent of the earth’s surface, squeezing wildlife and nature into an ever-smaller corner of the planet and increasing risks of zoonotic diseases like COVID-19.
• Between 2010 and 2015, the world lost 3.3 million hectares of forest areas. Poor rural women depend on common pool resources and are especially affected by their depletion.
• Currently, land degradation has reduced productivity in 23 per cent of the global terrestrial area, and between $235 billion and $577 billion in annual global crop output is at risk as a result of pollinator loss.
• Illicit poaching and trafficking of wildlife continues to thwart conservation efforts, with nearly 7,000 species of animals and plants reported in illegal trade involving 120 countries.
• Of the 8,300 animal breeds known, 8 per cent are extinct and 22 per cent are at risk of extinction.
• Of the over 80,000 tree species, less than 1 per cent have been studied for potential use.
• In 2016, the United Nations Environment Programme (UNEP) flagged a worldwide increase in zoonotic epidemics as an issue of concern. Specifically, it pointed out that 75 per cent of all emerging infectious diseases in humans are zoonotic and that these zoonotic diseases are closely interlinked with the health of ecosystems.

Authored by Michael Wilkins / Senior Research Fellow, Sustainable Finance, S&P Global Ratings

The traditional corporate imperative of maximizing shareholder value is increasingly under siege.   Companies are fast adopting ‘stakeholder capitalism’, focusing on long-term value creation for customers, employees, society, and the environment rather than just short-term value for shareholders. 

According to our recently published whitepaper "Stakeholder Capitalism: Aligning Value Creation with Protection of Values," we believe the pandemic has served to accelerate this shift, with substantial government support for businesses raising expectations of corporate social responsibility. Recent surges in sustainable investing and increasing market scrutiny of ESG factors are calling into question the purpose of corporations and asking where their responsibilities to society begin and end. Companies are now expected to invest more in employee health and wellbeing, safety protocols, and ensuring business continuity. But this means aligning these objectives with sometimes-contradictory shareholder interests.

Striking the balance 

The core premise of stakeholder capitalism is to find a balance and compromise in meeting the needs and serving the interests of all stakeholders and shareholders. It implies a company's purpose is to create sustainable long-term and shared value for all. 

Value creation is not just about profit maximization for shareholders but instead encapsulates a more holistic purpose, aligning the broader values of a corporation with those of society, while considering externalities. Yet, the "value" created by the pursuit of stakeholder capitalism is difficult to measure, which limits its current operational effectiveness. It requires the enhancement and standardization of nonfinancial disclosure around different metrics to ensure more transparency and accountability. Ignoring externalities such as global warming, increasing social fragmentation, and unrest may eventually backfire on a corporation's long-term operating environment and profitability. Ongoing shifts in stakeholder expectations vis-à-vis corporations may have tangible business and financial consequences. The balance between stakeholder and shareholder interests has become a delicate one.

Effective stakeholder management 

Covid-19 may have acted as stimulus for sustainability-related growth but also, indirectly, as an opportunity for corporations to refocus their priorities in line with market expectations around sustainable growth.

While it remains to be seen the extent to which Covid-19 will lead to lasting fundamental changes, it is likely that effective stakeholder management will become increasingly important for companies to successfully operate in a world of weakened public finances, social scars, and environmental degradation. However, it remains difficult to measure the stakeholder value a company creates.

Improving that measurement will require enhanced disclosure.

A case for sustainable investing

The growth of sustainable investing could reflect stakeholder capitalism taking root. Companies that have focused on sustainability issues have empirically been shown to achieve lower costs, enhance employee productivity, mitigate risk, and generate new growth opportunities. Effective sustainability performance is also said to strengthen corporate resilience. Research from Bank of

America Merrill Lynch even suggests that the integration of ESG initiatives and greater stakeholder engagement could help prevent around 90% of bankruptcies. 

The COVID-19 crisis has sharpened the focus on stakeholder value. The pandemic has reaffirmed the materiality of sustainability-related risks and the deep links between businesses and their stakeholders across the value chains. In response to the pandemic, governments have provided substantial support to corporations to prevent economic collapse. This in turn has raised expectations about corporate responsibility and the purpose of corporations. Companies are now expected to invest more in employee health and wellbeing, safety protocols, fortifying cyber security, and ensuring business continuity.

Redefining purpose and responsibilities 

Following the stakeholder approach can raise issues around accountability because environmental, societal, and economic issues may end up being tackled by non-democratically elected leaders. Indeed, corporations may argue they are paying taxes to governments to cover these very matters. Inside of a company, employees want to see the CEO and they also want to see the company take a stand on issues that are important to them that advance social change or advance things in the communities around us. People realize that for true change to occur, they cannot just rely on the government. The change also must come from the private sector and its leaders.

In conclusion, the purpose of a corporation is being redefined. The aim is to increase economic and societal resilience by accelerating inclusive economics and societies while shaping a new concept for economic integration and digital revolution. A more inclusive and holistic approach is even more crucial during the current volatile times in which many people are without their jobs and companies are forced to shut. The values that a corporation embraces can be as important as the value that it creates. From a stakeholder perspective, the two are inextricably linked.

The conversation on sustainability usually centers around cutting carbon emissions and increasing renewables. However, sustainability goes past this to thinking about tomorrow’s future leaders. 

Businesses and countries targeting economic diversification, such as the UAE, focus on succession planning to ensure a steady stream of Emiratis to lead the sector into the next 50 years and beyond. 

The departure rate of CEOs at the world’s 2,500 largest publicly traded companies in 2000 was 12.9%, but only half were planned, according to research by PricewaterhouseCoopers (PwC). Fast-forward eight years to 2018, and overall turnovers climbed to 17.5%. However, planned successions drastically increased to make up nearly 70% of that figure.

There is no one way to plan for the next round of leaders. Secondments and job rotations can test employees’ adaptability and flexibility, while pushing to extend further than the original scope of work. It also provides the ability for professionals in emerging markets to work with more mature firms alongside experienced professionals with international experience.

This is what helped shape Majd Al Menhali, Chief Financial Officer for Mirfa International Power and Water Company (MIPCO), which operate Al Mirfa power generation and desalination plant with a capacity of 1.6 MW and 53 MIGD on behalf of owners TAQA (60%), ADFG (20%) and Engie (20%). He has fostered a culture of teamwork and implemented internal controls and processes, which he says are key to his success. Yet these skills didn’t come overnight. Al Menhali says many were learned during a secondment to ExxonMobil in Houston, changing his views on how organizations are run.

“Give yourself time to learn as much as you can,” he says adding that it’s important to recognize when it’s time to move on so that you always look to innovate rather than stagnate. 

This is just one step in a leadership succession plan, many of which start right at the point of hire. Proactive companies pinpoint candidates, help them develop professionally and even get them to consider their replacement when they move on to the next challenge. 

Yet, succession planning isn’t just about a handover. It takes shape in knowledge transfer.

A few questions after graduating a scholarship program led Alawi Al Jefri to his current position.
A leader from the program asked him where he saw himself. “Do you want to go to routine corporate work, do you want to work on operational assets, such as oil and gas, or are you seeking some exciting opportunities,” Al Jefri recounts.

And these questions are what led him to diving deeper into where he saw his path, leading him to positions with Mubadala and Masdar. He was able to work on exciting projects such as Hydrogen Power Abu Dhabi and London Array. He also spent time in Senegal and Jordan gaining skills from waste-to-energy projects before seizing the opportunity at Al Taweelah Refining. He then joined Abu Dhabi Power Company, which merged with TAQA in 2020, and stepped into the EMD role at the Fujairah Asia Power Company (FAPCO).  The project company, majority owned by TAQA, operates the Fujairah 2 power generation and desalination plant with a capacity of 2.1 GW and 53 MIGD. 

“I’m lucky – my experience with each of these entities was quite good for me,” Al Jefri says. “It has enriched and broadened my experience.”

He uses those questions to help prepare his employees today, asking where they see themselves when they retire. Al Jefri says that he wants to encourage his staff to lay the foundation to build a path leading them to that goal. “I tell them that once you see an opportunity, make sure you grab it. Enjoy and maximize the experience so you have no regrets about missed opportunities.” 

It’s the same for Abdulla Al Khemeiri, Executive Managing Director of Arabian Power Company, which operates the Umm Al Nar power generation and water desalination plant with a capacity of 2.2 GW and 95 MIGD. He says having clarity about your current role coupled with future objectives and targets is necessary for all levels. 

Companies that practiced successful succession planning approached it as developmental rather than a replacement process. And this is what Al Khemeiri hopes will help the UAE’s future power and water sector. 

His advice to the next generation: “You need to not only understand your existing role, but how you’d like it to evolve into for the future.”

By AbdulAziz Al Obaidli, Director of UAE Asset Management at TAQA Group