green transformation means selecting a method of work that is more efficient in the use of energy and materials that companies consume or use in production or in delivery of services, which in turn leads to lower costs and thus maximises profits on capital.
But there are four major variables that a company takes into consideration when considering adopting the green transition.
First of all, is a green transformation a necessity to maintain the company’s ability to compete in its markets — for example in some export markets or as local suppliers to international companies operating in Egypt?
Second, what are the investments or costs required to achieve this transformation?
Third of all, what are the returns on the investment in green transformation that could be achieved?
Finally, how much time is needed to accomplish this transformation and when will the return be realised?
As for Egyptian companies operating in the market here, studies have shown that there are three sectors in which the return on investment for going green has become rewarding — these are energy, transportation, and real estate development.
The prices of energy and materials used in these sectors became market based, increasing their utilisation efficiency, or resorting to renewable resources — including recycling — to use some of them when possible has become a profitable economic choice.
Regarding the sectors in which competition is international — such as tourism and export — the returns on green transformation vary according to the markets in which the company competes.
In addition to the economic returns that motivated some Egyptian companies to adopt a green transformation, other motives are becoming increasingly important to many Egyptian companies.
For example, the importance of social responsibility, reputation in the markets, and attracting highly qualified and skilled employees from the new generation — a large percentage of whom prefer to work for companies that exercise their responsibilities towards society.
There is also a segment of customers in B2B or B2C that prefer to buy products or services from companies committed to a green transformation.
It is worth noting that the movement towards going green among Egyptian companies in many sectors has picked up pace since the government implemented its macroeconomic reform programme and structural reforms in FY2016/17.
The new orientation adopted by the government is a remarkable shift that reflects the maturity of the economy and the markets in Egypt and the ability of the private sector to adopt business models suited for market-based pricing of the resources it uses.
In another significant development, the Financial Regulatory Authority in 2022 required that companies listed on the Egyptian Stock Exchange and non-banking financial services companies to submit reports about their environmental, social, and governance (ESG) practices. As such, we can surely expect more acceleration in the movement towards the green transformation.
Egypt’s hosting of the upcoming UN Conference of Parties on Climate Change (COP 27) in November is boosting the awareness of society, state bodies, the private sector, civil society, and the media about the importance of climate action and its existential implications for Egypt.
Inspired by these developments, the Green Transformation Partners (GTP) Group met with Minister of Planning and Economic Develpment Hala El-Said to thank her for inviting the private sector to engage and match the government’s orientation towards increasing the percentage of green public investments to reach 50% of the state investments in 2024/2025 — an inevitable strategic choice to confront the risks of climate change that the world has witnessed over the past years.
The group also expressed their appreciation for her endorsement of their initiative and their commitment to invite other Egyptian companies to join the initiative to accelerate the transformation of the Egyptian economy towards green models for investment and development.
The GTP is a special alliance of Egyptian companies that provides a platform for its members to present their vision and dialogue with the government to create a business climate that enhances the feasibility of going green and promoting the reduction of the carbon footprint of the private investment.
The GTP is also a platform through which member companies can launch their initiatives, explore opportunities for cooperation, and declare the results of their activities and achievements, in addition to providing information on technological development in the field of green transformation and spreading awareness regarding the feasibility and economic benefits of investing in the green transformation.
All the companies that founded the GTP stressed their commitment, as Egyptian companies, to business goals and principles of cooperation that guide them — namely:
- Leading by example through a measurable green shift.
- Expand the membership of the GTP to the largest possible number of Egyptian companies that adopt the green transformation and are committed to measuring and managing their carbon footprint.
- Keeping pace with the government’s orientation towards green transformation and consistency with national development plans.
- Seeking to improve the business climate to advance the green transformation and increase private investment in it.
- Build a body of knowledge on technological developments and innovations that support the green transformation.
- Share best practices and provide continuous learning and education to members.
As many as 12 private institutions — including large and medium ones — participated in the meeting.
They operate in seven different sectors, including the industrial, banking, transporting goods, higher education, passenger transport, real estate development, agriculture, and energy sectors.Sherif Al-Diwany is an Adviser to the Board of Alexandria Business Association