(Left to right) Adham Sleiman, Partner and Amer Hage Chahine, Principal at Arthur D. Little Middle East.
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Saudi industrials: Striking a balance

The industrial sector has always been the backbone of strong nations and complex innovations are now catapulting it to new heights. The task at hand is to ensure that it advances in a manner that balances economic growth with environmental protection. Here, the Kingdom of Saudi Arabia (KSA) has the potential to lead by example, and Arthur D. Little has identified areas across the industrial value chain where public- and private-sector players can pursue sustainable progress, in KSA and beyond.

The Private Sector

Industrialists are delivering significant efforts toward sustainability throughout the private sector, with leading multinational companies implementing wide-ranging measures. Below are four actionable areas in which businesses can continue to make positive impact:

  • Sustainable industrial inputs: Transitioning from environmentally damaging energy sources to renewable alternatives is a critical step toward increased sustainability. Industrial facilities should reassess their energy mix and implement more environmentally friendly options, including biomass, manufacturing residuals, and solar and wind power. Using recycled and eco-friendly raw materials as well as shifting toward sustainable procurement are also important steps.
  • Refined manufacturing processes: Industrial facilities can reduce their carbon footprint by implementing practices to refine their manufacturing processes. These practices include (i) following lean production principles, (ii) improving efficiency through operational excellence, (iii) promoting a holistic “reduce, reuse, recycle” philosophy, (iv) ensuring technology and configuration optimization, and (v) improving energy efficiency through heat recovery and minimizing energy losses.
  • Efficient shipment & distribution: On top of industrial inputs and manufacturing processes, shipments and distributions of manufactured products are proving to be key contributors to the sector’s emissions. Shipping and distribution can be optimized by rolling out green storage logistics, adjusting routes, and applying fuel-efficient processes.
  • Green marketing: Products labeled as environmentally friendly are experiencing significant growth, with consumers more willing to pay premium prices for “saving the environment.” Manufacturers can also reduce increase their sustainability by adopting reusable packaging and paperless marketing practices.

The Public Sector

Industrial giants are making strides when it comes to sustainability, yet without governmental enablement, their efforts remain limited. There are six dimensions within the public sector where changing practices or adopting new approaches can support sustainability goals:

  • Green incentives: KSA is leading the transformation of the industrial and mineral resources sector through the Ministry of Industry and Mineral Resources Sustainability Council (MIMSC) and is working to secure funding for green transformation projects in industrial facilities.

The government has launched the Liquid Fuel Displacement Program, which aims to displace more than one million barrels per day of liquid fuels across utilities, industry, and agriculture by 2030. The collaborative program will enable the kingdom to realize its ambition of deriving 50% of its electricity from renewables by the dawn of the next decade. KSA also aspires to source 70% of its water from treated industrial wastewater.

  • Environmental transparency: MIMSC is developing voluntary reporting standards aligned to the specific structure and conditions of the Saudi economy, particularly in relation to the SME landscape. These standards are intended to boost foreign investment, ensure long-term environmental sustainability, and catalyze participation in nationwide endeavors, such as the Saudi Green Initiative.
  • Public-private partnerships: MIMSC is playing a key role in synchronizing private and public sector sustainability efforts. First, it gathers input from Saudi companies and public entities working closely with SMEs to ensure new policies represent a corporate perspective. Second, it contributes to sustainability of the industrial and mining ecosystems by supporting companies that set best practices and foster innovation and knowledge sharing.
  • Eco-friendly licensing requirements: The Kingdom is revamping its industrial licensing requirements by mandating criteria to promote the adoption of advanced technologies to increase manufacturing efficiency and help reduce GHGs.
  • Maximized collaboration: The Saudi government is unifying the region’s efforts through consistent collaboration between GCC countries. The kingdom’s efforts have been incorporated into a joint plan that aims to ensure that the percentage of industrial facilities adopting circular economy practices reaches at least 50% of industrial facilities within five years in each of the GCC countries.
  • Incentivized SMEs: SMEs constitute around 90% of the kingdom’s industrial sector, and KSA is supporting them by providing incentives and services to enable their sustainable development. These incentives include promoting the use of efficient technologies that reduce waste and securing funding for green-oriented start-ups.

For the industrial sector, the road to a sustainability is as challenging as it is long. However, collaboration, conviction, and targeted initiatives can accelerate the journey and help nations strike a delicate balance between economic growth and environmental protection.