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REMEDIAL PROGRAM SPRING 2024
REM 8014
Research and Analytics in Business
Spring 2024
Impact of Environment, Social and Governance (ESG) Sustainability Strategies on Organisation Success. A Case Study of ADNOC Organisation
Title: Impact of Environment, Social and Governance (ESG) Sustainability Strategies on Organisation Success. A Case Study of ADNOC Organisation
Executive Summary
The aim of this report was evaluating the impact of ESG strategies on organisation performance. In order to achieve this, the organisation of focus is ADNOC with their best strategies identified which can be adopted in improving sustainability. The data used to inform this findings was sourced through a quantitative research approach. This is with analysis using Microsoft excel to identify frequencies and descriptive data. From the findings, the sustainable strategies categorised as ESG are instrumental for ADNOC leverage on competitive advantage and market dominance. Also, there are different strategies adopted by ADNOC for their success in their operations. From the findings and review of literature, the gaps identified can be managed by focusing on the following recommendations;
- Review budget on ESG for successful implementation
- Improve on capacity development amongst the senior leadership
- To review their ESG strategies
Table of Contents
3.0 Methodology and Results. 6
3.2.1 Influence of ESG strategies on organisations performance. 6
3.2.2 ESG strategies in ADNOC UAE. 7
4.0 Conclusion and Recommendations. 7
1.0 Introduction
1.1 Research Background
In today highly competitive business environment, investing in Environmental, Social and Government (ESG) sustainability approaches is core for organisations success. To support this, while quoting KPMG 2020 Global CEO Foresight Survey, Chen et al. (2023) report noted that approximately two-thirds (63.0%) of successful organisation put immense emphasis on ESG in the current volatile international environments. Similarly, in Bankrate (2023), approximately 89% of all investors prioritise on ESG issues as core in their investment strategy in 2022 from 84% in 2021. Hence, there has been an increased popularity among the academic and researchers on impact of ESG strategies on organisations performance. In United Arab Emirates (UAE) for instance where Abu Dhabi National Oil Company (ADNOC) has based their operations, there has been substantial changes in sustainability. To support this, ESG Times (2023) note that it is mandatory for organisations to provide mandatory ESG reporting for public joint stock organisations in Abu Dhabi Securities Exchange or Dubai Financial Market. Nevertheless, there lack sufficient research evaluating if the ESG sustainability strategies impact on performance and productivity of organisations in UAE.
1.2 Problem Statement
Despite the popularity of ESG sustainability strategies in modern organisations, it is still controversial on how it contribute to organisations success particularly for ADNOC. For instance, Cho (2022) note that Investing in ESG sustainability strategies contribute to positive signal/image to different stakeholders but lacking a direct link with performance. Similarly, Park and Jang (2021) note that ESG investments is distractive to achievement of long-term based profitability attained by innovativeness, cost-based controls and clients focus. However, in other studies such as Chen et al. (2023), investment in ESG directly contribute to alleviation of risks linked with sustainable returns. The outcome of this is increased ADNOC organisation performance and productivity. In UAE context, there has been less research done in investigating the relationship of ESG on performance. This is a significant gap which the current research will focus on filling through an evaluation of impact of sustainability on ADNOC success in their business environment.
1.3 Aims and Objectives
This report intend to evaluate the relationship of an organisation investing in ESG sustainability approaches and performance in their sector of operations. In line with this aim, the following objectives would be considered;
- To understand influence of ESG strategies on organisations performance
- To understand how ADNOC Company invest on ESG strategies for their success
- To recommend best practice in using ESG for ADNOC improved positioning in oil and gas sector in UAE
To achieve the identified objectives, the following research questions would be answered;
- How do ESG strategies impact on organisations performance?
- How does ADNOC Company invest on ESG strategies for their success?
- Which strategies can be used by ADNOC in sustainable approaches for achieving increased performance?
2.0 Literature Review
From the reviewed literature, ESG an abbreviation of Environmental, Social and Governance entail an investment and enterprise evaluation standard prioritising on these areas as opposed to traditional financial performance (Halid et al., 2023). The rationale of embracing the ESG framework is assessing organisations sustainability in their business environment. These findings are supported by Rajesh and Rajendran (2020) research which observed and evaluated ESG performance scores of 1,820 organisations internationally in 5 years. The authors hypothesised that investing in ESG have a positive implication on organisations performance in their business environment. For example, in the environment aspects of the strategy, investing on practices in this area has a positive implication on improving operations efficiencies of organisations and lowering investment risks of investors hence an improved performance. Also, according to Taliento et al. (2019) investments in social factor contribute to achievement of the shareholders, creditors, consumers and governments positively impacting on organisations competitiveness over time. This is with governance contributing to improvement of the business performance in areas of market laws and regulations.
Further, reviewed literature evidence that in developing countries, investment in ESG is popularly used in organisations as a strategy for increased sustainability (Sherwood & Pollard, 2018; and Ng et al., 2020). Today, an increased prioritisation of demand of environment and social issues owing to the stakeholders and clients increasing awareness on necessity to lower environment depletion. Therefore, investing in ESG strategies would lead to an organisation success in their operations as supported by the literature.
3.0 Methodology and Results
3.1 Methodology
This research will adopt a positivism philosophy due to ESG strategies being fixed reality, measurable and knowable. This is with primary data from ESG experts in ADNOC being engaged with quantitative research which involve collection of data in numerical form and analysed using mathematical methods used. Further, a case study which involve evaluation of an issue of interest (ESG strategies) in their real-world context (ADNOC) would be used. The questionnaire would collect data from 50 respondents selected through simple random sampling approach. Analysis has been done using Microsoft Excel and Statistical Package for Social Sciences (SPSS).
3.2 Results
3.2.1 Influence of ESG strategies on organisations performance
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