An overview of CSR in the

renewable energy sector

Examples from the Masdar Initiative in Abu
Dhabi
Touc Mezher, Samer Tabbara and Nawal Al Hosani
Masdar Institute of Technology, Abu Dhabi, United Arab Emirates
Abstract
Purpose The purpose of this paper is the introduce corporate social responsibility (CSR) in Abu
Dhabi, the biggest Emirate and one with the largest oil reserve in United Arab Emirates (UAE). Abu
Dhabi set the rst renewable energy policy in the region in January 2009. The policy calls for at least
7 percent of Abu Dhabis power generation capacity to come from renewable energy sources by 2020.
In 2006, the leadership of Abu Dhabi made a strategic decision to establish a globally competitive
renewable energy sector in the country and hence the Masdar Initiative was created. It is driven by the
Abu Dhabi Future Energy Company (ADFEC), also called Masdar.
Design/methodology/approach The paper focuses on the corporate social responsibility of
Masdar and the role the rm is playing as the prime mover in the renewable energy sector in UAE
and the region. The paper is structured in the following manner. First, the literature on corporate social
responsibility is reviewed. Second, the environmental challenges of UAE are highlighted. Third, the
paper discusses the different business units of Masdar and their related projects and investments at
local, regional and global levels. Finally, the role of ADFEC as a prime mover in sustainability and
corporate social responsibility is highlighted.
Findings Masdar has taken leadership in CSR and sustainable energy technologies in Abu Dhabi,
UAE and the region.
Originality/value The case demonstrates the willingness of oil-producing countries to become
more sustainable and to do something about climate change. The Masdar Initiative, which includes the
rst carbon-neutral city, can be regarded as a benchmark for future similar projects in the region and
around the world.
Keywords Social responsibility, Renewable energy, Gases, Emission, United Arab Emirates
Paper type General review
Introduction
Human activities are the most important factor that is affecting our climate. This was
conrmed by the Third and Fourth Assessment Reports of the United Nations
Intergovernmental Panel on Climate Change (IPCC, 2007). Carbon dioxide (CO2) is one
of the most important anthropogenic greenhouse gases (GHG). Annual emissions,
energy as the main source, grew by about 80 percent between 1970 and 2004.
Reduction of CO2 emissions from energy use can be done in three ways: energy
efciency, renewable energy (RE), and carbon capturing and sequestration. Renewable
energy is an attractive option because it substitutes for fossil fuel and the economic
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1477-7835.htm
The support of Masdar Institute of Science and Technology (MIST) in Abu Dhabi, UAE, is
gratefully acknowledged.
MEQ
21,6
744
Received 15 October 2009
Revised 28 April 2010
Accepted 1 June 2010
Management of Environmental
Quality: An International Journal
Vol. 21 No. 6, 2010
pp. 744-760
qEmerald Group Publishing Limited
1477-7835
DOI 10.1108/14777831011077619
feasibility of renewable energy technologies is improving with time (Clift, 2007; Sims,
2004). Fossil fuel will still remain the major source of energy for decades to come, but
eventually alternative sources of energy will surpass fossil fuels (Zerta et al., 2008).
Developing a renewable energy sector in a country will have a positive impact on its
sustainability and will provide a wide variety of socioeconomic benets, contribute to
the diversication of energy supply, enhance regional and rural development, and
create an opportunity for a domestic industry and job creation potentials (del R o and
Burguillo, 2009). Newly established RE companies are considered to be in the business
of sustainability and corporate social responsibility (CSR). This paper will look at the
CSR role of newly established RE companies and will discuss the case of Masdar
especially after the Abu Dhabi government announced that seven percent of power has
to come from RE sources by year 2020. This paper starts by reviewing the CSR
literature, and then looks at the environmental challenges in Abu Dhabi. Finally, the
role of Masdar as the Prime Mover in the RE sector is highlighted including its
sustainability and CSR practices.
Literature review of CSR
CSR: concept, development and principles
Since 2000, the European Union (EU) has been engaged in developing a framework for
corporate social responsibility with tools for assessing standards (Streimikiene et al.,
2009). In their Green Paper, the Commission of the European Communities described
CSR as a concept whereby companies integrate social and environmental concerns in
their business operations and in their interaction with their stakeholders on a
voluntary basis (CUC, 2001, p. 6). Socially responsible means going beyond
compliance, investing more into human capital, the environment and relations with
stakeholders and not just fullling legal obligations (CUC, 2001). CSR was
acknowledged as an opportunity for enterprises in Europe to contribute to a
sustainable growth and job creation. CSR can play a leading role in enhancing Europes
innovation potential and competitiveness. Some of the proposed actions to promote
CSR practices include awareness-raising and practice exchange, support to
multi-stakeholder initiatives, cooperation with member states, consumer information
transparency, research, education, and international dimension of CSR (CUC, 2006).
Better regulations, instruments, mainstreaming CSR with EU policies and programs,
and Europes contribution to global CSR were also proposed (CUC, 2007).
CSR has evolved over time since it was rst debated in 1932 by Professor Dodd when
he said that corporate managers have responsibilities to the public as a whole and not
just to shareholders (Dodd, 1932). CSR has also evolved through the years from
philanthropy to strategic philanthropy, from investing to socially responsible investing
(fund screening, social advocacy, community investment), from entrepreneurship to
social entrepreneurship, from venture capital fund to social venture capital fund, from an
MBA to an MBA in CSR, corporate social responsibility and protability (employees,
customers, governments, media), and the bottom line (Cochran, 2007).
At the global level, many international accords were initiated to promote voluntary
CSR practices. Such accords include the UN Global Compact (UNGC), Global Corporate
Citizenship Initiative (GCCI), Equator Principles for Financial Institutions (EPFIs), and
the UN Principles for Responsible Investments (UNPRI) (Sadler and Lloyd, 2009). The
UNGC, which was launched at UN headquarter in 2000, is a strategic policy initiative
An overview
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745
for businesses that are committed to aligning their operations and strategies with ten
universally accepted principles in the areas of human rights, labor, environment and
anti-corruption as shown in Table I (UNGC, 2000).
The GCCI was launched by the World Economic Forum in 2001. According to
Professor Klaus Schwab, Founder and Executive Chairman of the World Economic
Forum, corporations are having more inuence over the lives of stakeholders, which is
due to diminishing role of the state due to advances in technology (Schwab, 2008).
In 2003, ten major European project nance banks agreed a set of guidelines named
the Equator Principles, aimed at incorporating environmental and social responsibility
into their lending practices (Equator Principles, 2003). The principles were formulated
with the support of the International Finance Corporation, the private sector lending
arm of the World Bank. In 2004 the UN also promoted its Responsible Investment
Initiative which led in 2006 to agreement on six Principles for Responsible Investment
(PRI) in a global charter signed by 32 pension and investment funds (Sadler and Lloyd,
2009). Table II shows the Equator and PRI principles.
CSR and sustainability
Lynes and Andrachuk (2008) developed a conceptual model for corporate social and
environmental responsibility (CSER). There are four parts of the model. Part I consists
of four levels of inuence:
(1) the market system;
(2) political-institutional system;
(3) scientic system; and
(4) social system.
Principle
Human rights Principle 1: Businesses should support and respect the protection of
internationally proclaimed human rights
Principle 2: make sure that they are not complicit in human rights abuses
Labor standards Principle 3: Businesses should uphold the freedom of association and the
effective recognition of the right to collective bargaining
Principle 4: the elimination of all forms of forced and compulsory labor
Principle 5: the effective abolition of child labor
Principle 6: the elimination of discrimination in respect of employment and
occupation
Environment Principle 7: Businesses should support a precautionary approach to
environmental challenges
Principle 8: undertake initiatives to promote greater environmental
responsibility
Principle 9: encourage the development and diffusion of environmentally
friendly technologies
Anti-corruption Principle 10: Businesses should work against corruption in all its forms,
including extortion and bribery
Source: UNGC (2000)
Table I.
United Nation Global
Compact Principles
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Part II consists of different rms motivation for CSER including:
.
long-term nancial strategy;
.
eco-efciencies;
.
competitive advantage;
.
good corporate citizenship;
.
image enhancement;
.
stakeholder pressures; and
.
a desire to avoid or delay regulatory action.
Part III consists of catalysts, which help shape inuences by acting as a medium for
encouraging/discouraging CSER. Part IV consists of the level of commitment
encompassing the degree to which a rm will participate in CSER in terms of its
pledges to take a course of action, responsibility taken for its action, level of
involvement with environmental and social issues, as well as its dedication to improve
the rms performance in these areas. The conceptual model was used for an in depth
study and was applied to Scandinavian Airlines (SAS) (Lynes and Andrachuk, 2008).
Responsible leadership plays a critical role in the sustainability of the rm. A
company that embarks on the path of sustainability needs to carefully examine its
mission, vision and values. It must be informed about legal constraints and assess all
its management structures. Leaders should examine carefully the critical strategic
sustainability factors. Internal factors include managerial, operational, and economical.
External factors include market, government, and stakeholders expectations (Szekely
and Knirsch, 2005).
Corporations are driven by prots, but still, they should play a more proactive role
in the sustainable development of the society. This means that they have to go beyond
The Equator Principles UN Principles for Responsible Investment (ESG)
Principle 1: Review and categorization
Principle 2: Social and environmental assessment
Principle 3: Applicable social and environmental
standards
Principle 4: Action plan and management system
Principle 5: Consultation and disclosure
Principle 6: Grievance mechanism
Principle 7: Independent review
Principle 8: Covenants
Principle 9: Independent monitoring and reporting
Principle 10: EPFI reporting
Principle 1: We will incorporate ESG issues into
investment analysis and decision-making
processes
Principle 2: We will be active owners and
incorporate ESG issues into our ownership
policies and practices
Principle 3: We will seek appropriate disclosure on
ESG issues by the entities in which we invest
Principle 4: We will promote acceptance and
implementation of the Principles within the
investment industry
Principle 5: We will work together to enhance our
effectiveness in implementing the Principles
Principle 6: We will each report on our activities
and progress towards implementing the Principles
Note: ESG Environmental, social, and corporate governance
Sources: The Equator Principles (Equator Principles, 2003); UN Principles for Responsible
Investment (PRI, 2009)
Table II.
The Equator Principles
and the UN Principles for
Responsible Investment
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their prot-oriented commercial activities and increase the well being of the society
around them (Malovics et al., 2008).
CSR and the supply chain
In response to customer and shareholder concerns for corporate social responsibility
(CSR), many buying rms are implementing programs within their supply chains
aimed at ensuring suppliers act in a socially responsible way with respect to such labor
practices and/or environmental issues. To transfer supply chain partners socially
responsible behaviors, companies can use three management tools (Ciliberti et al.,
2008):
(1) establishing written supplier requirements;
(2) monitoring supplier performance to verify compliance with the requirements;
and
(3) contributing to suppliers awareness building and training on the company
policy about CSR issues.
Monitoring suppliers behavior to ensure compliance is important but may damage
buyer-supplier relationship. Therefore, a CSR implementation regime characterized by
procedural justice rather than by greater monitoring is more likely to increase supplier
compliance, and can improve rather than damage a buyers exchange relationships
with their suppliers (Boyd et al., 2007). A study conducted in Italy reveals difculties in
transferring CSR behaviors to small and medium sized enterprises that operate in
developing countries. Some of these obstacles to diffuse CSR practices in developing
countries include: cultural differences, low interest showed by customer in CSR, located
and operating in developing countries, and corruption in general (Ciliberti et al., 2008).
CSR strategies
There are many external forces that drive organization to the path of CSR such as
consumer demand for responsibly made products, challenges to organizations
reputations by nongovernmental organizations (NGOs), industry codes of conduct,
assessments and rankings of CSR performance, pressure from socially responsible
investors through public interest proxy resolutions, as well as the socially conscious
values of organizational managers and employees (Heslin and Ochoa, 2008). Heslin and
Ochoa proposed seven principles where organization can embark on strategic CSR:
(1) cultivate needed talent;
(2) develop new markets;
(3) protect labor welfare;
(4) reduce your environmental footprint;
(5) prot from by-products;
(6) involve customers; and
(7) green your supply chain.
Strategic orientation of rms toward CSR philosophy can support both its nancial
and stakeholders interests (Burke and Logsdon, 1996). Burke and Longsdon have
proposed a model for strategic analysis of CSR which has ve dimensions:
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(1) centrality (closeness to t to the rms mission and objectives;
(2) specicity (ability to capture private benets by the rm);
(3) proactivity (degree for to which the program is planned in anticipation of
emerging social trends and in the absence of crisis;
(4) voluntarism (the scope of discretionary decision-making and the lack of
externally imposed compliance requirements); and
(5) visibility (observable, recognizable credit by internal and/or external
stakeholders for the rm).
These dimensions should help managers develop CSR strategies that pay off.
Husted and Allen viewed Burke and Longsdon model as not fully developed with
testable hypotheses. In their study, Husted and Allen examined three (visibility,
appropriability, and voluntarism) of the ve dimensions in more detail and set out a
hypothesis of the relationship of each dimension to value creation. The other two
dimensions, centrality and proactivity, do not affect value creation in the Spanish
context where their empirical study was conducted. The conclusion of their study was
that visibility is clearly understood to be related to value creation. To the extent that
consumers and other stakeholders are perceived to observe CSR activity, they are able
to reward rms for their participation. Appropriability also signicantly affects the
creation of value through CSR projects. In other words, rms perceive that designing
CSR projects with the intent to generate benets is necessary for value creation.
Voluntarism is an essential element for the creation of value, but not in the direction
hypothesized by Burke and Logsdon. They thought that greater voluntarism would
lead to greater creation of value from strategic CSR projects (Husted and Allen, 2007).
To increase a rms competitive advantage, CSR projects should be cost effective
and produce a clear return on investment. CSR governance refers to organizing the
activities of transferring of rm resources for the production of social goods and
services. Husted describes three types of common modes of governance:
(1) outsource CSR through corporate charitable contributions;
(2) internalize CSR through in-house projects; and
(3) use a collaborative model.
When deciding on a mode, managers should consider two attributes:
(1) coordination (autonomous or cooperative); and
(2) motivation (incentive intensity or administrative control).
The two drivers for internalizing CSR are the centrality and specicity as developed by
Burke and Logsdon (1996). A decision matrix was developed for choosing among the
CSR governance structures where specicity and centrality are treated as being only
high or low when in fact they are both continuous. For example, if specicity is high
and centrality is high, then the best CSR governance structure is an in-house project
(Husted, 2003).
Falck and Heblich (2007) propose a planning process of strategic CSR action.
Decision-making is initiated by looking and evaluating a social trend. Once the trend is
evaluated, then it will be determined whether any of the companys stakeholders are
An overview
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749
interested in it and its impact on the nancial system of the company. Depending on
what is at stake and the type of committed resources, the company will choose a
strategic action without any risk of opportunistic behavior on the part of competitors
(exclusive stake) (Falck and Heblich, 2007).
McWilliams and Siegel (2001) conducted an empirical study based on a
framework of supply and demand model and CSR. Their hypothesize that a rms
level of CSR will depend on its size, level of diversication, research and
development, advertising, government sales, consumer income, labor market
conditions, and stage in the industry life cycle (McWilliams and Siegel, 2001). A
study conducted in the US modeled corporate investments in environmental
research and development (R&D) as investments in corporate social responsibility.
The theory and the empirical study support the hypothesis that socially responsible
corporate investments in environmental R&D increase with corporate self-interest in
reducing pollution caused by toxic emissions. Consequently, corporate
environmental R&D investments depend on both public policy and the structure
of markets (Scott, 2005).
CSR and energy
A study in the Baltic States (Lithuania, Latvia, and Estonia) investigated the problems
and challenges of CSR in the energy sector, revealing that the main barriers to CSR
development in the social sphere include: weak co-operation with stakeholders; weak
NGOs, insufcient care in competence and motivation of personnel; low awareness of
society about energy companies activities; indebtedness of heat consumers, high energy
prices comparing with low average income of population reducing initiatives to pay
higher price for green (renewable) energy or white energy (saved) support for socially
responsible business in energy sector; and the lack of information and awareness
(Streimikiene et al., 2009). The indicators used to monitor the sustainable development of
the Baltic States include both sustainable and energy development indicators. The main
sustainable development indicator used is the Human Development Index (HDI), which
provides information on the main economic and social trends of the country and
represents economic and social dimensions of sustainable development. The sustainable
energy development indicators (Streimikiene et al., 2009) are:
.
increase in energy efciency which is expressed by energy intensity of GDP
(primary energy/GDP, nal energy/GDP); and
.
increase use of renewable energy sources which can be expressed by share of
renewables in electricity generation, share of renewable in total primary energy
supply, and in use of biofuels in transport.
Environmental challenges of Abu Dhabi, UAE
The United Arab Emirates (UAE) is located in the Middle East and in the eastern part
of the Arabian Peninsula as shown in Figure 1. The land is largely hot, dry desert. The
UAE consists of the seven emirates. Abu Dhabi is by far the largest and controls 90
percent of all oil and natural gas reserves in the UAE. The UAE federal government
recognizes that diversication of its economy plays a key role in maintaining growth.
The other main industrial activities in the country include construction, aluminum,
chemicals and plastics, metals and heavy equipment.
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According to the state of the environment (SOE) report of Abu Dhabi (EAAD, 2009),
the main source of air pollution in the country comes from the oil and gas industry
followed by electricity and water desalination production. Over 90 percent of the water
consumed in the country comes from desalinated water and this shows the coupling
between energy and water. Natural gas fuels over 99 percent of total electricity
generation, the remainder being based on oil. UAE and other Gulf states have the
highest CO
2
emissions per capita and UAE has the second highest water consumption
per capita after the United States of America (EAAD, 2009). Figure 2 shows the
historical CO
2
emission in UAE (CDIAC, 2009).
The Abu Dhabi Urban Planning Council (ADUPC) has developed the Plan Abu
Dhabi 2030 (ADUPC, 2007). It is the most comprehensive visionary plan for the city of
Abu Dhabi. This Urban Structure Framework Plan is rst and foremost grounded in
the cultural and environmental identity of Abu Dhabi. The citys population may grow
Figure 1.
Location of United Arab
Emirates
Figure 2.
Historical CO
2
emissions
in UAE
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751
to three million or it may exceed ve million by 2030. Clearly, this situation will have
important implications and will assert more pressures on existing infrastructure and
institutions even without drawing upon the demand for RE technology. At the same
time, it is clear that even though the plan covers most aspects of urban planning, it still
lacks attention to the energy required to meet the comprehensive development plan.
This omission could have serious consequences. Abu Dhabis energy demand and
supply to meet electricity generation and water desalination is critical to the
sustainable development of the city and must be dealt with very wisely because it
could be the tipping point between success or failure of the plan.
Abu Dhabi Water and Electric Company (ADWEC) is the government agency
dealing with electricity and water needs not only for the Emirate of Abu Dhabi but for
the whole country. Based on Plan Abu Dhabi 2030, ADWEC developed a projection
plan for electricity and water demand which will almost triple by the year 2030. The
mandate of ADWEC is to ensure that, at all times, all reasonable demands for water
and electricity in the Emirates are satised (ADWEC, 2008).
The Masdar Initiative in Abu Dhabi: a bold move
In April 2006, Abu Dhabi took a bold and historic decision to embrace renewable and
sustainable energy technologies. Hence, the Masdar Initiative was created. It is a
multi-billion dollar comprehensive economic development program designed to
leverage Abu Dhabis considerable nancial resources and energy expertise into
innovative solutions for cleaner, more sustainable energy production and resource
conservation.
The Masdar Initiative has four primary objectives:
(1) to help drive the economic diversication of Abu Dhabi;
(2) to maintain, and later expand, Abu Dhabis position in evolving global energy
markets;
(3) to position the country as a developer of technology, and not simply an
importer; and
(4) to make a meaningful contribution towards sustainable human development.
To implement the Masdar Initiative, Abu Dhabi government has created the Abu
Dhabi Future Energy Company (ADFEC). ADFEC is a private joint stock company
wholly owned by the government of Abu Dhabi through Mubadala Development
Company. The following is a brief description of the different business units of
ADFEC.
.
Property development unit. Overseeing the building of Masdar City. Masdars
Special Free Zone (SFZ) is a unique, integrated Green Community in the heart
of Abu Dhabi and will be completed in 2016. Renewable energy is main source of
energy, 230 Megawatts, to power the city. The main RE technology used is the
photovoltaics (PV), about 90 percent, which will be installed on the roofs of the
buildings. The other 10 percent will come from other RE technologies such as
concentrated solar power (CSP), biomass, and geothermal energy. Masdar City
has commissioned in April 2009 its rst 10 MW PV power plant that will used to
power the rst phase of the city. This is the rst power plant of its kind in the
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region. The plant is also registered in the United Nations as a clean development
mechanism (CDM) project eligible for carbon credits (CDM, 2009).
.
Industries. Main objectives is to invest in RE manufacturing plants around the
world for both money making operations and to develop the technology know
how and transfer it later to Abu Dhabi. ADFEC has identied both wind and
solar as the most protable between all RE technologies. For example, ADFEC
has already invested and built a thin lm manufacturing plant (to use in PV) in
Germany using new technology that was developed by German scientists with
ADFEC funding. Today, ADFEC will be building a second thin lm
manufacturing plant in Abu Dhabi. ADFEC is investing in a wind turbine
manufacturing plant in Finland and London Array offshore wind farm.
.
Carbon management. ADFEC signed several projects related to carbon capture
and storage in Abu Dhabi and Bahrain. In addition, ADFEC is building a
hydrogen energy plant in joint venture between British Petroleum (BP)
Alternative Energy and Rio Tinto. They are working together on the front-end
engineering design of an industrial-scale hydrogen-red power generation
project with capture of the carbon dioxide (CO2), which would then be available
for transportation and storage. The plant would be located in Abu Dhabi. Many
of the CDM projects that are implemented in Abu Dhabi will contribute to the
reduction of CO2 per capita emissions especially in the oil and gas industry.
.
Utilities and asset management. The objective of this unit is to build and operate
RE (wind and solar) power plants in Abu Dhabi and abroad. The power is sold to
local utility companies. One of their major investments in Abu Dhabi is Shams 1
(100 MW), which is one of a several CSP power plants that will be built in Zayed
City. ADFEC is planning to build about 1600 MW of CSP plants by 2020. CSP is
the most proven technology when it comes to a large-scale power generation in
desert-like country. In addition, ADFEC has direct investment in 12 clean tech
companies and invested in four leading green funds focusing on cutting-edge
clean technology.
.
Masdar Institute of Science and Technology. Located in Masdar City and
developed in cooperation with the Massachusetts Institute of Technology (MIT),
the Masdar Institute emulates MITs high standards and offers masters and
doctoral-level degree programs focused on the science and engineering of
advanced energy and sustainable technologies. The Masdar Institute aims to
become a centre of high-caliber renewable energy and sustainability research
capable of attracting leading scientists and researchers from around the world
and to develop a pool of highly skilled scientists, engineers, managers and
technicians capable of accelerating the development of indigenous technology
and enterprise in the region and globally.
Masdar Innovations benets to economy and society
The project represents a paradigm shift, a Middle Eastern oil-producer nation making
a visionary and long-term commitment to the development of new forms of clean and
sustainable energy. Masdar is a highly structured initiative, ensuring that all critical
elements for success (workforce, technology, infrastructure and institutions) are put in
place to create a sustainable and synergistic community capable of achieving tangible
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results of world-scale signicance. The project is innovative in its open engagement
model, pooling an impressive array of some of the worlds best scientic and corporate
resources to maximize the potential for impact, creative breakthroughs and eventual
scale-up and broad deployment of new energy solutions for the global community
(Clean Energy Awards, 2007).
Although difcult to precisely measure, the following direct results are expected
from the project by 2016:
.
10,000 new high-quality jobs in the clean energy and sustainable technologies
sector in Abu Dhabi;
.
500 full-time Masters and PhD students, and 80 high caliber faculty at the
Masdar Institute specializing in clean energy and sustainable technologies;
.
a multibillion-dollar expansion of the Abu Dhabi non-oil economy; and
.
the creation of a world-class scientic and research hub which is currently
non-existent in the Gulf region; such a hub can become the core of other
knowledge-based activities and industries in addition to clean energy.
The whole society will certainly benet from the creation of the renewable energy
sector through job creation, research and development in RE technologies, and
graduate educational opportunities at the Masdar Institute. Society and the
environment will benet through the accelerated use of renewable energies
developed and/or produced at Masdar.
Towards sustainability and social responsibility in Abu Dhabi Future
Energy Company (ADFEC)
CSR is not new to UAE, the Emirates Environmental Group (EEG), which has been
active in the country since 1991 and established a CSR network in 2004 (EEG, 2009).
The objective of the network is to establish collaboration with leading public and
private enterprises on solving environmental problems and promoting sustainable
development through the concept of CSR. In addition, many UAE organizations are
current participants in UNGC.
CSR and energy
Building a renewable energy industry is a big challenge especially when workforce,
institutions, and infrastructure do not have the experience. Therefore, the country will
need the private sector to take the leadership role in close partnership with the public
sector by providing technical expertise, nancial capability, and political power to safe
sail UAE in the right direction. ADFEC is considered to be a Primary Mover and will
leapfrog Abu Dhabi into the renewable energy sector and will ensure that the seven
percent target that was set by the government of Abu Dhabi by 2020 is met. That is
why ADFEC is trusted by the government to implement the Masdar Initiative and
especially to eliminate many of the barriers of CSR development in the social sphere.
ADFEC is currently working with all concerned stakeholders in order create a
renewable energy sector in Abu Dhabi. The HDI for United Arab Emirates is 0.868.
This is considered high and gives the country a rank of 39th out of 177 countries
according the United Nations Human Development Report 2007/2008. UAE has shown
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an upward trend for the past ten years. The HDI provides a composite measure of three
dimensions of human development:
(1) living a long and healthy life (measured by life expectancy);
(2) being educated (measured by adult literacy and enrolment at the primary,
secondary and tertiary level); and
(3) having a decent standard of living (measured by purchasing power parity, PPP,
income).
CSR and the supply chain
ADFEC is not trying to ensure sustainability and social responsibility within its
company but also working with its suppliers to ensure such practices. Sustainability is
part of every contract that ADFEC signs with its suppliers. One of the most visible
problems in UAE is the Labor practice. UAE depends on foreign unskilled labor for its
development. The government is cracking down on unsafe labor practices such as
housing and working hours. ADFEC has established a Code of Conduct policy in
addition to Contractors Temporary Living Quarters Guidelines. One of the major
concerns in the region is unskilled labor living conditions and Masdar took the lead in
establishing decent labor villages in Masdar City for the unskilled labor force building
the city.
CSR strategy
This initiative since its inception had a positive and a propagating impact on local,
regional, and global levels. The Masdar Initiative has been called many names that
reect its global importance such as a Lighthouse, a Hydrogen Bomb, a
Sustainability Laboratory, etc. Table III summarizes ADFECs role on the local,
regional, and global sustainability levels. This is not a complete mapping of ADFEC
sustainability and CSR practices but only a high level listing of the primary activities
that shows how sustainability is core to ADFEC. Most of the activities listed in the
table are in accordance to the United Nations Global Compact (UNGC) principles that
are related to human rights, labor, environment, and anti-corruption. ADFEC will be a
participant in UNGC soon. In addition, ADFEC is working with an international
consultant to establish CSR policy and procedures for all its units and will be
publishing its rst CSR report in December 2009. Also, ADFEC is working toward
getting all the needed ISO certications such as ISO 9001 (quality), ISO 14001
(environment), and OHSAS 18001 (occupational health and safety) which will increase
its credibility among its stakeholders.
CSR in Masdar extends beyond the common understanding of social
responsibility, corporate philanthropy and green washing; it is the core and the
integral part of ADFECs business. It is corporate responsibility that covers
sustainability, societal norms, and strives to be the change in a local and a global
platform. For example, Masdar City has adopted all One Planet Living principles
and ADFEC is keeping track of all its CO2 footprints. ADFEC is working with
many NGOs including the local chapter of Worldwide Fund for Nature (WWF) to
develop awareness program in the country regarding sustainability and renewable
energy. The Masdar Institute is collaborating with WWF on establishing an
ecological footprint program in UAE.
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ADFEC as a prime mover
Workforce
Skilled Will rely in the short term on expatriates but also ensuring the
developing of national expertise by hiring and training UAE
nationals (building local capacity)
Unskilled Will remain depending on expatriates
Human rights and corruption Establishing Code of Conduct and Contractors Temporary
Living Quarters Guideline and other related policies for
employees and establishing decent labor villages in Masdar City
for the unskilled labor force living quarters in the city. Other
related policies will follow
Institutions
Government agencies Working and advising government agencies on energy reform
policies, land use planning reform, etc.
Laws, regulations, and legislations Advising the legal branch of the government to create laws that
will facilitate and speed up RE projects
Private sector Building the capabilities of the local private sector in UAE by
allowing it to participate in the different projects and in
implementing green supply chain
Financial institutions Advising local banks, with the assistance of global nancial
banks, on how to participate in nancing RE projects in the UAE
and abroad
Taxes and tariffs Negotiating with the local government to come up with the best
tariff reform policy that will benet all the stakeholders
High school education Building environmental awareness with UAE Ministry and
NGOs
Tertiary education Building relations with all local universities through Masdar
Institute to help develop their programs. 10-15 percent of
students from local universities are considered to be main
recruiting target for Masdar Institute
Research and development
institutions
Masdar Institute in the heart of the Masdar Initiative. Full
nancial support to R&D. Hiring top faculty and recruiting top
caliber students
Government-private sector
cooperation
A good model for government and private sector partnership
Innovation factors R&D spending, university-industry collaboration, the number of
patents generated from different projects, driving technology
change, etc.
Infrastructure
Power plants Investing in CSP plants in Zayed with a capacity reaching 1,900
MW by 2020. Building the rst 10 MW PV power plant,
registered at the UN as a CDM project eligible for carbon credits,
in Masdar City
Distribution networks Already UAE has excellent conventional distribution networks
and grids but need to connect RE projects to them
Connectivity Working with ADWEA and other related institutions and
companies, by providing the expertise, to build the RE
connectivity infrastructure and dealing with logistics, tariffs, and
regulatory issues
(continued)
Table III.
ADFECs role and impact
on local and global
sustainability
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Conclusion
This paper discussed the sustainability and the corporate social responsibility of
ADFEC in Abu Dhabi and UAE. The success of Masdar Initiative will encourage
others to start investing in renewable energy, which will eventually contribute to the
social welfare of the society at large. But in order to ensure sustainable development
and social prosperity of the country, all stakeholders (government institutions, private
sectors, NGOs, public, universities, etc.) must be engaged in direct coordination and
collaboration in order to develop the right energy policies, incentives to invest in RE
projects, ensure the funding is available for research and development to develop RE
technologies, put in place the needed market mechanisms for diffusing RE
technologies, build public awareness, etc. ADFEC has the ability to leverage its own
actions into the GCC, MENA and Southeast Asian regions. By providing the leadership
and demonstrating that concrete results are possible Masdars spillover effect can be
quite substantial. Masdar is driving the transition from an oil-based economy to more
knowledge-based technology and service industries. The environment will also be a
key beneciary of Masdar Initiative and the different RE and water resources
technologies developed and applied by ADFEC can greatly enhance sustainable
human development in the arid countries of the MENA region. ADFEC is striving to be
ADFEC as a prime mover
Impact on the local level Creating the rst sustainable city in the world, Masdar City,
where the quality of life is of importance
Creating the Silicon Valley of the renewable energy in UAE
Developing the local human capabilities and capacities
Developing local institutions and infrastructure
Building unique thin-lm (PV) manufacturing plants in Abu
Dhabi
Creating the RE market in an oil rich country, which is a unique
endeavor and a bold move
ADFEC is partnering with local NGOs including Emirates
Wildlife Society (EWS) and the local branch of WWF to build
environmental awareness, and energy savings and efciency in
UAE
Reduction of CO
2
emissions and water consumptions per capita
Impact on the global level: some
people are calling Masdar a
Lighthouse, Hydrogen Bomb,
Sustainability Laboratory
Making UAE a global leader in the RE sector
Masdar is becoming a well-known brand around the world
Investing in the best RE companies around the world
Investing in RE infrastructure projects around the world
Many countries regionally and globally are proting from
Masdars experience and initiating similar projects (Dubendorf,
Swiss Hub)
Signaling a positive sign that oil-rich countries can be sustainable
ADFEC has direct investment in 12 clean tech companies and
invested in four leading green funds focusing on cutting-edge
clean technology
Masdar City is adopting One Planet Living principles
Impact on climate change Contributing to reduction of global CO
2
emissions by investing in
projects around the world related to energy efciency, renewable
energy, and carbon capturing and sequestration Table III.
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a benchmark for others in sustainability and CSR practices in the region but many
challenges still remain and must be dealt with. Some of the challenges include cultural
differences, low consumer interest, and other challenges that are common in
developing countries.
The Masdar Initiative is moving forward despite the global economic problems
because the leadership of Abu Dhabi is convinced that is the right trajectory to build a
knowledge-based economy in renewable energy. In addition, the international
community votes to establish the headquarters of the International Renewable Energy
Agency (IRENA) in Abu Dhabi in Masdar City.
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About the authors
Touc Mezher is the Associate Dean for Student Affairs and Professor of Engineering Systems
and Management at Masdar Institute of Science and Technology. Before Joining Masdar
Institute, he was a Professor of Engineering Management at the American University of Beirut
from 1992 to 2007. He earned a BS in Civil Engineering from University of Florida, and a
Masters and ScD in Engineering Management from George Washington University in 1988 and
1992 respectively. His research interests include Sustainable Development, Renewable Energy
Management and Policy, Building Knowledge-Based Economies and Innovation Systems, etc.
Touc Mezher is the corresponding author and can be contacted at: tmezher@masdar.ac.ae
Nawal Al Hosani is the Associate Director of Sustainability at Masdar. Her responsibilities in
Masdar range from conceptual thinking to execution, leading and coordinating the sustainability
team, and introducing innovative integrative applications. Previously, she held senior leadership
positions in the General Headquarters of Abu Dhabi Police (ADP). From 2002-2007 she was the
Head of Design and Studies in the Projects Engineering Department. In 2007 she became the rst
female Deputy Director in the history of ADP. She actively participated in a large number of
Continuous Professional Development (CPD) courses to remain in the forefront of the social
science and sustainable development debates. The selection of CPD courses reects her interest
in project management methods, leadership, planning and decision support mechanisms. She
was decorated with several medals and received special rewards for her professional conduct
and excellence. She won a Chevening Fellowship from the Foreign and Commonwealth ofce of
the UK. Recently (May 2008) she won the Emirates Businesswomen Award for professional and
career achievements category. Nawal Al Hosani has a BSc in Architecture from UAE Faculty of
Engineering and a PhD from the University of Newcastle upon Tyne, UK.
Samer Tabbara is the Sustainability Education and Awareness Associate at Masdar. He
focuses on corporate sustainability and integrating sustainability on Masdar City. Previously he
held several design and development positions, the latest with Tameer as Sustainable
Developments Manager. His experience includes the design and development of several
signature and large-scale projects in the region. He also has extensive experience in Corporate
Sustainability, Sustainability Cost Analysis; Energy Modelling; and Building Life Cycle
Analysis. He is LEED-accredited and has a Bachelor of Engineering from the American
University of Beirut and an MBA from Manchester Business School, UK.
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