Environmental, Social, Governance (ESG) disclosure in Saudi Arabia: from voluntary guidance to a new era of expectations
In the last few years, the narrative surrounding Environmental, Social and Governance (ESG) in Saudi Arabia has moved fast. What began as a voluntary signal has evolved into a strategic necessity. For players in the corporate Saudi arena, especially those listed, or aiming to attract investment, this is not a “nice-to-have” option anymore. It is rapidly becoming a fundamental core business requirement.
The evolving regulatory backdrop
- The Capital Market Authority (CMA) first issued ESG Disclosure Guidelines in 2019.
- The Saudi Exchange (Tadawul) followed suit in 2021 with its own ESG disclosure framework, encouraging listed companies to provide ESG-related information.
- In 2025, the CMA formalised a framework for green, social, sustainability and sustainability-linked debt instruments (GSS / SLB), thereby requiring issuers to include relevant ESG disclosures, especially when proceeds are used for environmental or social-impact projects.
On paper, ESG disclosure remains “voluntary.” In practice, pressure is growing, from regulators, investors, lenders, and the broader marketplace. According to recent data, in 2024, 94 listed firms issued sustainability reports, an increase from 81 in 2023. Amongst the top 100 companies on Tadawul by revenue, approximately 65 percent now report on ESG. Voluntary ESG disclosure is morphing into market expectation. For many companies, the window to start early is closing.
Why this matters in Saudi’s context
1. ESG as strategic value, not just compliance
For decades many companies in Saudi Arabia, whether in energy, manufacturing, banking or real estate, measured success strictly in financial terms. Now ESG adds a new dimension broadly including resilience, sustainability, risk management, and investor confidence. A study of Saudi-listed firms found a positive link between ESG disclosure and financial sustainability.
Moreover, boards and executives cannot treat ESG as a side issue. ESG considerations increasingly form part of enterprise-wide risk management frameworks in the Kingdom, covering environmental risks, labour and human capital, governance integrity, climate transition, and long-term competitiveness.
2. Access to capital (debt and equity) leans on ESG readiness
The CMA’s 2025 guidelines for green, social, sustainability, and sustainability-linked debt instruments opened new financing channels for firms that qualify. However, access depends on transparency in use of proceeds, environmental/social impact reporting, and ongoing disclosure, in short, good ESG governance.
Firms that ignore ESG may struggle to access these green/sustainable financing modalities. In contrast, early adopters can position themselves as attractive to investors (domestic and international) who increasingly factor ESG into decisions.
3. Build reputation, stakeholder trust, and alignment with Vision 2030
Saudi’s broader trajectory under Saudi Vision 2030 and the Saudi Green Initiative (SGI) makes ESG not a PR token, but a strategic asset. Regulators, markets and society now expect companies, especially large ones, to take sustainability seriously. Firms that voluntarily disclose ESG and embed sustainability as of 2026 will enjoy better stakeholder trust, stronger legitimacy, and readiness for future regulation implementation.
The reality on the ground: the capacity gap
Despite progress, real-world ESG adoption amongst Saudi firms remains uneven. As recently as 2023 a small fraction of listed firms had formal sustainability reports with one source estimating only 13 out of 217 companies — approximately 6%.
At Staterra, we see this challenge play out regularly with our clients. The biggest barrier is not simply a lack of intent but a decided lack of internal capacity. Major gaps remain in data collection, standardisation, quality and comparability.
Many reports lack consistent metrics on air emissions to atmosphere, proper waste management (both normal and hazardous), water usage including both potable water supply and aqueous effluent treatment, recycle and discharge, labour practices, governance structure and social impact. Adoption of globally recognised frameworks (e.g. GRI, SASB, ISSB) remains sporadic at best.
Corporate culture compounds the problem. Some companies treat ESG reporting as a checkbox exercise, often outsourcing the reporting to consultants without building internal systems and capacity to monitor ESG over time. This approach may produce a ‘one-off’ report, but it does not deliver functional ongoing risk management, investor confidence nor operational improvement.
The result? Companies miss out on green financing opportunities, lose investor attention, and remain unprepared when regulations tighten. From a regulatory perspective, Saudi’s framework is still largely “rule-based”. That makes it difficult to capture the dynamic nature of ESG materiality, what matters can change quickly with business conditions, climate events or stakeholder expectations. Some academic research warns this rigidity may stifle genuine ESG progress.
What you gain by acting now – practical steps for moving forward
If you are a company operating in Saudi, or advising one, here are concrete priorities which can be adopted and implemented in order to stay ahead:
1. Secure long-term resilience and investor confidence
Don’t wait for a mandate. View ESG disclosure as part of long-term corporate resilience, risk management, access to capital, stakeholder trust. Engage leadership and onboard early to build credibility with financiers and regulators before your competitors do.
2. Bridge the capacity gap with systems that last
Invest in dedicated ESG teams or integrate ESG into existing governance, operations, sustainability or risk-management units. Manual reporting once a year is not enough. You need ongoing data collection on emissions, resource use, labour, governance and community impact. This ensures you are always ready to respond to investor queries, financing requirements or Saudi regulatory changes as set down by MEWA, NCEC and the RCJY.
3. Gain credibility with recognised ESG reporting frameworks
Use frameworks such as Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) or forthcoming international standards for sustainability reporting ensures comparability, credibility and robustness. Investors and lenders recognise these standards, which translates into faster access to green financing and better valuations.
4. Position yourself for green and sustainable financing
If you plan to raise capital via green/sustainability-linked instruments, transparent use of proceeds and solid reporting mechanisms are essential. Companies with robust ESG governance qualify for preferential financing terms and may attract more international investors.
5. Integrate ESG into governance and board oversight
Ensure ESG oversight at the board or executive level. Transparency, accountability and long-term thinking at the top signal to markets that your ESG commitments are genuine, not just for show.
The case for early movers, and risk for laggers
Companies that adopt ESG disclosure now, before it becomes strictly mandatory, stand to gain several advantages. They build credibility with investors, improve risk management, and align themselves with national sustainability goals ahead of peers. In a few years, ESG-ready firms will be eligible for green financing, attract preferential investment attention, and enjoy better stakeholder trust.
On the flip side, firms that ignore or delay ESG disclosure risk falling behind. They may struggle with financing, investor confidence, and could face reputational or regulatory pressure as the Kingdom aligns closer with global ESG norms.
Conclusion
Saudi Arabia’s ESG landscape is transforming. What started as voluntary disclosure and optional frameworks has rapidly progressed through regulatory pressure, market expectations and commitments under Vision 2030. Yes, full mandatory ESG reporting may not yet be universal. However, for any company aiming to thrive long-term, and for stakeholders urging genuine sustainability, ESG disclosure is no longer optional.
If you are running a company or advising one, now is the time to get your ESG house in order. Build internal capacity and adopt a recognised framework. Embed ESG into governance, risk management, and financing strategies. At Staterra, we work with organisations to bridge the capacity gap and build ESG systems that deliver real business value, not just reports. Because the future will not wait.
Ready to future-proof your ESG strategy and secure new financing opportunities? Contact Staterra now to discuss how we can support your journey.