Reinventing business models: Navigating climate and AI disruptions in the Middle East

Al Arabiya

4 hours ago

The Middle East is undergoing a profound transformation, with its business leaders among the most confident in the world about revenue growth and the regions economic outlook for the year ahead. However, chief executives in the region are also keenly aware of the disruptive forces reshaping businesses, compelling them to rethink how they create and sustain value. For them, AI and climate change aren't distant challenges – they are already driving the reinvention of business models to ensure long-term viability.
Navigating innovation with AI and climate change
PwC's 28th Annual CEO Survey: Middle East findings have indicated that business leaders in the Middle East see AI as a powerful enabler – creating enormous possibilities for innovation, revenue and productivity growth. In fact, GCC CEOs are more likely to have adopted GenAI in the last 12 months than their peers globally (88 percent vs 83 percent) and are using it to boost business performance and create new sources of value.
Over the next three years, 93 percent of GCC CEOs predict AI will be systematically integrated into tech platforms, compared to 78 percent globally. Additionally, 90 percent expect AI to enhance business processes and workflows (vs. 76 percent globally), 85 percent to embed it in workforce and skills (vs. 68 percent globally), and 81 percent anticipate its use in new product and service development (vs. 63 percent globally).
In the past 12 months, GenAI has also driven greater efficiencies, increased revenue and profitability and facilitated job creation in the region, with 68 percent of regional business leaders acknowledging improved efficiencies in their own time at work and 63 percent reported efficiencies in employees' time (vs. 56 percent globally). More than half of GCC CEOs also reported revenue growth, 53 percent saw an increase in profitability and 36 percent of regional business leaders highlighted job creation through GenAI, more than double the global average of 17 percent.
Regional business leaders have also acknowledged that climate change will impose significant business and economic constraints as a result of the impacts of rising temperatures, droughts and floods. These physical risks stand as a formidable challenge, exerting pressure on companies to adopt sustainable practices and integrate climate risk into their strategic planning and decision-making.
In terms of positive action, nearly 80 percent of CEOs in the GCC have initiated climate-friendly investments over the past five years, and these investments are starting to pay off, with the number of CEOs reporting an increase in revenue greater than those citing an increase in costs. Among Middle East CEOs who have not made any climate-friendly investments in the last 12 months, several key barriers hinder their ability to decarbonize, such as regulatory complexities, perception of lower returns on climate-friendly investments and the lack of available financing.
The urgency to reinvent
Our survey findings have revealed that more than half of GCC CEOs believe that they will need to adapt their businesses in 10 years or less to remain viable. The intertwining of climate imperatives with AI advancements requires leaders to rethink strategies, focusing on integrating these elements into their core operations. Business models must also evolve to capture new opportunities presented by industry convergence, as traditional sector boundaries blur and competition intensifies. CEOs must navigate this shift by embracing cross-industry collaborations, leveraging AI to enter new markets and domains of growth, and by adopting sustainable practices to enhance resilience.
Strategic pathways forward
Over the next decade, GCC countries are expected to implement significant regulatory changes in the areas of AI, technology and climate, among others. This will be key to shaping future enterprises and will offer transformative opportunities for businesses to drive innovation, enhance competitiveness and achieve sustainable growth. Robust frameworks for responsible AI governance, data protection and cybersecurity will foster a secure environment for technological advancements, while climate-focused policies will enable businesses to leverage sustainability opportunities.
The path forward demands bold leadership, a commitment to sustainability and a relentless pursuit of innovation. This strategic realignment of business models and future goals and ambition will not only drive growth but will ensure that businesses in the region remain front runners as they navigate the shifting complexities of a dynamic global landscape.