ESG Metrics and Risk Factors in Asset and Facility Management: Adapting to Mandatory Reporting Policies

Mohammad G. Abu Afifeh¹ , Mufid Samarai², Rami Alsodi^3,4

1 Conceliare, P.O. Box 541885, Amman, Jordan. main@conceliare.com

2 Sahara Management Consultancy, P. O. Box 2580, Dubai, UAE. samarai@sharjah.ac.ae

3 Department of Public Works, P.O. Box 351, Sharjah, UAE. rami.alsodi@dpw.sharjah.ae

4 University of Sharjah, P. O. Box 27272, Sharjah, UAE. U21200094@sharjah.ac.ae

Abstract #

The growing emphasis on Environmental, Social, and Governance (ESG) considerations is profoundly reshaping how global companies manage their assets and facilities, especially in light of impending mandatory reporting requirements. This study critically examines key ESG metrics and risk factors relevant to asset and facility management across various industries worldwide. Through a comprehensive analysis of existing literature and reports, it identifies prevalent ESG challenges and evaluates their impact on operational efficiency and corporate responsibility. The findings underscore the increasing necessity for standardized ESG frameworks that incorporate risk management strategies to meet evolving reporting obligations and stakeholder expectations. The study presents actionable recommendations to enhance the integration of ESG principles in asset and facility management, fostering sustainable operations, improving transparency, and ensuring compliance with emerging global standards. Additionally, the study analyzes secondary data from Saudi-listed companies, providing insights into how corporate governance mechanisms such as board independence and audit committee composition influence ESG disclosures. These findings contribute to the ongoing discourse on sustainable corporate governance, highlighting ESG’s role in mitigating risks and bolstering long-term organizational resilience.

Keywords: Economic diversification, ESG reporting, Sustainable Development Goals (SDGs), Corporate social responsibility (CSR), Environmental, Social, and Governance (ESG), Asset Management, Facility Management.

1 Introduction #

ESG (Environmental, Social, and Governance) is a framework for evaluating how businesses manage sustainability, social responsibility, and corporate governance. It is important for assets because it ensures long-term value and resilience against risks like climate change. For employees, ESG promotes fair labor practices, diversity, and safety, leading to a healthier work environment. Companies benefit from ESG by improving reputation, attracting investors, and fostering sustainable growth. On a global scale, ESG drives positive impacts on the world by addressing environmental challenges, promoting social equity, and encouraging ethical governance.

Integrating Environmental, Social, and Governance (ESG) considerations has become a critical aspect of corporate strategy, significantly influencing how companies manage their assets and facilities. There has been a growing emphasis on sustainability and responsible management practices in recent years, driven by increasing regulatory requirements and stakeholder expectations [1]. Companies are now expected to demonstrate their commitment to sustainable operations through internal policies, transparent reporting, and adherence to emerging global standards [2].

Mandatory ESG reporting requirements are becoming more prevalent worldwide, compelling organizations to adopt standardized frameworks for evaluating and disclosing their sustainability performance [3]. These frameworks, such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), guide companies in measuring and reporting key ESG metrics, enabling them to communicate their efforts effectively [3]. However, integrating these principles into asset and facility management poses unique challenges, including balancing operational efficiency with environmental stewardship and social responsibility [4].

This paper examines the key ESG metrics and risk factors pertinent to asset and facility management across various industries globally. Through a comprehensive analysis of existing literature and reports, the research seeks to identify prevalent ESG challenges and evaluate their impact on operational efficiency and corporate responsibility. The findings will underscore the

increasing necessity for standardized ESG frameworks incorporating risk management strategies to meet evolving reporting obligations and stakeholder expectations. The significance of the paper is that it has the potential to offer actionable recommendations for enhancing the integration of ESG principles in asset and facility management. This integration is crucial for adopting sustainable operations, improving transparency, and ensuring compliance with emerging global standards [5]. Through a comprehensive analysis of current sustainability practices and their impact on operational efficiency, this paper contributes to the ongoing discourse on sustainable corporate governance, highlighting the role of ESG in mitigating risks and bolstering long-term organizational resilience.

2 Literature Review #

2.1 ESG in Asset and Facility Management

Integrating Environmental, Social, and Governance (ESG) considerations into asset and facility management has garnered significant attention in recent years, primarily due to its impact on operational efficiency, risk management, and long-term sustainability [6]. ESG integration in this context involves a holistic approach to managing assets and facilities that accounts for environmental impacts, social responsibilities, and governance practices. Research has shown that organizations adopting ESG-focused asset and facility management strategies are better positioned to address emerging regulatory requirements and stakeholder expectations [7].

One key aspect of ESG integration in asset management is adopting sustainable practices, such as energy-efficient building designs, renewable energy sources, and water conservation measures [8]. These practices reduce the environmental footprint and contribute to cost savings and improved asset value over time. Similarly, social considerations, such as ensuring safe and healthy working conditions and engaging with local communities, have been linked to enhanced corporate reputation and employee satisfaction [9].

2.2 Mandatory Reporting Requirements

Globally, there is a growing movement towards mandatory ESG reporting, with various countries and regions implementing regulations that require companies to disclose their sustainability practices [10]. For example, the European Union’s Corporate Sustainability Reporting Directive (CSRD) mandates that companies provide detailed information on their ESG initiatives, including their environmental and societal impact [10]. In the United States, the Securities and Exchange Commission (SEC) also considers rule changes requiring ESG disclosures, emphasizing transparency and accountability [11]. Figure 1 shows the percentage of companies in the Middle East that have certain types of sustainability reporting. More than 50% of the companies in the Middle East have no stand-alone sustainability report.

Figure 1 Distribution of ESG Reporting Practices in the GCC Region [12]

These mandatory reporting requirements have significant implications for asset and facility management. Companies must implement sustainable practices and develop mechanisms for tracking and reporting their ESG performance [13]. This has led to the adoption of standardized reporting frameworks, such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), which provide guidelines for measuring and communicating ESG metrics [3, 14].

While integrating ESG principles into asset and facility management offers numerous benefits, it also presents challenges. One of the primary challenges is balancing operational efficiency with sustainability goals [6]. Implementing energy-efficient systems, for example, may require significant upfront investment, which can be a barrier for some organizations. Additionally, a lack of standardized ESG metrics and reporting practices makes it difficult for companies to benchmark their performance and demonstrate their commitment to sustainability [15].

Despite these challenges, integrating ESG principles presents opportunities for organizations to enhance their long-term resilience and competitiveness [8]. By adopting a proactive approach to ESG, companies can mitigate risks, improve stakeholder relations, and access new markets and investment opportunities. Moreover, consumers’ and investors’ growing demand for sustainable practices incentivizes companies to integrate ESG into their asset and facility management strategies [9].

3 ESG Supports SDG Implementation #

• Aligning Business Strategies: By adopting ESG principles, companies ensure their operations are aligned with the SDGs, integrating sustainability into their business models and fostering long-term positive impacts on society and the environment.
• Financial Sustainability: Many financial institutions and investors are aligning their portfolios with the SDGs, using ESG criteria as a tool to invest in sustainable business practices that contribute to the goals.
• Corporate Responsibility: ESG provides a framework for companies to demonstrate corporate responsibility, which goes hand in hand with achieving the SDGs, ensuring businesses actively contribute to solving global challenges.

Summary Table of ESG and SDGs Relationship:

ESG Dimension	Related SDGs	Key Areas of Focus
Environmental	SDG 7, 12, 13, 14, 15	Energy efficiency, climate action, sustainable resource use, biodiversity, pollution reduction.
Social	SDG 1, 3, 4, 5, 8, 10, 11	Health & safety, labor rights, gender equality, education, diversity, inclusion, decent work, urban development.
Governance	SDG 16, 17	Anti-corruption, transparency, partnerships, strong institutions, ethical governance.

So, ESG is a practical approach that aligns business operations with the broader global framework of the SDGs. By adopting ESG principles, companies contribute to the achievement of the SDGs through sustainable practices, ethical governance, and social responsibility. It bridges the gap between corporate actions and global development goals, promoting long-term sustainability and shared value creation for both businesses and society.

4 Key ESG Metrics and Risk Factors #

Key ESG Metrics and Risk Factors include environmental, social, and governance aspects. Environmental metrics cover energy efficiency and emissions, reducing the ecological footprint. Social metrics focus on health, safety, and diversity, enhancing company reputation and employee satisfaction. Governance metrics involve leadership practices, ethics, and compliance, ensuring transparency and accountability. These metrics collectively assess an organization’s sustainability and risk management. Figure 2 shows the main three pillars of ESG metrics.

Figure 2 ESG’s three main pillars are environment, social, and governance.

4.1 Environmental Metrics

Environmental metrics are central to ESG considerations, as they directly address an organization’s impact on the planet. In asset and facility management, these metrics often include energy efficiency, water usage, waste management, carbon emissions, and resource conservation [15]. Companies increasingly focus on energy-efficient designs and use renewable energy sources to reduce their carbon footprint and operational costs [8]. Waste management practices, such as recycling and reducing hazardous materials, also contribute to a company’s environmental sustainability profile.

Vital environmental metrics commonly used in reporting include:

• Energy Consumption: Measures an organization’s total energy, often expressed in kilowatt-hours (kWh) or joules. The goal is to reduce energy consumption through efficient practices and renewable energy sources [3].
• Greenhouse Gas (GHG) Emissions: Assesses the volume of emissions produced by a company, including CO2 and other greenhouse gases. Metrics like the Carbon Intensity (CI) and Scope 1, 2, and 3 emissions are commonly used to track a company’s impact on climate change [16].
• Water Usage: Evaluates total water consumption and aims to implement water conservation, recycling, and wastewater reduction strategies [17].
• Waste Management: Involves tracking the amount and types of waste generated, focusing on reducing, reusing, and recycling materials to minimize environmental impact [18].

4.2 Social Metrics

Social metrics focus on an organization’s impact on its employees, customers, and the broader community. These metrics in asset and facility management include health and safety, employee well-being, community engagement, and diversity and inclusion [9]. Companies prioritizing these areas often experience enhanced reputation, employee satisfaction, and customer loyalty.

Standard social metrics include:

• Health and Safety: Measures the effectiveness of health and safety policies and practices in the workplace, including the frequency of workplace accidents and the provision of a safe working environment [9].
• Employee Well-being: Assesses job satisfaction, work-life balance, and access to training and development opportunities. These metrics are linked to employee retention, productivity, and morale [17].
• Community Engagement: Evaluate the company’s involvement in community initiatives, philanthropy, and the impact of its operations on local communities. This includes supporting social causes and fostering positive relationships with stakeholders [19].
• Diversity and Inclusion: Tracks the representation and inclusion of diverse groups within the organization. Metrics include gender and ethnic diversity in the workforce, leadership positions, and policies promoting an inclusive work environment [20].

4.3 Governance Metrics

Governance metrics are critical to assessing a company’s leadership, ethical practices, and adherence to regulatory requirements. In asset and facility management, strong governance ensures that ESG initiatives are effectively integrated into corporate strategies and operations [7]. These metrics include board diversity, executive compensation, anti-corruption measures, and stakeholder engagement.

Key governance metrics include:

• Board Diversity: Evaluates the composition of the board of directors regarding gender, ethnicity, and expertise, promoting diverse perspectives in decision-making [21].
• Executive Compensation: Assesses how executive pay is linked to the company’s performance and ESG goals, ensuring alignment with long-term shareholder interests [22].
• Anti-Corruption and Ethics: Measures the effectiveness of policies and practices to prevent corruption, bribery, and unethical behavior within the organization [23].
• Stakeholder Engagement: Tracks the company’s efforts to communicate with and involve stakeholders in its decision-making processes, ensuring transparency and accountability [24].

5 Overview of ESG Performance and Corporate Governance in Asset and Facility Management #

The study involves reviewing and analysing ESG performance reports from various companies across different industries. These sources include publicly available sustainability reports, ESG ratings from third-party agencies, and company disclosures aligned with frameworks such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) [3, 14]. The reports were gathered from established databases like Bloomberg, Refinitiv, and MSCI, in addition to company websites and sustainability reports [3, 15].

A purposive sampling method was employed to select companies that have publicly disclosed their ESG performance and have a significant presence in asset and facility management. The sample includes companies from various industries, including real estate, manufacturing, and energy, providing a broad perspective on ESG practices [7]. The study identifies key ESG metrics relevant to asset and facility management based on their prevalence in the literature and industry practices. These metrics include energy consumption, greenhouse gas emissions, water usage, waste management, health and safety records, and board diversity [15, 16, 18].

A review of existing literature and reported ESG metrics were performed to identify patterns, trends, and potential correlations between ESG performance and aspects like operational efficiency, financial performance, and risk management. This review draws on statistical analyses presented in the sources to provide an overview of ESG practices across the sampled industries [7, 8].

The review of ESG performance reports across various industries reveals considerable differences in how companies integrate ESG practices into their asset and facility management. Industries like real estate and manufacturing have shown significant strides in adopting energy-efficient building designs, renewable energy usage, and waste management practices [15]. For example, firms implementing green building standards such as LEED certification have experienced noticeable reductions in energy consumption and greenhouse gas emissions, thereby improving overall operational efficiency [2, 15].

In the social domain, numerous companies have established health and safety protocols that include regular training sessions, emergency preparedness programs, and wellness initiatives aimed at enhancing employee well-being [9, 19]. These practices have been linked to reduced incident rates and improved employee satisfaction. Additionally, community outreach programs have been employed by some organizations, helping them build a strong social license to operate and fostering positive stakeholder relationships [19].

Despite these advancements, integrating governance metrics remains less common among companies. Metrics such as board diversity and executive compensation linked to ESG performance are not as prevalent [21, 22]. Although some organizations

have adopted anti-corruption measures and transparent stakeholder engagement practices, there is a general lack of emphasis on governance within asset and facility management contexts.

The review suggests a positive relationship between ESG performance and operational efficiency. Companies that prioritize environmental metrics like energy consumption and waste management often report lower operational costs and enhanced asset value over time [8]. Investments in sustainable technologies and designs lead to reduced utility expenses and maintenance costs, resulting in higher profit margins [16]. Social initiatives, such as health and safety programs, also correlate with increased productivity and reduced absenteeism [9], while enhancing corporate reputation and customer loyalty [19].

However, the quantifiable impact of governance practices on operational efficiency remains less clear and requires further investigation. While essential for ethical conduct and regulatory compliance, governance metrics’ direct influence on tangible operational outcomes is less evident [7, 22].

The study identifies several challenges in the integration of ESG practices into asset and facility management. A primary challenge is the significant upfront investment required for sustainable technologies and infrastructure [6, 8]. Even though such investments yield long-term benefits, initial costs can be prohibitive, particularly for smaller organizations. Furthermore, the lack of standardized ESG metrics and reporting practices complicates efforts to benchmark performance and communicate sustainability commitments [13].

Risk management is a critical aspect of ESG integration. Companies with robust ESG strategies are generally better equipped to mitigate risks associated with regulatory compliance, environmental liabilities, and social conflicts [22]. Proactively addressing environmental risks like resource scarcity and climate change can improve an organization’s adaptability to regulatory changes and market shifts [16]. Engaging in stakeholder dialogues and community engagement initiatives is crucial for managing social risks and maintaining a company’s social license to operate [9].

This analysis underscores the pressing need for standardized ESG frameworks that integrate risk management strategies and facilitate compliance with evolving reporting obligations [3, 14]. Adopting standardized reporting practices, such as those outlined by the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), can help companies better communicate their ESG efforts to stakeholders and align with global sustainability goals [3, 15]. However, existing frameworks have gaps, particularly in the context of asset and facility management governance practices [23]. There is a need for industry-specific guidelines that address the unique challenges and opportunities in integrating ESG considerations into this field.

6 ESG Integration in Saudi Arabia: A Review of Practices and Implications #

An in-depth review was conducted on integrating ESG principles in Saudi Arabia’s corporate sector. This analysis focused on understanding the strategies employed by key companies, such as Saudi Aramco and SABIC, and their challenges and best practices in implementing ESG initiatives. The study highlighted how these companies align with global ESG standards and address region-specific sustainability challenges. It also examined Saudi Arabia’s national strategies, like the Saudi Green Initiative, to provide context on how government policies support and drive corporate ESG efforts​ [25].

Saudi Arabia has been making significant strides in integrating ESG practices within its corporate sector, aligning with the nation’s Vision 2030 and sustainability goals. The Saudi Stock Exchange (Tadawul) has issued ESG Disclosure Guidelines to promote transparency and encourage companies to report on their environmental, social, and governance practices. Additionally, Tadawul launched an ESG index to promote further and track the ESG performance of listed companies, fostering a culture of sustainability and corporate responsibility in the country​ [25].

6.1 Key ESG Initiatives in Saudi Arabia

1. ESG Integration Across Companies: A recent PwC survey shows over 60% of Saudi Arabian companies have embedded ESG issues into their business strategies. This significant shift demonstrates a commitment to sustainability, showing how companies increasingly align their operations with global expectations for responsible business conduct​ [25].
2. Investment in Sustainability Initiatives: The Saudi Green Initiative encompasses over 60 sustainability initiatives, with an investment surpassing SR700 billion (around $186.6 billion). These projects aim to increase the use of clean energy, offset emissions, and address climate change, reflecting the nation’s strong focus on environmental sustainability as part of its economic development strategy.
3. Corporate Emissions Reduction Targets:
   • Saudi Aramco: One of the largest oil companies globally, Saudi Aramco provides annual metrics on its environmental impact, including data on water consumption, hydrocarbon spillage, sulfur oxide emissions, and carbon emissions. This transparency reflects the company’s commitment to reducing its environmental footprint and maintaining operational excellence.
   • SABIC (Saudi Basic Industries Corporation): SABIC has committed to making all its operations carbon neutral by 2050. The company focuses on renewable and circular feedstock, demonstrating a shift towards more sustainable production processes. This move illustrates the industry’s efforts to contribute to a greener future in a region traditionally dominated by oil and gas​.
4. Green Financing: Saudi Arabia’s Public Investment Fund (PIF) has embraced green financing by issuing bonds totaling $5.5 billion. This initiative shows the Kingdom’s commitment to funding sustainable development through innovative financial instruments, indicating a growing interest in green financing as a vital tool for promoting environmental sustainability​.
5. Challenges in ESG Implementation: Despite the progress, several challenges persist. Approximately 40% of regional companies cite a lack of internal skills and expertise as a significant obstacle to implementing ESG initiatives. Additionally, one-third of companies reported ESG funding constraints as a significant barrier, highlighting the need for further investment in training programs and financial support to facilitate ESG integration​.

6.2 Implications for Asset and Facility Management

The review of Saudi Arabia’s practices exemplifies how companies in the region increasingly integrate ESG principles into their operations. By aligning with global ESG standards and implementing substantial sustainability initiatives, Saudi companies are enhancing their environmental performance, improving social and governance practices, and contributing significantly to the country’s overall sustainability goals. This approach serves as a model for other organizations in the Middle East, demonstrating that ESG integration can drive long-term organizational resilience and create value for stakeholders.

6.3 Most Influential Factors on Companies’ ESG Scores in Saudi Arabia

The study analyzes a dataset comprising 206 company-year observations from Saudi-listed companies from 2010 to 2019 collected in a survey carried by Bamahros et al. [26]. The dataset includes quantitative and qualitative variables that provide insights into corporate governance mechanisms and their impact on ESG disclosures. Key variables collected include:

Table 1 Description of ESG Scores, Corporate Governance Factors, and Control Variables [26]

Variable	Description
ESG Scores	A measure of a company’s environmental, social, and governance performance. The scores are derived from various ESG disclosure practices and are used as the primary dependent variable in the study.
Board Size	The total number of directors on the company’s board reflects the board’s capacity for oversight and decision-making.
Board Independence	The proportion of independent directors on the board indicates the level of independent oversight and potential influence on ESG practices.
Audit Committee Independence	The percentage of independent members on the audit committee highlights the committee’s ability to provide unbiased monitoring of ESG reporting.
Audit Committee Meetings	The frequency of meetings the audit committee holds shows the committee’s engagement level in overseeing ESG disclosures.
External Audit Committee Members	A binary variable indicates the presence of external members on the audit committee, reflecting the diversity of perspectives and expertise brought to the committee.
Board Meetings	The number of board meetings indicates the board’s active involvement in company oversight.
Government-owned Institutional Investors	Government-owned investors may influence the company’s governance and ESG practices.

The collected data enables the study to investigate the relationships between various corporate governance mechanisms and the level of ESG disclosures, providing insights into how governance practices impact sustainability reporting. Using quantitative metrics (e.g., board size, ESG scores) and qualitative aspects (e.g., presence of external members) allows for a comprehensive analysis of the factors influencing ESG performance.

Figure 3 Correlation Matrix of ESG Scores and Corporate Governance Factors

The paper analysis reveals that specific corporate governance mechanisms significantly influence ESG disclosure among Saudi-listed companies. A strong positive correlation was found between the independence of the audit committee and ESG scores, indicating that companies with a higher proportion of independent members on their audit committees tend to have more comprehensive and transparent ESG reporting. This suggests that independent audit committees are crucial in ensuring rigorous ESG disclosures. Additionally, external members on the audit committee are positively associated with ESG performance, highlighting the value of diverse perspectives and specialized expertise in enhancing the quality of ESG reporting. A moderate positive relationship was also observed between board independence and ESG scores, underscoring the importance of having independent directors who can provide effective oversight and promote accountable governance practices. While board size and the frequency of audit committee meetings showed positive correlations with ESG scores, their impact was less pronounced. These findings suggest that companies should prioritize strengthening audit committee independence, incorporating external expertise, and promoting board independence to improve ESG disclosures. By doing so, organizations can enhance transparency, foster stakeholder trust, and better align with global sustainability standards.

7 Recommendations and Future Studies #

This study contributes to the ongoing discourse on sustainable corporate governance by providing a structured evaluation of ESG implementation in asset and facility management. It underscores the importance of integrating ESG principles for compliance and as a strategic tool for risk mitigation, operational efficiency, and long-term organizational resilience.

1. Development of Standardized ESG Frameworks: There is a pressing need to develop industry-specific standardized ESG frameworks to integrate ESG principles in asset and facility management. These frameworks should offer clear metrics and benchmarks, particularly for governance practices currently underrepresented in existing standards [3, 14]. A standardized approach would enhance comparability across companies and industries, making it easier for stakeholders to assess and benchmark ESG performance.
2. Investment in Sustainable Technologies: Companies should invest in sustainable technologies and infrastructure, such as energy-efficient systems and renewable energy sources. While the initial investment may be significant, the long-term benefits include cost savings, enhanced asset value, and a reduced environmental footprint [8, 16]. Organizations should also explore financial incentives and subsidies for green technologies to offset upfront costs.
3. Enhanced ESG Reporting and Transparency: Transparent ESG reporting is crucial for building stakeholder trust and meeting regulatory requirements. Companies should adopt established reporting frameworks like the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) to ensure consistent and comprehensive disclosure of their ESG performance [3, 14]. Regular stakeholder engagement is also recommended to communicate ESG initiatives and address concerns, strengthening the company’s social license to operate [9].
4. Incorporating ESG into Corporate Strategy: Organizations should integrate ESG considerations into their core corporate strategies and decision-making processes. This includes linking executive compensation to ESG performance to ensure accountability and alignment with long-term sustainability goals [22]. By embedding ESG principles into corporate culture and strategy, companies can drive sustainable value creation and enhance their resilience to emerging risks.
5. Fostering a Culture of Continuous Improvement: ESG integration is an ongoing process requiring continuous improvement. Companies should regularly review and update their ESG strategies in response to evolving regulations, stakeholder expectations, and industry best practices [12, 23]. Implementing internal audits and assessments can help organizations identify areas for improvement and track progress toward their sustainability goals.
6. Incorporating Insights from the Saudi Context: The study of Saudi-listed companies revealed that certain governance mechanisms, such as having independent audit committees and external members on the audit committee, positively influence ESG disclosures. Companies in similar contexts should consider strengthening the independence of their audit committees and including external experts to enhance the quality of ESG reporting. Additionally, focusing on increasing board independence can contribute to better oversight and improved ESG performance.

8 Conclusion #

The growing emphasis on Environmental, Social, and Governance (ESG) considerations fundamentally reshapes how global companies manage their assets and facilities. This study has critically examined key ESG metrics and risk factors relevant to asset and facility management, highlighting the importance of integrating these principles into corporate strategies to foster sustainable operations and mitigate risks.

The findings reveal that while companies have made considerable progress in implementing environmental and social practices, the integration of governance within asset and facility management remains an area for improvement. Challenges such as the initial investment in sustainable technologies and the absence of standardized reporting practices hinder effective ESG implementation. However, organizations have notable opportunities to enhance operational efficiency, reduce risks, and improve corporate reputation through proactive ESG integration [8, 15].

Specific to the context of Saudi Arabia, the study observed that specific governance mechanisms, such as the independence of audit committees and the inclusion of external audit committee members, positively impact ESG disclosures. This underscores the importance of robust governance practices in enhancing transparency and accountability within the region’s companies.

To address these challenges, the paper recommends developing standardized ESG frameworks tailored to asset and facility management, investing in sustainable technologies, enhancing ESG reporting and transparency, and incorporating ESG into corporate strategy. By adopting a holistic and strategic approach to ESG integration, companies can comply with emerging regulatory requirements, create long-term value for their stakeholders, and contribute to global sustainability goals.

This paper contributes to the ongoing discourse on sustainable corporate governance by providing a structured evaluation of ESG implementation in asset and facility management, including insights from the Saudi market. It underscores the role of ESG in mitigating risks, enhancing operational efficiency, and strengthening long-term organizational resilience. Future research should continue exploring ESG practices’ impact on financial performance and work towards developing clear, industry-specific benchmarks to guide organizations in their sustainability efforts.

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