Today, innovation is celebrated and relentlessly pursued and often considered the backbone of a resilient business. But what is its true worth? Do big ideas change the world for the better, or are small ones that balance profit with purpose more impactful? Defining innovation is one challenge. Measuring it is another. Different organizations have different perspectives on embracing, organizing, and driving innovation. It could be the adoption of new ideas to improve, reimagine, and advance the way things are done. 

THE APPROACH 

Innovation isn’t just about developing new technologies but finding and applying the best existing solutions to reduce costs in key sectors like solar PV, water desalination, and green hydrogen, says Marco Arcelli, CEO of ACWA  Power. “We define innovation as achieving the lowest possible costs in these areas. This means sourcing the best technologies and suppliers globally and combining them with effective financing to reduce costs.”

This approach aligns with the broader goal of providing affordable energy to emerging markets with high demand but limited resources. “Our focus is on improving lives in these regions,” explains Arcelli. 

As the company expands its operations beyond Saudi Arabia, with 40% of its projects outside the kingdom, it continues emphasizing low-carbon energy and desalination to meet growing demands in these resource-constrained areas.

Innovation isn’t always about creating new inventions—it’s about applying and scaling existing technologies to address real-world challenges. “Innovation for us is about effective deployment, not new processes,” says Arcelli. 

By partnering with global research centers, including its R&D hub in Shanghai, ACWA Power focuses on refining and expanding existing solutions in sectors like energy and water.

This approach allows for measurable impact, with success tracked by how well innovations improve efficiency and lower costs. One example is The Power is Within You initiative, which invites Saudi youth to submit ideas for the power and water sectors, fostering fresh perspectives on critical issues.

“Innovation can also be defined as the systematic development and implementation of novel solutions that drive business growth while creating measurable ESG impact,” says Hattan Janbi, Senior Product Development Manager at Aramco. “This ensures that innovation efforts align with financial performance and sustainability impact.”

Janbi measures innovation using a balanced scorecard approach that integrates traditional commercial metrics like ROI, time-to-market, and market penetration with sustainability-focused KPIs such as carbon footprint reduction, resource efficiency improvements, and ESG ratings. Customer engagement and adoption, based on design thinking principles, also play a key role. This comprehensive approach ensures that innovation drives both competitive advantage and long-term sustainability.

To effectively measure the impact of innovation, particularly in ESG-driven projects, Janbi highlights the importance of combining financial performance with social and environmental contributions.

He explains that financial metrics such as ROI, Internal Rate of Return (IRR), and cost of capital adjusted for ESG risks are essential for evaluating projects’ viability and long-term growth potential. “Long-term revenue growth should be linked to ESG performance,” says Janbi.

For ESG and social impact, Janbi focuses on measurable outcomes like CO₂ reduction per dollar invested, energy efficiency improvements, job creation in underserved areas, and advances in gender diversity. He also points to governance metrics such as board diversity and ethical supply chain adoption.

To ensure credibility and transparency, Janbi advocates aligning impact reporting with global standards like PRI, SFDR, and SASB. Integrating ESG risk-adjusted discount rates for valuation is key to structuring dual-impact assessments,” he adds.

Fahad Abdulrahman Al-Otaibi, Executive Director of Research, Development, and Innovation at Saudi Electricity Company, sees innovation as solving industry challenges while creating value for society and the environment. “We assess innovation through strategic alignment, scalability, and measurable outcomes like efficiency gains and cost reduction,” he says. 

“We measure impact through reduced carbon emissions, improved energy efficiency, and social benefits like job creation and skill development,” says Al-Otaibi. Surveys, impact assessments, and alignment with UN SDGs reinforce the company’s commitment to societal and environmental progress.

SUSTAINABILITY AND IMPACT

Janbi emphasizes a comprehensive approach to quantifying ESG-focused innovation, integrating both qualitative and quantitative metrics to ensure both financial and non-financial value. “To quantify ESG-focused innovation, I integrate qualitative and quantitative metrics, ensuring that financial and non-financial value is accounted for,” he says.

For environmental performance, he highlights key metrics such as reductions in GHG emissions, improvements in water and energy efficiency, and increased circularity. “Reduction in GHG emissions (CO₂ per unit of output), improvements in water & energy efficiency, and reduction in waste generation or increase in circularity” are critical factors, he explains. On the social side, he points to “job creation, improvement in health & safety indicators, diversity and inclusion, and an inclusive workplace for caregivers.”

Financially, Janbi notes that ESG-driven innovation also offers tangible benefits. “ESG risk mitigation savings (access to incentives, lower regulatory penalties), ESG investment attractiveness (higher ESG ratings means better capital access), and increased customer loyalty due to ESG positioning” all contribute to long-term success. He adds that this approach aligns with ESG Investing: Industry Impact & Transformation and ESG Value Creation for Business Impact principles, ensuring innovation drives meaningful change.

Attribution in ESG-driven innovation can be complex, but Janbi addresses this challenge by using a combination of approaches. These include conducting sensitivity analysis and scenario modeling to compare ESG outcomes with and without innovation implementation. He also applies standardized ESG disclosure frameworks, such as TCFD, SASB, and GRI, to ensure transparency. Additionally, Janbi leverages AI and big data to track the impact of innovation over time and engages stakeholders—such as employees, customers, and investors—in validating the impact of ESG. Continuous iteration through design thinking ensures that innovation remains responsive and impactful.

Cost reduction is also critical in making energy and water more affordable and sustainable. “We rigorously measure savings through innovative processes and technologies,” says Arcelli, pointing to tariff reductions that make desalinated water, solar PV, and concentrated solar power (CSP) more accessible. 

Tracking these savings is vital to gauge innovation effectiveness. Environmental impact is also a key focus, particularly emissions reduction. “We monitor the decrease in greenhouse gas emissions,” adds Arcelli, citing the achievement of reducing the carbon footprint of desalination plants by over 80%.

“We value the number and quality of our collaborations,” says Arcelli, highlighting partnerships with institutions like KACST, KAUST, and KFUPM, as well as industry partners across China, Europe, and the USA. 

A recent collaboration with IRENA focuses on advancing innovation in renewable energy infrastructure, highlighting the company’s commitment to global cooperation in the energy sector.

For John K. Keppler, Executive Chairperson of iyris, innovation is new ideas, products, services, or processes that add value and contribute to the organization’s growth and competitiveness. “This aligns with our mission to equip low-to-mid tech with the tools needed to farm sustainably in harsh environments.”

It measures innovation through a value-driven approach, focusing on tangible outcomes like increased revenue, cost savings, and improved operational efficiency. “We look at metrics like these to assess impact,” explains Keppler. Beyond internal metrics, innovation also emphasizes stakeholder satisfaction. “Understanding earned ROI, along with customer feedback, is crucial for gauging how our technology is performing,” he adds.

“For us, everything revolves around sustainability,” says Keppler. “If the innovation doesn’t help growers produce more sustainably—at a lower cost with better yield—it won’t progress through our technology development stages.” At iyris, he adds, social and environmental impacts are inseparable and form the company’s core values. “One cannot exist without the other.”

A prime example is the National Food Production Initiative, launched in October 2024. This project transformed unproductive land into a 0.75-hectare sustainable farming facility in Saudi Arabia. Using their technology, the company extended the growing season and increased crop yield per season, addressing the previous limitations where the land could not support production due to harsh environmental conditions.

Cognitive diversity is key to innovation, fostering creativity, better decision-making, and adaptable solutions. By embracing diverse perspectives, the company creates innovations with broader societal impact. The iyris Labs team has strategies to manage conflicts and ensure collaboration, ensuring diversity drives innovation and sustainable, inclusive outcomes.

Cognitive diversity also fosters creativity by incorporating varied perspectives into problem-solving, says Al-Otaibi. It enhances decision-making, boosts collaboration, and drives inclusive solutions that address societal needs, ensuring innovation benefits a broader range of stakeholders.

Based on his experience, Janbi emphasizes that diversity also enhances problem-solving, creativity, and decision-making, particularly in ESG innovation. This aligns with the ESG Mindset for Business Transformation by fostering inclusive innovation cultures.

Diverse teams bring broader ideation and problem-solving. With cross-disciplinary expertise in engineering, finance, and ESG strategy, these teams develop more holistic solutions, effectively bridging technical feasibility with social acceptability.

Diversity also plays a key role in bias reduction and inclusive innovation. It challenges assumptions, reduces risks like greenwashing, and leads to ESG solutions that better address real social needs.

Additionally, diverse teams improve market fit and adoption by ensuring solutions are culturally relevant. This approach increases customer engagement, particularly through co-design strategies.

MEASURING SUCCESS

ACWA Power sees no conflict between profitability and innovation. “If we do not innovate, we will not generate profits,” says Arcelli. To measure innovation’s impact, the company tracks factors like improving access to affordable water and energy, supporting local economic growth, fostering knowledge transfer, and strengthening regional supply chains. Industry recognition through awards and challenges also reflects the success of its innovations, which aim for both profits and societal benefits.

“We employ data-driven methods like benchmarking, scenario analysis, and stakeholder feedback to measure the impact of innovation,” highlights Al-Otaibi. Collaboration with partners helps account for external factors, while longitudinal studies track sustained contributions.

The future of innovation measurement, according to Janbi, will integrate AI-driven ESG analytics, real-time tracking, and dynamic sustainability metrics. “Key trends include AI-driven ESG data modeling to predict long-term societal benefits and the use of generative AI for automated sustainability reporting,” he explains. He emphasizes the importance of standardizing ESG impact valuation and sustainability KPIs across industries, with external auditors ensuring and verifying ESG claims. “Internal ESG tracking will provide real-time transparency, and we are seeing a cultural shift beyond sustainability (doing less harm) to regeneration (creating positive impact),” says Janbi. Future metrics will focus on biodiversity restoration, circularity, and net-zero contributions.

He concludes, “This aligns with ESG Data & Accountability and Generative AI Incorporation in ESG,” positioning innovation as a driver of measurable societal transformation.

Similarly, iyris focuses on clear, measurable impacts, especially as sustainability becomes more important to customers and investors. “While we don’t report separately on sustainability metrics yet, we understand the positive environmental effects of our SecondSky covers, such as on a hectare of coverage or the increased yield of tomatoes using our seeds and rootstocks,” says Keppler.

As the company grows, it plans to offer a more detailed dashboard to track sustainability metrics and provide stakeholders with a clearer view of its impact.

Future measurements will leverage advanced analytics, real-time data, and AI-driven insights to evaluate societal contributions. According to Al-Otaibi, metrics will evolve to focus on qualitative and longitudinal assessments, emphasizing sustainability, inclusivity, and alignment with global impact frameworks.

Fast Company Middle East, in partnership with RDIA, will produce a report on “The Most Innovative Companies in the Kingdom,” featuring surveys and interviews with key companies from critical sectors in Saudi Arabia.