UAE’s Emirates NBD introduces compliant carbon market trading

Emirates NBD has launched carbon future contracts trading, addressing the growing demand from corporations to manage their carbon emissions offsetting.

The bank’s carbon future contracts trading facility also gives clients access to a rapidly growing asset class with an estimated value of Dhs850bn across six global emission trading schemes.

Emirates NBD’s carbon contract trading is aligned with the guidelines set by the EU and UK’s emission trading systems (ETS), providing full transparency, credibility and accountability.

The ETS’ follow the ‘cap and trade’ system whereby companies are given a limit or ‘cap’, on the amount of greenhouse gases they can emit. If a company exceeds its limit, it is required to buy permits, called allowances, from others who have emitted less.

Emirates NBD offering incentivises companies to reduce emissions

This approach incentivises companies to reduce their emissions and promotes a shift towards cleaner technologies and practices to combat climate change.

The UAE government is supporting the growth of carbon trading markets with plans to launch regulated carbon credit trading exchanges and clearing houses ahead of COP28. The nation is also observing 2023 as the Year of Sustainability, under the theme ‘Today for Tomorrow’.

The launch of trading capability in compliance carbon markets will also enhance corporate access to sustainability-linked finance amid a growing demand in ESG-related financing.

Green and sustainable financing in the UAE increased 32 per cent year-on-year in 2022, according to the consulting firm Arthur D Little.

Meanwhile, green debt instruments from the Middle East and Africa are outpacing the segment’s global growth, with $24.55bn in green and sustainable issued in 2021, a 532 per cent increase compared to Dhs3.8bn in 2020.

Making the UAE a hub for climate change financing

Ahmed Al Qassim, group head of Wholesale Banking at Emirates NBD said: “Through our Global Markets team, clients will be able to seamlessly tap global carbon credit markets to support their net zero ambitions and sustainability goals. Our clients’ engagement will also aid the growth of the region’s fast growing capital markets, attracting more global ESG investors as the UAE becomes a hub for climate change financing.

“Ahead of COP28, we will continue to provide a robust range of innovative green financing solutions to our regional and global clients as we collectively work to make the global energy transition a reality.”

Vijay Bains, chief sustainability officer, group head of ESG at Emirates NBD said the launch marks a significant achievement in granting access to the world’s most regulated carbon markets, in line with the 2023 Year of Sustainability, and the UAE’s revised nationally determined goal of a 31 per cent reduction of business-as-usual emissions by 2030.

“Access to carbon markets in the form of credits and offsets will become increasingly crucial for organisations to meet their net zero ambitions and goals in a structured manner. The group’s development of a carbon trading facility is also in line with the COP28’s goal of climate change mitigation, and the United Nation’s Sustainable Development Goal 13,” he added.

In other news, Abu Dhabi Global Market (ADGM) implemented its sustainable finance regulatory framework with immediate effect.

The framework covers rules on sustainability-orientated investment funds, managed portfolios and bonds as well as requirements for environmental, social and governance disclosures by ADGM companies.

Read: Abu Dhabi Global Market introduces regulatory framework for sustainable finance