UAE’s green, sustainable finance enjoy two years of rapid growth

The UAE’s green and sustainable finance has witnessed robust growth over the past years as environmental, social and corporate governance (ESG) reporting has increased across major public and private institutions in the region. This trend is expected to be a long-term catalyst for continued growth.

The issuance of sustainable-linked bonds and loans in the Middle East increased by 532 per cent to $24.6bn in 2021 from $3.8bn a year earlier.

Consultancy company Arthur D. Little in its Middle East Banks Drive growth in ESG finance, Face Calls For ESG Strategy report said the Middle East has witnessed a rise in ESG awareness through specific reporting requirements and frameworks for banks, which are increasingly moving from voluntary to mandatory reporting.

The report said Qatar has enacted a series of initiatives to make at least $75bn available for sustainable investments. In the UAE, Majid Al Futtaim raised $1.25bn in a revolving credit facility linked to the retail conglomerate’s ESG goals in December 2022.

The National Bank of Bahrain has also been actively working to embed ESG principles into its business practices.

“Green issuances from countries in the Middle East and North Africa are not standing still but are outpacing global growth. With new reporting requirements taking effect, banks are facing an urgent need to kick-start their strategies and execute concepts throughout their organisations,” said Andreas Buelow, partner, Arthur D. Little.

Financial institutions in the Middle East have adopted #ESG as a key strategic element in their commitment to going green.

Here we offer a two-part scalable solution for complex data to enable #banks to efficiently manage ESG information: https://t.co/gQ9rtB9His

— Arthur D. Little (@adlittle) February 27, 2023

The issuance of sustainability-linked loans and bonds in the MENA has outpaced global growth, driven by financial institutions’ commitment to ESG, which has become a key component of their contribution towards governments’ net-zero carbon emission targets.

Arthur D. Little calls on financial institutions in the region to design comprehensive strategies to cover the spectrum of ESG applications and comply with stronger reporting requirements.

Meanwhile, banks in the UAE are continuing to embrace ESG, which is gaining momentum and wide-reaching acceptance. Dubai Islamic Bank is concluding its ESG reporting, spanning ethics and integrity, thriving workplace, positive community impact, environmental stewardship, and sustainable finance and investments.

Sustainability in the UAE

In other news, the UAE is set to be hosting the COP28 climate conference in November. The Gulf state will be the second Arab state to do so after Egypt in 2022. As such, President Sheikh Mohamed bin Zayed Al Nahyan said that 2023 will be the ‘Year of Sustainability’

The Year of Sustainability will include several initiatives, activities and events that draw upon the UAE”s deep-rooted values of sustainability and the legacy of its founder, the late Sheikh Zayed bin Sultan Al Nahyan.

Read: UAE President announces 2023 as ‘Year of Sustainability’

Last October, the Dubai International Financial Centre entered into a one-year partnership agreement with the Global Ethical Finance Initiative to implement change across the global financial industry in relation to, amongst other items, financing sustainable development goals.

The UAE is taking a leading role on the global stage when it comes to ESG transformation. The country became the first GCC state to announce a net-zero carbon commitment – the Net Zero by 2050 Strategic Initiative – to attract investment from global capital markets as investors increasingly seek ESG-compliant investments.