UAE banking sector steps up sustainable financing to meet global emission goals and support UAE growth
The vibrant UAE banking and financial sector is prioritising sustainable banking and financing solutions to buttress green ambitions while also supporting economic and social development in the Gulf state.
This initiative is also in line with the UAE’s key strategy to reduce emissions and achieve climate neutrality by 2050, in adherence with the United Nations’ Sustainable Development Goals (SDGs).
The United Nations has convened a Net-Zero Banking Alliance that unites a global group of banks representing more than 40% of global banking assets, who are committed to aligning their lending and investment portfolios with net zero emissions by 2050.
According to the UAE Banks Federation (UBF), the sole representative of banks in the UAE, the country’s banking and financial sector aims to thwart climate change through green financing commitments and climate initiatives.
UAE-wide backing
This scenario comes about as providing green financing and issuing green-oriented funds has emerged as a powerful platform to meet the sustainability ambitions of various private businesses, semi-governmental and governmental organisations in the UAE, and the Middle East region, in general.
Jamal Saleh, Director-General of the UBF said: “Sustainability is a top priority for us. While the Central Bank of the UAE leads integrating its [sustainability] into the regulatory frameworks and advancing Islamic sustainable finance in the UAE, we at UBF are committed to supporting its [Central Bank of the UAE] goals in delivering necessary changes in our UAE finance sector.
“And, in line with the National Climate Change Plan of the UAE 2050 and the United Nations’ SDGs, our financial sector is playing a pivotal role in helping the UAE achieve net zero emissions,” Saleh added.
Regional pioneer
On the Middle East front, the UAE has spearheaded sustainability standards and principles in the nation’s banking and finance sector, having introduced the Abu Dhabi and Dubai Sustainable Finance Declarations in 2016 and 2019, respectively.
The UAE also launched the Guiding Principles for Sustainable Financing in 2020 to promote the development of a green financial market, and the National Sustainable Finance Framework in 2021.
Established in 1982 and headquartered in Abu Dhabi, UBF is the sole representative body comprising 59 members of banks and financial organisations operating in the UAE.
Sustainability transition
The UBF collaborates with the Central Bank of the UAE and UBF members to help the UAE transform into a sustainable economy.
As per publicly available data from UBF members, six major banks – FAB, ADCB, ENBD, DIB, Mashreq, and ADIB – have collectively allocated more than AED190 billion in green financing for various projects in renewable energy, waste-to-energy, and green technology across the UAE by the end of 2022.
According to the UBF, the huge growth in green funding by its members syncs with the Central Bank of the UAE’s Sustainable Finance Working Group, and sector-wide sustainability objectives.
These programmes support the Year of Sustainability initiatives of the UAE as the nation prepares to host COP28 later this year.
The UBF has set up an Environmental, Social, and Governance (ESG) steering committee comprising subject matter experts to empower the ESG and green finance sector in the UAE to work under the guidance of the Central Bank of the UAE’s policy.
The policy aims to usher in sustainability principles in reserves management and monetary operation and to firm up the principles and frameworks for green finance.
The UAE hosts COP28 from November 30 to December 12, 2023, at Expo City in Dubai.
Last Updated on 9 months by Arnold Pinto
