Are UAE Banks Leading the Green Revolution?
So, in a nutshell, this report from KPMG and Emirates NBD sheds light on how UAE banks are stepping up to support the country's move towards a greener economy. They're doing this by financing various projects like renewable energy, energy efficiency, sustainable transportation, and green buildings. Plus, they're creating new sustainable finance products such as green loans and sustainability-linked bonds.
Charles Batchelor, Partner in Accounting and Finance at KPMG Lower Gulf, highlights the crucial role banks play in addressing climate change. He mentions how banks in the UAE are becoming more environmentally conscious in their operations, thanks in part to support from organisations like the Dubai International Financial Centre and Abu Dhabi Global Market. Vijay Bains, Group Chief Sustainability Officer and Group Head of ESG at Emirates NBD, emphasises their active involvement in green projects and aligning their practices with the UAE's climate goals.
The UAE's financial sector aims to mobilise AED 1 trillion in sustainable finance by 2030, as announced during COP28. Banks are collaborating closely with clients to reduce environmental impact and are providing advisory services on sustainable practices. The UAE's sustainable finance working group is driving these efforts forward.
The UAE is leading the way in the Middle East, contributing significantly to the region's total bond issuance, largely due to governmental initiatives in sustainability. Banks are reaffirming their commitment to sustainability post-COP28 through investment strategies and incorporating environmental criteria into lending policies.
However, there are still challenges to address, such as greenwashing and navigating new regulations. Banks need to shift investments from high-carbon sectors to green technologies while managing risks. This shift will require careful consideration to extend financing to a broader range of sustainable projects demanded by customers.
