Emirates NBD introduces compliant carbon market trading

Emirates NBD has launched carbon future contracts trading, fulfilling growing demand from corporations to manage their carbon emissions offsetting and align with the UAE’s net zero action plan.

Emirates NBD’s carbon contract trading is aligned with the guidelines set by the European Union’s emission trading system (ETS) and the UK’s emission trading scheme, providing full transparency, credibility, and accountability. The ETS’s 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. 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. Also, the year 2023 is dedicated to sustainability in the UAE, under the theme ‘Today for Tomorrow’ and includes initiatives, activities and events that draw upon the UAE’s values of sustainability.

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 $24.55 billion in green and sustainable issued in 2021, a 532 per cent increase compared to $3.8 billion in 2020.

Ahmed Al Qassim, group head of wholesale banking (left) and Vijay Bains, chief sustainability officer, group head of ESG at Emirates NBD. — Supplied photo

The group aims to continue being at the forefront of the rapidly evolving carbon trading landscape in the region, providing clients with the flexibility to deal in carbon credits as they reach their sustainability goals. The 28th United Nations Climate Change Conference, also known as the Conference of the Parties of the UNFCCC, or COP28, will be held in the UAE. Ahead of COP28, the Bank’s carbon future contracts trading facility also gives clients access to a rapidly growing asset class with an estimated value of $850 billion across six global emission trading schemes.

Ahmed Al Qassim, group head of wholesale banking at Emirates NBD, said “We are proud to be taking the lead in facilitating client access to global compliance carbon markets ahead of the UAE’s hosting of COP28 in November. 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 of Emirates NBD’s carbon trading facility 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.”

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