Six major UAE banks have collectively dedicated more than Dh190 billion ($51.8 billion) in green financing for various projects in renewable energy, waste-to-energy, and green technology by the end of 2022, according to data from UAE Banks Federation (UBF) members.
Established in 1982, UBF is the sole representative body comprising 59 members of banks and organisations operating in the country. The federation revealed the success of the UAE banking and financial sector in developing sustainable banking solutions in line with the country’s strategy to reduce emissions and achieve climate neutrality by 2050 and with UN Sustainable Development Goals (SDGs).
First Abu Dhabi Bank (FAB), Abu Dhabi Commercial Bank (ADCB), Emirates NBD, Dubai Islamic Bank, Mashreq Bank, and Abu Dhabi Islamic Bank are the six banks leading the sector’s sustainable financing initiatives to support economic and social development by collectively providing more than Dh190 billion in green financing.
The UBF highlighted the proactive role of the banking sector in combating climate change through green financing commitments and climate initiatives and said that providing green finance and issuing green-oriented funds has emerged as a “powerful mechanism” to meet sustainability commitments of various organisations in the UAE in particular and the region.
Jamal Saleh, Director-General of UBF, noted that as an active partner in UAE’s sustainable pursuits, the federation works in close collaboration with the Central Bank of the UAE and all UBF members to support establishing the groundwork for the transformation to a sustainable economy.
“Sustainability is a top priority for us. While the Central Bank of the UAE leads integrating it into the regulatory frameworks and advancing Islamic sustainable finance in the UAE, we at UBF are committed to supporting its goals in delivering necessary changes in the UAE finance sector. And, in line with the National Climate Change Plan of the UAE 2050 and United Nations’ SDGs, our financial sector is playing a pivotal role in helping the UAE achieve net zero emissions,” Saleh said on the ongoing development of sustainable banking in the UAE.
The tremendous growth in green funding by UBF members aligns with the guidelines of the Central Bank of the UAE’s Sustainable Finance Working Group, and sector-wide sustainability objectives, all of which support the initiatives during the ‘Year of Sustainability’ and the UAE’s hosting of COP28.
UN has convened a net zero banking alliance that brings together a global group of banks representing more than 40 per cent of global banking assets, who are committed to aligning their lending and investment portfolios with net zero emissions by 2050.
UBF has built a top-notch ESG steering committee comprising subject matter experts to drive the ESG and green finance sector to work under the guidance of the Central Bank of the UAE’s policy, which will adopt sustainability principles in reserves management and monetary operation to work towards strengthening the principles and frameworks for green finance.
Saleh has identified three major areas through which federation members will drive the transformation of the financial sector. First, propelling green projects by providing funds and issuing green bonds. Second, by inculcating green practices among customers, SMEs, suppliers, and vendors by promoting eco-friendly operations and living. And, last, by measuring and efficiently managing every UBF member’s carbon footprint and reporting the reductions achieved by the sector.
“Achieving net zero emissions requires the full participation of the financial sector to channel capital into environmentally sustainable and climate-resilient investments. In January 2020, the UAE published a set of guiding principles for sustainable finance to promote the development of a green financial market and ensure consistency across the sector. Together with our member banks, we are working under the direct supervision of the Central Bank of the UAE to further advance sustainable finance in the region. Collaboratively defining a framework for accountability and best practices will encourage the transition to a climate-neutral, resource-efficient, and resilient economy,” Saleh added.
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