Sustainability-linked loans becoming mainstream, says top banker

Sustainability-linked loans are becoming mainstream as there has been a heavy focus on environment, sustainability and governance (ESG) practices, especially in the context of the country hosting the COP28, a senior Dubai-based banker said.

Vijay Bains, chief sustainability officer and group head of ESG, Emirates NBD, said the ESG finance market is growing and the outlook is “amazingly positive”.

“For us, this is the largest financing opportunity. As new standards are being made, green sukuk and bond markets and the sustainability-linked loan have hit records. Sustainability is mainstream now,” Bains said in an interview on the second day of the Banking, Innovation and Technology (BIT) summit organised by Khaleej Times.

Emirates NBD, a leading banking group in the Middle East, North Africa and Türkiye region, recently announced its partnership in the capacity of Associate Pathway Partner for the 28th edition of the United Nations Climate Change Conference (COP28), being held in Dubai.

He said assets linked to sustainability will remain top-class and a priority over the coming decades as countries around the world increasingly sign up to net zero goals as part of the Paris Agreement. “Sustainability is here to stay. For us as well, it is mainstream completely.”

Banks role key for net zero goal

He stressed that the UAE banking sector’s role is very important in the country’s target to meet net zero by 2050.

“Emirates NBD is part of the UAE’s banking federation panel on sustainability. All financial services institutions are on a similar path to net zero. The UAE has also provided a framework for climate risk and climate financing. We are proud as a bank to share some lessons learnt with other financial services institutions. This is really positive for the market because it actually helps grow the market,” he said, adding that the UAE is on track to meet net-zero goals.

Bains said Dubai’s largest bank also works hand-in-gloves with regulators as the country moves to net zero.

Green loan rates

He noted that sustainability linked finance to SME is key, particularly to the UAE banking sector because SMEs make up a large part of the economy and they’re a growing part of the 2031 strategy. “SMEs are definitely aware of sustainability and we are already focused on helping the market explain this. SMEs don’t have ESG departments so they look to us for advice.”

He added that they advise firms to go for sustainability-linked loans as part of their KPIs as this helps in their overall governance strategy.

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