Sustainable finance key to net-zero goal

The implementation of the deliverables will be achieved through both legislative and non-legislative means.

The UAE Sustainable Finance Working Group, comprised of numerous federal and local UAE regulators and exchanges chaired by Abu Dhabi Global Market (ADGM), has issued a high-level statement on sustainable finance detailing their commitment to achieving the UAE’s sustainability objectives and the recently announced Net-Zero 2050 ambition as the first country in the Mena region.

The statement was issued on the side-lines of the 26th United Nations Climate Change Conference (COP26), under the presidency of the United Kingdom and in partnership with Italy, wherein the UAE is a committed partner striving to safeguard the environment, drive down emissions and create lasting economic opportunity.

The statement follows on from the UAE Core Regulators’ Group which began its work in 2019. It builds upon the commitments set out in the UAE Guiding Principles on Sustainable Finance, published in 2020, which serve to guide the implementation and integration of consistent sustainable practices among the UAE’s financial entities, contributing to the health and resilience of the nation’s economy.

The UAE Sustainable Finance Working Group issuing the statement, now operates in an expanded forum to scale up the development of sustainable finance policies in the UAE. It includes the UAE Ministry of Economy, the UAE Ministry of Finance, the Office of the UAE’s Special Envoy for Climate Change, the UAE Ministry of Climate Change and Environment, the Central Bank of the UAE, the Securities and Commodities Authority, ADGM, the Dubai Financial Services Authority, the Abu Dhabi Securities Exchange, Dubai Financial Market, and Nasdaq Dubai.

The statement sets a clear and much needed roadmap for the participating authorities to contribute to the UAE’s sustainable and climate change objectives, outlined in global frameworks, such as the Paris Agreement, the United Nations Sustainable Development Goals, which the UAE is fully supporting, and the nation’s own UAE Net Zero by 2050 strategic initiative.

Outlined in the statement are three key deliverables the UAE authorities will strive to achieve to give a concrete expression to these international commitments. The deliverables include: a targeted study aimed at encouraging consistent Environmental Social and Governance corporate disclosure standards across the UAE, examining how to strengthen good corporate governance by UAE companies to contribute to driving the sustainability agenda, and, crucially, develop a UAE taxonomy of sustainable activities, which constitutes a major milestone defining the path for economic transition to sustainable development.

The implementation of the deliverables will be achieved through both legislative and non-legislative means and in coordination with the authorities on the monitoring and technical support required to incorporate sustainability into regulatory frameworks.

The directives set out in the statement follow the establishment of the UAE Sustainable Finance Working Group in 2019, now comprising a range of regulatory authorities, exchanges, governmental bodies, and ministries in the UAE in charge of developing environmentally sustainable finance policies.

The statement is also an advancement in the authorities’ development of the UAE Guiding Principles on Sustainable Finance, which serve to guide the implementation and integration of consistent sustainable practices among the UAE’s financial entities, contributing to the health and tenacity of the nation’s economy. Ahmed Jasim Al Zaabi, chairman of ADGM, said: “Addressing the impact of climate change has never been more critical, and the financial regulators must work together to establish standards and norms that support the development of a sustainable economy with long term value returns. As key UAE regulators, we at ADGM are responsible for setting out robust frameworks that promote greater adoption of sustainable financing, to support the nation’s ambitious net-zero objective. Together with our fellow regulators and exchanges, ADGM has issued this statement to highlight its commitment to catalysing climate action as we collectively look to sustain the growth of the UAE’s economy. We are confident that the implementation of the directives set out in this statement will have a significant impact on the UAE’s achievement of its various global commitments to sustainability.”

Ministers and senior officials affirmed that the high level commitment to achieving the UAE’s sustainability objectives.

Mariam bint Mohammed Almheiri, Minister of Climate Change and Environment, said: “Amongst the many areas on which MOCCAE focuses in its commitment to responding to climate change, sustainable finance remains one of the crucial pillars supporting the development of a successful, green, and resilient economy. The significant investment in clean and renewable energy sources that will be required to implement the UAE Net Zero by 2050 Strategic Initiative over the course of the next three decades only underscores the critical importance of sustainable finance. We are keen to collaborate with our colleagues from other ministries, regulatory authorities, and exchanges on mainstreaming sustainable finance practices and creating an enabling environment for the growth of the market.”

Younis Haji Al Khoori, Under-secretary of Ministry of Finance said: “Mitigating the impact of climate change on key economic sectors is a prerequisite for building resilient and sustainable economies. At the Ministry of Finance, we are committed to devising sustainable finance policies to contribute to the UAE’s net-zero goal and support sustainable economic and social development, which represent a key pillar for the next 50 years. We are pleased to be part of the this initiative, which echoes our pledge to contribute to the UAE’s climate change objectives and reaffirms our commitment to retain the robust, safe, sustainable, and green economic environment in the UAE.” — Wam