COP28 in UAE: How banks are spearheading sustainability drive with $51 billion in green financing

The UAE’s banking sector has been toeing the line in tandem with UAE Net Zero 2050 and the energy diversification strategy, launching sustainability frameworks and financing some of the biggest renewable projects, all the while fighting climate change with environmental campaigns and activities, a top official said.

“This reaffirms the sector’s commitment to UN Sustainable Development Goals (SDGs) and aims to contribute to making green energy affordable and accessible in the country and wider region, primarily through the issuance of green financing and funds,” Jamal Saleh, Director General of UAE Banks Federation – the sole representative and unified voice of banks in the UAE, told Khaleej Times.

Apart from financing, banks have been adopting innovative technologies and embracing digitisation to reduce their carbon footprints by way of paperless transactions, improving energy efficiencies through “green buildings” retrofitting and smart facility management to conserve electricity, recycle waste and plastic, as well as monitoring to reduce their greenhouse gas (GHG) emissions. Thus, contributing to the UN’s goals of building resilient infrastructure and fostering innovation.

Saleh underlined that the UAE banking sector’s efforts and initiatives aim to “transform the finance industry into a force for driving sustainability”.

UAE banks have been fervent in implementing sustainable finance frameworks and building robust green finance infrastructure to support green projects and initiatives. According to published data from six major banks: First Abu Dhabi Bank (FAB), Abu Dhabi Commercial Bank (ADCB), Emirates NBD, Dubai Islamic Bank, Mashreq Bank, and Abu Dhabi Islamic Bank, green financing for various projects, in committed and allocated loans, bonds and investment funds, amounts to $51.8 billion (more than Dh190 billion).

Mashreq Bank

Green bonds issued by UAE banks to finance environmental projects have been vital in securing investments for renewable and sustainability projects. For example, sustainability- and adaptation-linked investments worth $15.5 billion have been financed by Mashreq Bank.

The bank formed its very first internal Sustainability Working Group (SWG), which will be accountable for assessing current and potential Environmental, Social, and Governance (ESG)-related risks and opportunities, reviewing the existing framework to manage such risks, prioritising ESG initiatives for immediate implementation, setting targets, and monitoring performance against established key performance indicators (KPIs).

Abu Dhabi Commercial Bank

Abu Dhabi Commercial Bank (ADCB) has recently been recognised by the UAE government for the bank’s strong track record in sustainability and social impact. The bank has committed $13.6 billion to green financing by 2030 under its ADCB Green/Sustainable Bond Framework. The framework adopted last year was launched with inaugural $500 million funding to help finance low-carbon initiatives like wind turbines and solar panels.

First Abu Dhabi Bank

FAB has allocated $1.16 billion by 2022 to various green projects, such as three solar power plants that will help reduce CO2 emissions, seven “green buildings” for energy efficiency and a wastewater plant that can treat up to 430,000 cubic metres of water every day.

The bank’s green financing efforts have supported UAE’s solar energy initiative highlighted by the Mohammed Bin Rashid Al Maktoum Solar Park (MBR), which will be the largest single-site concentrated solar power plant in the world with a planned production capacity of 5,000 MW by 2030. When completed, it will provide clean energy for 320,000 residences and save over 6.5 million tonnes of carbon emissions annually.

Emirates NBD

As per the Emirates NBD’s annual Environmental, Social, and Governance (ESG) report, the bank has issued some $11.35 million in ESG bonds as conventional and sukuk financing over the past three years to support various projects. Some $50.63 million was also issued in “sustainable loan solutions,” which covered agriculture, projects to reduce greenhouse gas emissions, and increasing the use of renewable energy.

Abu Dhabi Islamic Bank

Abu Dhabi Islamic Bank has put in motion a new three-year ESG strategy that prioritises accelerating its green financing and investing initiatives, having already made significant strides in this area with the allocation of $1.7 billion towards sustainable project financing.

Dubai Islamic Bank

Dubai Islamic Bank introduced a Sustainable Finance Framework (SFF) ESG credit risk policy and scorecards and issued sukuk of $705 million in 2022, the first-ever Sustainable Sukuk from a UAE Financial Institution. In addition, ESG funding during the year booked new green financing of approximately $367 million. Over the past several years, the bank has participated in more than $7 billion of green Islamic capital market transactions globally.

Prominence of COP28

Saleh underlined that COP28 is a powerful platform for the UAE banking sector.

In relation to the efforts made by the Central Bank of the UAE in promoting green and sustainable finance; it has taken proactive steps by forming a high-level Committee on Green and Sustainable Finance, led by the governor and comprised of assistant governors, to spearhead and oversee sustainability initiatives.

“Prioritising sustainability is not just a moral imperative but also a business opportunity. Incorporating sustainable practices within the banking sector can generate long-term value for investors, society, and the planet. It aligns with global efforts to combat climate change and supports the UAE's vision for a greener, more sustainable future,” Saleh added.

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