The UAE Banks Federation has hailed the success of the UAE banking and financial sector in developing sustainable banking solutions. This is in line with the UAE’s strategy to reduce emissions. And to achieve climate neutrality by 2050 consistent with the United Nations Sustainable Development Goals.
The Federation highlighted the proactive role of the banking sector in combating climate change through green financing commitments and climate initiatives. It 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, in general. The UBF works in close collaboration with Central Bank of the UAE and all UBF members to support establishing the groundwork for the transformation to a sustainable economy.
Six major banks (FAB, ADCB, ENBD, DIB, Mashreq, and ADIB) have collectively dedicated over AED190bn ($51.8bn) in green financing for various projects in renewable energy, waste-to-energy, and green technology by the end of 2022.
Year of Sustainability and COP28
Growth in green funding by UBF members aligns with the guidelines of the Central Bank’s Sustainable Finance Working Group. In addition, sector-wide sustainability objectives all support the initiatives during the ‘Year of Sustainability’ and the UAE’s hosting of COP28.
The United Nations has convened a Net-Zero Banking Alliance. This brings together a global group of banks representing over 40% of global banking assets. Members are committed to aligning their lending and investment portfolios with net zero emissions by 2050. Meanwhile, UBF has built a top-notch ESG steering committee. This comprises subject matter experts to drive the ESG and green finance sector to work under the guidance of Central Bank of the UAE’s policy. The aim is to adopt sustainability principles in reserves management and monetary operation to work towards strengthening the principles and frameworks for green finance.
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The Abu Dhabi and Dubai Sustainable Finance Declarations
Jamal Saleh, Director General of UAE Banks Federation (UBF), said: “Sustainability is a top priority for us. The Central Bank 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 our UAE finance sector. And, in line with 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.”
The UAE introduced the Abu Dhabi and Dubai Sustainable Finance Declarations in 2016 and 2019, respectively. It published the Guiding Principles for Sustainable Financing in 2020 to promote the development of a green financial market, and the National Sustainable Finance Framework in 2021.
In addition, the UAE is one of the first countries to include sustainability reports among the mandatory disclosures of public companies listed on the stock exchange. This reflects the importance given by regulators to sustainability. The country’s banks and financial institutions have initiated the issuance of green sukuk and bonds. Their total market in the UAE has been around AED 62.4bn ($17bn) in recent years.
The Director General of UAE Banks Federation 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 own carbon footprint and reporting the reductions achieved by the sector.
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