- COP 28 accelerated sustainable finance issuances in MENA, with the UAE Banks Federation AED 1 Trillion Sustainable Finance pledge playing a major role in the rise of banks’ issuance of green, social and sustainable (GSS) bond issuance in the UAE.
- Financials accounted for 64% of MENA GSS issuance in the first 11 months of 2024.
- Green buildings and renewable energy dominate bond allocations, supported by key players like FAB and Emirates NBD.
Dubai, 05 December 2024 – A new report by Bloomberg Intelligence highlights the UAE’s banks’ growing position as a potential leader in sustainable finance, in part driven by an AED 1 Trillion ($270 billion) commitment by 2030, announced by the UAE Banking Federation at COP28 in Dubai.
Commitments, such as this announcement and the Sustainable Finance Framework, have accelerated the mobilization of UAE financial institutions in sustainable bond issuance above other industries, as the country targets Net Zero by 2050. The report finds that financials now lead in the MENA region, accounting for 64% of its green, social, sustainability and sustainability-linked bond (GSSS) issuance in 2024, an increase from 24% in 2021.
In the UAE, First Abu Dhabi Bank (FAB), Abu Dhabi Islamic Bank (ADIB), and Emirates NBD are among most active banks, reflecting strong investor demand. Recent issuances, such as ADIB’s green Sukuk in 2023, was oversubscribed by up to 5.2x.
FAB, the largest issuer of sustainable debt among UAE banks, as of March has allocated around $1.1 billion to green buildings and $1 billion to renewable energy projects. Emirates NBD’s $750 million green Sukuk similarly supported green infrastructure, dedicating 40% to renewables, 37% to green buildings, and 18% to clean transport as of June 2024. These efforts align with the UAE’s targets to cut emissions by 47% by 2035 and triple renewable energy capacity by 2030.
Grace Osborne, ESG Analyst at Bloomberg Intelligence, said: “The UAE has emerged as a leader in sustainable finance in the Middle East, with the UBF AED 1 Trillion by 2030 pledge accelerating the role of national banks in financing the country’s Net Zero 2050 ambitions. Banks’ are scaling finance towards green buildings, renewable energy and clean transport, key to meeting the UAE’s targets such as tripping renewable energy capacity by 2030, and to capturing potential green premiums, with UAE green bonds from banks seeing strong demand with deals 2-5x oversubscribed. Though our findings suggest clarity is needed on what counts towards to UBF target, with robust frameworks, polices and regulations in place to empower banks to further drive sustainable finance and capture green growth opportunities in the region.’
UAE’s green bonds from banks continue to see strong demand in the dollar market with deals 2-5x oversubscribed, resulting in more attractive pricing. However, a call for banks to tighten exposure to high-carbon clients while increasing sustainable finance volumes.
The UAE’s progress is fostering regional growth in sustainable finance, with Saudi Arabia and Qatar following suit. Saudi Arabia’s Public Investment Fund is driving $19 billion in green investments, and Qatar debuted its first $2.5 billion in green bonds. This regional push in green investments presents opportunities for banks in the region to initiate sustainable finance issuance.
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Reem Kharoub
Senior Associate, Integrated Media
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