UAE’s Leadership in Green Finance
The United Arab Emirates (UAE) is making significant strides in green finance and sustainable development. The country has implemented strategic policies to enhance investment in sustainable projects and foster innovation in this sector. Recognized as a regional model in the Middle East, the UAE’s regulatory framework supports green finance, positioning it as a global hub for sustainable investment and attracting international capital.
Progress in ESG Sukuk
Bashar Al Natoor, Global Head of Islamic Finance and Managing Director at Fitch Ratings, highlighted the UAE’s advancements in Environmental, Social, and Governance (ESG) sukuk. By the third quarter of 2024, the value of outstanding ESG sukuk in the UAE reached approximately US$9.1 billion, marking a 43% year-on-year growth. The UAE’s total ESG bond portfolio is valued at $13.4 billion, reflecting a 59% year-on-year increase, with ESG sukuk comprising 40.6% of this portfolio.
Regional and Global Impact
ESG sukuk now make up around 15.6% of the UAE’s overall sukuk issuance as of Q3 2024, up from 12.7% year-on-year. The UAE holds a significant 47% share of the Gulf Cooperation Council countries’ ESG sukuk market, highlighting its leading role in the region. Globally, the UAE ranks second after Malaysia, accounting for 20.5% of all ESG sukuk worldwide, reinforcing its position as a key player in sustainable finance.
Future Commitments
The UAE has pledged to mobilize AED1 trillion by 2030 to finance sustainable projects, supporting its vision to become a regional leader in sustainability and innovation. This commitment aligns with a broader strategy for resilience and sustainable economic growth in the face of future challenges.
Doubts Revealed
UAE -: UAE stands for the United Arab Emirates, a country in the Middle East known for its modern cities like Dubai and Abu Dhabi.
Green Finance -: Green finance refers to financial investments that support environmentally friendly and sustainable projects, like renewable energy or pollution reduction.
ESG -: ESG stands for Environmental, Social, and Governance. These are criteria used to measure the sustainability and ethical impact of an investment.
Sukuk -: Sukuk is a type of Islamic financial certificate, similar to a bond, that complies with Islamic religious law.
Bashar Al Natoor -: Bashar Al Natoor is a person who works for Fitch Ratings, a company that evaluates the financial health of businesses and countries.
Fitch Ratings -: Fitch Ratings is a company that gives ratings to countries and companies to show how safe it is to invest in them.
AED -: AED stands for Arab Emirates Dirham, which is the currency used in the United Arab Emirates.
