(MENAFN- Khaleej Times) The UAE's banking and financial sector will mobilise more than Dh1 trillion ($272.5 billion) in sustainable finance by 2030, senior officials said at the 28th edition of the United Nations Climate Change conference (COP28) in Dubai on Monday.
Khaled Mohamed Balama, Governor of the Central bank of the UAE, said the banking sector, will need to contribute to both the UAE's medium-term economic plans and the Strategy for Net Zero by 2050.
“Critically, this requires financing the transition and climate adaption strategies of corporate customers, which includes carbon-intensive sectors, but also allocating new funds to green projects,” he said.
Balama added that the current economic and sectoral structure of many countries means that the challenge facing financial institutions is significant.
Khaled Mohamed Balama. - Supplied photo
The UAE Net Zero by 2050 strategic initiative is a national drive to achieve net-zero emissions by 2050, which is aligned with the Paris Agreement.
Addressing the repercussions of climate change is an immediate need and key to achieving sustainable socio-economic growth for all the countries around the world.
According to Climate Policy Initiative's (CPI) Global Landscape of Climate Finance 2023, average annual flows in 2021-22 reached almost $1.3 trillion, doubling compared to 2019-20 levels.
Moody's Investors Service said climate exposures by big global banks have increased over the past three years, but they still do not report in detail on how climate change might affect their financial performance.
Moody's analysts said banks will be active in issuing new types of climate-focused instruments such as blue bonds, and debt for nature swaps to complement their diversified funding sources. In 2023, it expects global sustainable bond issuances to reach $950 billion, only slightly below the 2021 peak of $1.1 trillion.
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The UAE Central Bank also issued principles to guide Islamic finance institutions in developing sustainable finance strategies.
The regulator recently launched the COP28 UAE TechSprint to speed up innovative technology solutions to address sustainability-related data issues faced by local financial institutions.
Abdul Aziz Al Ghurair, chairman of the UAE Banks Federation, announced the massive commitment of Dh1 trillion for sustainable transformation and climate action on behalf of the local financial institutions.
Abdul Aziz Al Ghurair. - Supplied photo
Dr Sultan Ahmed Al Jaber, Minister of Industry and Advanced Technology and COP28 President, stressed that active engagement from the financial sector is critical to realise the climate ambitions and to ensure that the 1.5°C target remains within reach.
“Achieving net zero emissions hinges on the strategic allocation of capital towards environmentally sustainable and climate-resilient investments. Today's landmark announcement by UAE banks is a strong demonstration of the UAE's commitment to lead by example and deliver actionable solutions to sustainability and the climate crisis... Collaboration on this scale is pivotal in creating the necessary momentum to confront the challenges ahead,” he said.
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