DUBAI - Dubai Islamic Bank is planning to finance environmental and social projects under a new Sustainable Finance Framework published on Friday.

The framework will allow the lender to issue green and sustainability-linked Islamic bonds and loans to fund projects in renewable energy, clean transport, green buildings and wastewater management as well as support job creation and affordable housing, a statement said.

Investor demand for ESG-linked financing has surged and interest has picked up in the Gulf and wider Middle East, with increasing opportunities to invest in projects linked to sustainabililty and energy transition.

The next two major climate change conferences, COP27 and COP28, will be held in Egypt and the United Arab Emirates respectively.

Issuance of green bonds also allows borrowers from the region to diversify their investor base. Recently, Saudi Arabia's sovereign Public Investment Fund raised $3 billion from green bonds, while First Abu Dhabi Bank raised $700 million from green bonds earlier this month.

(Reporting by Rachna Uppal; Editing by Nick Macfie)