Dubai, UAE: The Dubai Financial Services Authority (DFSA), a founding member of the UAE Sustainable Finance Working Group (SFWG), took a significant step by adopting, alongside other financial regulators of the UAE, the Principles for the effective management of climate-related financial risks (the Principles). This is the Middle East region’s first initiative of this nature. Last Thursday, the DFSA, together with other members of the SFWG, attended an official ceremony hosted by the Central Bank of the UAE to launch the Principles.

The SFWG was established in 2019 as a joint platform to promote and enable the UAE’s adoption of sustainable finance at the national level. The Principles, developed by the SFWG, reflect a number of recent publications from international standard setters, including the Principles for the effective management and supervision of climate-related financial risks from the Basel Committee on Banking Supervision, and the Guide for supervisors: integrating climate-related and environmental risks into prudential supervision by the Network for Greening the Financial System.

Ahead of the UAE’s Presidency of COP28, the Principles, which the DFSA and other UAE regulators consulted on earlier this year, set joint expectations of UAE regulators for the safe and prudent governance and risk management of climate-related financial risks by financial sector entities operating in the country. Relevant firms will be encouraged to embed considerations around climate risk identification, assessment and management in their business strategies and decision-making processes, including collecting relevant data to enable them to achieve these goals.

The Principles align with the 10 Economic Principles of the UAE, unveiled by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, at the UAE Government Annual Meetings 2023 held on 7-8 November, as well as the Dubai Economic Agenda D33, both of which aim to drive economic growth and ensure stability of the financial sector, while promoting sustainable and energy-efficient businesses.

Following the official launch, the DFSA will shortly write to its regulated firms setting out its supervisory guidelines and expectations on climate-related financial risks. The guidelines, which are not yet formally binding, will serve as a foundation for these discussions in the context of the DFSA’s existing supervisory expectations of how to consider and manage climate-related financial risks.

Ian Johnston, Chief Executive of the DFSA, said: “We are embedding climate risk considerations within our regulatory framework, in line with our regulatory objectives and international regulatory developments. We are confident there will be a strong commitment from our firms to address relevant climate concerns in their strategies and risk management.”

To read the Principles, visit: www.dfsa.ae/download_file/3523/0.
To read the official SFWG media release, visit. www.centralbank.ae/media/t3ipeg0u/uae-sustainable-finance-working-group-launches-the-uae-principles-for-the-effective-management-of-climate-related-financial-risks-en.pdf

For further information, please contact:
Corporate Communications
Dubai Financial Services Authority
Level 13, The Gate, West Wing
Dubai, UAE
Email: DFSAcorpcomms@dfsa.ae
www.dfsa.ae

About Dubai Financial Services Authority (DFSA)

The Dubai Financial Services Authority (DFSA) is the independent regulator of financial services conducted in and from the Dubai International Financial Centre (DIFC), a purpose built financial free zone in Dubai. The DFSA's regulatory mandate covers asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodities futures trading, Islamic finance, insurance, crowdfunding platforms, money services, an international equities exchange and an international commodities derivatives exchange. In addition to regulating financial and ancillary services, the DFSA is responsible for administering Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) legislation that applies to regulated firms and Designated Non-Financial Businesses and Professions in the DIFC. Please refer to the DFSA's website for more information.

Ian Johnston was appointed Chief Executive of the DFSA in September 2022. He previously served as the DFSA’s Chief Executive from 2012-2018. A lawyer by background, Ian had several senior executive roles in the private sector, including as CEO of one of Australia’s major trustee companies. The second half of his career being in regulation, Ian was an Executive Director at the Australian Securities and Investments Commission; Special Advisor at the Hong Kong Securities and Futures Commission; and since 2019, consulting to and advising a number of financial regulators in Europe, Asia and the Middle East.