PHOTO
Abu Dhabi Global Market (ADGM) has created a Sustainable Finance Declaration aimed at promoting a sustainable finance industry in the emirate, which has been signed by 25 public and private entities at the inaugural Sustainable Finance Forum event on Wednesday.
The agenda that was launched as part of Abu Dhabi Sustainability Week aims to formally foster the industry of sustainable finance and investments in the UAE and wider region.
“Banks have already started financing in this area, and this declaration marks a trigger of incentives for banks in this field,” Mubarak Rashed al-Mansoori, the UAE central bank governor told reporters in Arabic on the sidelines of the event.
“It is a key and vital goal as per UAE’s agenda, in terms of focus on environment and climate change,“ he added.
“We back this initiative and our signing of the declaration shows our support for it. Sustainable finance has become economically viable, and there is high adoption rate in several sectors,” he added.
The UAE central bank is one of the 25 entities that signed the declaration, and the list includes other public entities like the Ministry of Energy & Industry, Securities and Commodities Authority, Abu Dhabi Department of Economic Development, Abu Dhabi Department of Finance, and state-owned investment company Mubadala Group, among others.
“Today renewable energy projects, whether solar or wind, are competitive in terms of costs, and there are usually offtake agreements to purchase the output. So all the factors of success for such projects exist,” al-Mansoori added.
“Banks now see that the cost is competitive, and there is a source that can buy the project’s production. So all of these factors give banks a sort of confidence to finance more of these projects,” he added.
Several key banks also signed the declaration, including First Abu Dhabi Bank, BNP Paribas, Citibank, HSBC Bank Middle East Limited, Abu Dhabi Commercial Bank and Al Hilal Bank.
“It is premature to talk of new regulations (in sustainable finance), but there will definitely be new initiatives to support this agenda,” the governor added.
First Abu Dhabi Bank also agreed to commit $10 billion for financing green businesses over 10 years, Ahmed Al Sayegh, Minister of State (UAE) and chairman of ADGM told the audience in a keynote address at the event.
As per the declaration, the role of the UAE central bank and Securities and Commodities will be to facilitate, along with ADGM, the flow of investments and support provisions of the declaration.
Among the provisions of the declaration is that the signing entities agree to identify innovative solutions for economic, environmental and social development in the UAE capital and beyond. The entities also agree to aim for increasing the quality and depth of green financing products in Abu Dhabi.
The declaration also includes a commitment to collaboration to foster integrating green investments in the wider region and to encourage educational opportunities to enhance environmental protection.
“The UAE is witnessing rapid realisation of large-scale investments in clean energy projects. However, a shift in the capital flow at scale, not only for renewables, but also for a range of green industries and businesses, needs to take place in the next few years to realise the national ambitions,” Thani bin Ahmed Al Zeyoudi, Minister of Climate Change & Environment told the audience in a keynote address.
“The Government alone cannot support this transition and accelerating private sector investments in sustainable projects will be key to success,” he added.
In 2017, the UAE launched its energy strategy in which it set contribution of clean energy to total energy mix to reach 50 percent by 2050, and it also set the goal to reduce carbon footprint of power generation by 70 percent by 2050.
Central bank governors and finance ministers of the G20 major economies agreed in 2016 to raise around $90 trillion of investments over the next 15 years to reach climate objectives and sustainable development worldwide.
(Reporting by Nada Al Rifai; Editing by Michael Fahy)
Our Standards: The Thomson Reuters Trust Principles
Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2019
