UAE and IMF discuss green financing ahead of Cop28

July 27, 2023|Written by |Central Bank of the United Arab Emirates, International Monetary Fund

The Central Bank of the United Arab Emirates (CBUAE) and the International Monetary Fund (IMF) met in Abu Dhabi to discuss various issues, including green financing, ahead of the Cop28 meeting which will be held in the Emirates in November.

One of the topics of the 19 July discussion was how the two organisations could work together to achieve progress on sustainable financing at the global climate conference. The two parties also discussed the CBUAE’s agenda for green financing and how both organisations could align with the Emirates’ strategy for sustainable growth.

“We welcome all efforts to strengthen our cooperation and relations with international financial institutions, particularly the IMF,” Khaled Mohamed Balama, governor of the CBUAE, said in a statement.

“The UAE acknowledges the role these ties play in supporting our efforts to establish sustainable growth in various sectors, and in enhancing the UAE’s position in the global stage and its contribution to providing effective solutions that ensure financial stability, drive global economic growth, and encourage sustainable development.”

On the same day, UAE renewable energy company Masdar said it raised US$750mn in a debut sale of green bonds and plans to issue more next year to help fund renewable energy projects. The green and sustainable bond market in countries on the Arabian peninsula hit a record in 2022, reaching US$8.5bn from 15 deals, compared to US$605mn from six deals in 2021.

Meanwhile, ESG financing has gained traction in the last few years, reaching USD$6.3bn in the UAE in 2022, or about 18.2% of total bond issuances, according to the CBUAE’s annual report. About 70% of ESG financing was issued by banks.

Besides green bonds, the sector also includes broader sustainability bonds, demonstrating “a developing emphasis of UAE banks in incorporating ESG factors into their business models and their role in facilitating the market to support the transition to a more sustainable economy”.

The UAE government declared 2023 as the “year of sustainability” ahead of hosting the Cop28 climate summit. The government has drawn criticism for the appointment of Cop28 president Sultan Ahmed Al Jaber, who is also the head of the Abu Dhabi National Oil Company.

The country’s central bank said in its annual report that it plans to focus on developing guidelines and principles for supervising climate-related financial risks, conducting climate-risk stress tests, monitoring ESG developments, investing part of the CBUAE’s foreign exchange reserves in ESG financial assets, and generally transforming the sustainability of the central bank.

 

This page was last updated July 26, 2023

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