COP28 in Dubai last year gave a platform to UAE banks to renew their commitment to sustainability and financing climate action.
Seizing the opportunity, the Emirate’s banks pledged to provide Dh1 trillion ($270 billion) in sustainable finance by 2030 — a substantial financial commitment that buttressed the $85 billion in financing that COP28 successfully managed to mobilise.
While much more financing is needed to slow rising temperatures, compensate developing economies, and support their transition, this level of investment from UAE banks is an important marker for the industry, highlighting their commitment to climate action.
Providing financing is naturally the most immediate and powerful way banks can demonstrate this. But climate action extends beyond the provision of finance. For many banks, their commitment to climate action and sustainably cuts deeper.
It’s a core focus for our organization based on a strong belief, whether at the management board level or among our employees, that this is part of our social obligation to the economies that we are in, to the markets that we are in, and to the communities that we are in
For Mashreq’s group chief executive officer, Ahmed Abdelaal, the bank’s focus and drive on climate change and sustainability is a fundamental element of its growth and development strategy, “not a box ticking exercise.”
“It’s a core focus for our organization based on a strong belief, whether at the management board level or among our employees, that this is part of our social obligation to the economies that we are in, to the markets that we are in, and to the communities that we are in,” says Abdelaal.
This commitment is reflected in the bank’s support of the 17 UN Sustainability Development Goals and in its sustainability framework, which focuses on four key areas: enabling a low carbon transition and environmental stewardship; empowering employees and communities; embedding responsible business practices across its operations; and exceeding customer expectations in various ways, especially via digital innovation and financial inclusion.
As part of this commitment, Mashreq has launched Climb2Change, a global initiative integrating the bank’s comprehensive environmental, social, and governance (ESG) efforts and milestones.
Under this umbrella platform, Mashreq is spearheading various initiatives including helping to clean up 14 of the highest mountains globally, and collaborating on the Very Nile initiative in Egypt, and Notice Nature, which is a community climate and nature initiative in partnership with Emirates Nature-WWF to protect the UAE’s biodiversity and other areas.
Abdelaal says that these initiatives, together with Mashreq's focus on building a culture of sustainability, has helped fortify the bank's resilience in a dynamic environment.
Sustainable finance growth
Importantly, these initiatives also reinforce Mashreq’s support of global efforts to bridge the sustainable finance gap, underscored by its commitment to provide Dh110 billion ($30 billion) of sustainable finance by 2030, one of the largest contributions of the UAE banking sector’s Dh1 trillion pledge announced at COP28.
As such, sustainable finance is a key growth area for the bank’s corporate and investment banking business, which provides a range of financing options, including sustainability-linked loans, green and social loans, bonds and sukuk.
Since 2022, Mashreq has facilitated $8.3 billion of sustainable financing in the debt and loan capital markets.
the importance of sustainability and sustainable finance has come to the forefront, and we've been actively helping clients think through their sustainability strategy including setting Sustainable Performance Indicators (SPIs) and related financing solutions
“COP28 provided a very favourable backdrop for a lot of our corporate clients to think about their own sustainable KPIs,” says Joel Van Dusen, head of Mashreq’s corporate and investment banking group. “More generally, the importance of sustainability and sustainable finance has come to the forefront, and we've been actively helping clients think through their sustainability strategy including setting Sustainable Performance Indicators (SPIs) and related financing solutions.”
He adds that the bank has a dedicated sustainable finance team, who are supported by relationship managers that have undergone training in the area.
Among some of the key transactions that indicate the bank’s regional leadership in sustainable finance, three standouts include the $1.2 billion sustainability-linked loan (SLL) for Cenomi Centers, Saudi, a $450 million SLL for Bahrain Steel, and a $1.4 billion green loan for Al Rajhi Bank.
All three transactions were the borrower's debut sustainable financing.