Apicorp adopts new green bond framework to finance energy transition

The lender recently allocated $1bn to green projects in line with its new ESG guidelines

The Arab Petroleum Investments Corporation, a multilateral development bank headquartered in Saudi Arabia, has launched a green bonds framework, as lenders in the region look to tap the growing market for sustainability and green projects.

The Dammam-based bank, which is owned by 10 members of the Organisation of Arab Petroleum Exporting Countries, recently allocated $1 billion to green projects in line with its new environmental, social and governance guidelines.

"The [green bond] framework reflects our deep understanding of the ESG impact of our investments across the energy spectrum and our commitment to setting out new engagement strategies with our stakeholders to spread awareness of their ESG exposure," said Ahmed Attiga, Apicorp chief executive.

"This will, in turn, enhance our collective ability to address the challenges posed by climate change."

The new framework will help to advance projects refinanced or invested through the bank's green bond or sukuk programme.

The financial instrument policy will be closely aligned with the UN's Sustainable Development Goals and will focus on circular economy – which involves sharing, reusing and recycling existing materials – on mitigating pollution and biodiversity.

Apicorp's green assets currently account for $500 million in loans and direct investments, the equivalent of 13 per cent of its portfolio.

Global multilateral investment banks are increasingly funding green technology, renewables and sustainable solutions and are reducing the weightage of more polluting fuels such as coal in their portfolios.

Higher ESG compliance among banks comes as investors become more conscious about the environment after the Covid-19 pandemic caused a decline in emissions.

A growing commitment towards ESG principles among stakeholders is also behind banks dumping polluting assets and switching to those with cleaner footprints.

Developed countries are also being urged to help bridge the gap in financing for developing economies by international financial organisations such as the International Monetary Fund.

The institution, based in Washington, has been urging developed nations to spend $100bn on an annual basis on climate finance.

Updated: September 22nd 2021, 11:04 AM