Abu Dhabi Global Market launches regulatory framework for sustainable finance

Lack of available, accessible and affordable funding putting world’s climate goals at risk, Dr Al Jaber says

The ADGM building in Abu Dhabi. The ADGM is aiming to identify projects that are aiding the net-zero transition. Ruel Pableo for The National

The Abu Dhabi Global Market, one of the region's fastest-growing financial hubs, has launched a regulatory framework for sustainable finance.

The regulations include rules on sustainability-orientated investment funds, managed portfolios and bonds as well as requirements for environmental, social and governance disclosures by companies based in the financial centre, it said on Tuesday.

“The lack of available, accessible, affordable finance is putting the world’s climate goals and sustainable development at risk and addressing this issue is one of the top priorities of the Cop28 Presidency,” said Dr Sultan Al Jaber, President-designate of Cop28.

“To make transformational progress, we need to shift gears in mobilising private finance.”

The initiative will play a vital role in mobilising capital for the transition to net zero not only in the UAE, but also in emerging markets and developing economies, Dr Al Jaber, who is also Minister of Industry and Advanced Technology, added.

“Finance is the key to turn good intentions into real results,” he said.

“The Paris Climate Agreement set our collective ambition, and we need initiatives such as ADGM’s Sustainable Finance Regulatory Framework to help us keep 1.5°C within reach.”

ADGM will grant a designation to products and services that meet its standards, with the aim of identifying those that are aiding the net-zero transition.

ADGM will also allow companies to use its designation mark in marketing materials and client communications, it said.

The UAE plans to invest between Dh150 billion ($40.8 billion) and Dh200 billion by 2030 to triple the share of renewable energy in the country’s overall energy mix.

The Emirates has also approved a National Hydrogen Strategy, which will boost the country’s hydrogen production and export capability over the next eight years.

A National Electric Vehicles Policy aims to build a network of charging stations and encourage take up of lower emission vehicles.

“We believe our regulatory framework for sustainable finance is the most comprehensive in the Middle East and South Asia region, and comparable in scope and content with the most comprehensive regulatory frameworks globally,” said Ahmed Al Zaabi, chairman of ADGM.

“Our requirements, particularly those which set minimum standards for sustainability-focused products and services, will help to channel capital into projects and activities that advance the country’s transition to net zero.”

Green and sustainable finance issuance, aimed at environmentally friendly projects, grew 32 per cent in the UAE last year compared with 2021, said consultancy Arthur D Little.

Major public and private institutions in the UAE, including the Dubai Financial Market, the Ministry of Climate Change and Environment and publicly listed companies in the Securities and Commodities Authority have shown an increase in environmental, social and governance standards reporting, Arthur D Little said in a February report.

The global sustainable finance market, which was valued at $3.65 trillion in 2021, is projected to hit $22.48 trillion by 2031, growing at a compound annual rate of more than 20 per cent between 2022 and 2031, according to Allied Market Research.

ADGM, opened in 2015, aims to connect the emirate with international markets in the Middle East, Africa, South Asian and East Asian economies, and is part of Abu Dhabi's efforts to diversify its economy.

It grew its assets under management by 56 per cent last year as it welcomed more businesses and expanded its workforce.