Are we at a pivotal moment in the evolution of sustainable finance?

Against the backdrop of an international health crisis, and one of the largest vaccine rollouts in history, the third edition of the Abu Dhabi Sustainable Finance Forum (ADSFF) was held virtually on 20 January, 2021, as part of the larger Abu Dhabi Sustainability Week. 



In a chapter of history forever defined by both Covid-19 and climate change, investors, financial institutions, government representatives and NGOs gathered to address key developments in sustainable finance, specifically how to rebuild global economies through a sustainable, resilient and equitable approach.


Key speakers included:

• H.E. Ahmed Al Sayegh, Minister of State, UAE and Chairman of Abu Dhabi Global Market; 
• Mairead McGuinness, European Commissioner for Financial Stability, Financial Services and the Capital Markets Union, European Commission 
• in addition to representatives from Luxemburg, Egypt and the United Kingdom.
  

Here are the five top takeaways from the event:

1. Low carbon economies is a common goal

Antoine Sire, Head of BNP Paribas Group Engagement, was joined by industry peers from Allianz, HSBC and Amundi on a panel entitled, “Financial Roadmap to Net Zero – Reality Now or Long-Term Ambition?”

A pragmatic approach based on sustained progress and implementation of industry wide common standards was highlighted throughout the panel. Finance was recognised as a core enabler of transformation and an important pre-requisite to meaningfully address climate change.

During his address, Antoine Sire explained BNP Paribas’ commitment to the Paris Agreement which set the course to achieving carbon neutrality by 2050 to limit the global temperature increase to well below two degrees. Panellists also acknowledged the complexities faced by certain sectors on their sustainability journey, a point Antoine explained by stating: “Innovation is critical for finance to support the low-carbon economy transition, and being at the forefront of new financing techniques.”

Elsewhere during the forum, international airline Etihad announced it had begun to tackle its carbon emissions, declaring an intent to achieve a minimum target of zero net carbon emissions by 2050 and to halve of its 2019 net emission levels by 2035. A methodical approach including carbon off-setting, latest-generation fuel-efficient aircraft and biofuel development was explained as part of the strategy.

2. A commitment to Sustainable Finance for the growth of the economy

Five new signatories were added to the Abu Dhabi Sustainable Finance Declaration, affirming their commitment to advancing the UAE’s sustainability agenda. Blackrock, Crédit Agricole, Invesco, Clean Energy Business Council, in addition to the first non-governmental organisation (NGO), the Emirates Nature WWF joined the expanding network this year.

Forty-one public and private sector participants have now signed the framework to foster positive economic, social and environmental initiatives, and advocate for sustainable finance investments for the long-term well-being and growth of the economy.

3. Innovative bonds for social impact – a focus on disability

The Middle East’s first Social Impact Bond was issued in the UAE to support the training and employment of people with physical and learning disabilities. The bond aims to create measurable social outcomes or ‘pay-for-success’ contracts between the public and private sector, bringing organisations together to solve collective social challenges. Key objectives are to increase the employability skills and opportunities of people of determination.

“We have to focus our efforts on financing companies that align to a sustainable future themselves and are on a transition journey. This shift will take pragmatism, innovation, client engagement, and partnerships across various stakeholders.”

Social bonds are gaining popularity around the world to address critical issues including education, healthcare, housing and employment.

4. Disclosure is key in ESG Assessment

The growing demand for ESG disclosure was widely discussed throughout the forum by key stakeholders including Mark Carney, UN Special Envoy for Climate Action and Finance and UK Prime Minister’s Finance Adviser for COP 26.

In advance of this growing mandate, Abu Dhabi Global Market (ADGM) announced their ‘Sustainability Excellence, ADGM Sustainable Finance Platform’, a newly developed ESG performance tool designed to capture sustainable finance activity in the region. Using ADGM signatory companies including BNP Paribas, organisations are assessed by the platform according to 25 key performance indicators which are based on publicly available data, including sustainable finance products both developed and in the pipeline. 

5. Strategic Partnerships are fundamental to success

In order to tackle the climate crisis, mobilising knowledge across not only the finance industry, but research, science and society emerged as a key theme of the forum. A number of strategic partnerships and coalitions were announced at the event including a new sustainable financing framework between the UAE Ministry for Climate Change and Environment and local regulator ADGM. This type of partnership embeds climate change as the heart of developments in sustainable finance, as banks have an integral role in supporting corporates, investors, individuals and broader society in moving towards a carbon neutral world by mid-century.