What we learnt at the Abu Dhabi Sustainable Finance Forum 2020

ESG investing has gained considerable momentum in the past year. What's changed? What's new? And what are the opportunities ahead in the Middle East?

Climate change legislation, new sustainable finance guiding principles, and pioneering bonds were but three of the core themes at the annual Abu Dhabi Sustainable Finance Forum (ADSFF) 2020 in January.

Following last year’s inaugural event, ADSFF 2020 once again brought together institutional investors, key financial institutions, international organisations and others, harnessing the drive and energy to achieve what was billed as a new “Decade of Deliverables”.

In his keynote address, Laurent Fabius, former French Prime Minister and COP 21 President, pointed to the importance of government action and the role of blended finance – the use of developmental and philanthropic capital to spur private sector investment. With the will and vision, he believes the financing communication can take major steps to achieving the sustainable development goals.

Top five takeaways from the ADSFF 2020

1. United Arab Emirates’ Guiding Principles in Sustainable Finance

Abu Dhabi Global Market (ADGM) established its first set of guiding principles on sustainable finance through the launch of its “Working Group”, comprising 10 UAE government agencies, financial regulatory authorities and its three stock exchanges which helped formulate the UAE’s Guiding Principles.

Our ambition is to deliver significant financial resources to support our partners and clients in the sustainability transition

These sustainable finance principles are the region’s first, focusing on taxonomy, disclosure and government. They are also a major milestone in the UAE’s aim to develop a thriving sustainable finance sector, supporting the Emirates’ efforts to advance social progress and environmental mitigation.

For Jacques Michel, Head of BNP Paribas Middle East & Africa at BNP Paribas, it was a matter of great pride that the bank played an active role in the process. “Our ambition is to deliver significant financial resources to support our partners and clients in the sustainability transition,” he explains.

2. A global climate initiative focused on research

The UAE launched the Abu Dhabi Climate Initiative, which seeks to drive forward research and development in water and climate technology. Announced by the Climate Change and Environment Minister, His Excellency Dr Thani Al Zeyoudi, the initiative follows commitments made in “UAE Vision 2021” (six national priorities including sustainable environment and infrastructure) and “UAE Green Agenda 2015-2030” (a framework consolidating the country’s climate change mitigation and adaptation initiatives). It also seeks to draw on the country’s unique climate and resources, development priorities and ambitions.

3. The Middle East’s first social bond project

The region’s first ever social impact bond was announced by Salama Al Ameemi, Director General of Ma’an, which was established to nurture greater collaboration between the government of Abu Dhabi and the private sector.

Social bonds, which are structured to attain metrics linked to an agreed social outcome, give borrowers the opportunity to work towards its social objectives and investors the opportunity to allocate capital in line with their ESG (Environmental, Social and Governance) objectives. Details of this programme will be announced later this year.

4. A Green Bond Accelerator Programme

The Abu Dhabi Department of Energy (DoE) announced a Green Bond Accelerator initiative with Abu Dhabi Global Market (ADGM) and Abu Dhabi Securities Exchange (ADX).

The goal is to establish Abu Dhabi the region’s hub for sustainable finance, a centre of excellence for green bonds and green sukuks (Islamic bonds) both in the Emirates and across the Middle East and Africa.

5. An education initiative: sustainable finance certification

The ADGM Academy, which supports efforts to promote training and financial sector knowledge in the region, invited the London Institute of Banking and Finance to launch a “Certificate in Sustainable Finance”, which was signed at ADSFF 2020.

ADSFF 2020 provided the opportunity to bring together our clients to discuss the challenges – and the opportunities – ahead.

The certificate programme underlines the increasing importance of sustainable finance to both borrowers and investors throughout the region and worldwide.

ADSFF 2020 successfully brought together the Middle East’s leading investors, borrowers and other financing specialists. For Jérôme Ponrouch, Head of Sustainability and CSR Middle East & Africa at BNP Paribas, it proved to be the opportunity to drive forward discussions on how to embed environmental, social, and governance (ESG) metrics into finance.

Attendees included Majid Al Futtaim, a Dubai-based retail holding company, which launched the region’s first corporate green sukuk in 2019, raising $600 million, in which BNP Paribas acted as global coordinator and joint lead manager.

“Now is the time to engage with key decision makers from the government, from institutions, corporates and regulatory bodies about sustainable finance,” explains Jérôme. “ADSFF 2020 provided the opportunity to bring together our clients to discuss the challenges – and the opportunities – ahead.”

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