How ADGM is developing a sustainable financial industry in the UAE – News

ADGM is working with its counterpart regulators in the United Arab Emirates to develop a taxonomy for sustainable projects



ADGM has placed environmental and social objectives at the forefront of its own strategy.

Published: Sat 29 Oct 2022, 2:43 PM

Over the years, Abu Dhabi Global Market (ADGM), which celebrated its seventh anniversary this month, has implemented several sustainable finance initiatives to preserve the UAE’s economy and environment for future generations.

Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector.

Mercedes Vela Monserrate, Head of Sustainable Finance at ADGM, noted that the International Financial Center aims to develop a dynamic sustainable financial center that supports capital formation as well as the creation and issuance of products to achieve economic, social and environmental positives.

“We are closely aligned with the UAE’s initiatives, supporting Abu Dhabi, the UAE and global stakeholders in achieving the Sustainable Development Goals and the climate change goals of the Paris Agreement. With an internationally recognized regulatory regime, direct application of common law and proximity to some of the largest sovereign wealth funds, institutional investors and private wealth in the world, ADGM is ideally placed to develop a sustainable financial ecosystem that meets the needs of local and international investors. . ”

Monserrate noted that, in line with national and international initiatives, the ADGM has placed environmental and social objectives at the forefront of its own strategy.

Since 2019, initiatives such as Sustainable Finance Agenda, Sustainable Finance Working Group and Abu Dhabi Sustainable Finance Declaration have been launched to develop a thriving sustainable finance hub.

Mercedes Vela Monserrate, Head of Sustainable Finance at ADGM.

Mercedes Vela Monserrate, Head of Sustainable Finance at ADGM.

“The Abu Dhabi Declaration calls for collaboration and collective action to create a sustainable and thriving financial industry not only in the UAE, but across the region. In line with this agenda, ADGM continues to integrate the principles of sustainability in its regulatory framework, to be the first international financial center in the region to implement an ESG framework.

Monserrate said ADGM’s efforts have resulted in a concerted collaboration between public and private stakeholders in the UAE to channel attention, resources and conversation on sustainable finance.

“To reinforce our commitment to sustainable finance, ADGM will launch several new initiatives.”

In the past, ADGM published the UAE’s first set of sustainable finance guidelines, launched the Abu Dhabi Sustainable Finance Forum, the first social bond project and the first real estate investment fund. of the UAE, has adopted a series of internal sustainable principles to improve the ADGM. existing ESG practices, rolled out the Gender Equality Initiative and the Sustainable Finance Platform for investors and stakeholders to have real-time access to critical UAE- and region-specific sustainable finance data within the meaning of wide, reflecting international standards and featuring customizable indicators.

Monserrate noted that the ADGM is working with its counterpart regulators in the UAE to develop a taxonomy for sustainable projects.

“To increase the adoption and growth of sustainable finance, ADGM is enhancing its regulatory framework to include clear ESG and sustainable finance requirements in its regulatory framework.

ADGM’s recent focus on developing standards for green-labeled financial products and services aims to help investors identify investments with a sustainability objective and ensure that financial institutions incorporate the risk of change. climate in their risk management.

First “carbon neutral” financial center

ADGM is the first “carbon neutral” international financial center in the world. It is also partnering with AirCarbon Exchange to create the world’s first fully regulated carbon exchange and clearinghouse.

“While voluntary carbon markets are only one piece of the global climate finance framework, they have grown significantly in recent years, from $146 million four years ago to more than $1 billion. dollars this year. In this context, the creation of a voluntary regional carbon market in combination with the necessary regulatory framework would present a new opportunity for the UAE financial sector.

To support initiatives and innovations in sustainable development, ING is one of the banks with which ADGM collaborates in three areas of sustainable finance, namely regulation, collaboration and capacity building.

“At ING, sustainability is at the heart of what we do. We monitor and manage the impact of our operations on the climate and source 100% renewable electricity for buildings under our management control. We have been integrating sustainability into our sourcing processes and offsetting our remaining carbon emissions since 2007,” said Sebastian Frederiks, Head of Middle East Wholesale Banking, ING Bank.

Sebastian Frederiks, Head of Middle East Wholesale Banking, ING Bank.

Sebastian Frederiks, Head of Middle East Wholesale Banking, ING Bank.

“The biggest impact we can have is with our funding. We are committed to steering our lending portfolio towards the Paris Agreement’s climate target of 1.5 degrees, or net zero by 2050. We call our strategy for achieving this the Terra Approach. It focuses on the nine sectors in our loan portfolio with the highest emissions: oil and gas, renewables and conventional energy, automotive, shipping, aviation, steel, cement, residential mortgages and commercial real estate. »

Frederiks pointed out that following the decision to host the UN Climate Change Conference COP 28 in the United Arab Emirates, there has been a “further acceleration” in requests for customer support in the area. of the ESG.

ING supports the ADGM and the United Arab Emirates in achieving their sustainability and climate goals.

“In January 2019, ING was one of the first 25 signatories of the Abu Dhabi Declaration on Sustainable Finance. Since then, ING and ADGM have continued to work closely together on sustainable finance topics. ING can play a role by funding change, sharing our knowledge and offering our innovative solutions. All of this we are actively rolling out for our banking clients in the UAE. For example, we organize ESG awareness sessions for boards, we share best practices on risk and due diligence, we support sustainability-related lending facilities and we use our network of in-depth ESG investor distribution for green bonds.

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