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ADGM is working with peer regulators in UAE to develop taxonomy for sustainable projects
ADGM places environmental and social goals at the forefront of its own strategy.
Over the years, the Abu Dhabi Global Market (ADGM), which celebrates its seventh anniversary this month, has been implementing several sustainable finance initiatives to protect the UAE’s economy and environment for future generations.
Sustainable finance refers to the process of considering environmental, social and governance (ESG) factors when making investment decisions in the financial sector.
Mercedes Vela Monserrate, head of sustainable finance at ADGM, noted that the IFC aims to develop a vibrant sustainable financial centre that supports capital formation and the creation and issuance of products to Achieve positive economic, social and environmental goals.
“We are closely aligned with the UAE’s initiative to support Abu Dhabi, the UAE and global stakeholders in achieving the Paris Agreement’s Sustainable Development Goals and climate change goals. With the proximity of the world’s largest sovereign wealth funds, institutional investors and private wealth, ADGM is well-suited to develop a sustainable financial ecosystem to meet the needs of local and international investors.”
According to Monserrate, ADGM puts environmental and social goals at the forefront of its own strategy, based on national and international initiatives.
Since 2019, initiatives such as the Sustainable Finance Agenda, the Sustainable Finance Working Group and the Abu Dhabi Declaration on Sustainable Finance have been launched to develop a thriving sustainable finance hub.
Mercedes Vela Monserrate, head of sustainable finance at ADGM.
“The Abu Dhabi Declaration calls for cooperation and collective action to create a thriving sustainable finance industry not only in the UAE but in the wider region. In line with this agenda, ADGM continues to incorporate sustainable development principles into its regulatory framework, To be the first international financial centre in the region to establish an ESG framework.”
Monserrat said ADGM’s efforts have resulted in a coordinated collaboration of public and private stakeholders in the UAE to steer attention, resources and dialogue on sustainable financing.
“To further advance our commitment to sustainable finance, ADGM will launch several new initiatives.”
In the past, ADGM has published the UAE’s first set of sustainable finance guidelines, launched the Abu Dhabi Sustainable Finance Forum, the first social bond project and the UAE’s first sustainable REIT, using a series of internal sustainable principles to enhance ADGM’s existing ESG practices, launching a gender equality initiative and a sustainable finance platform that provides investors and stakeholders with real-time access to essential sustainable finance data specific to the UAE and the wider region that reflects International standard with customizable indicators.
Monserrate noted that ADGM is working with peer regulators in the UAE to develop a taxonomy for sustainable projects.
“In order to increase the adoption and growth of sustainable finance, ADGM is strengthening its regulatory framework to incorporate clear ESG and sustainable finance requirements into its regulatory framework.
ADGM has recently focused on developing standards for green label financial products and services, aimed at helping investors identify investments with sustainability goals and ensuring financial institutions incorporate climate change risks into their risk management. “
The first “carbon neutral” financial center
ADGM is the world’s first “carbon neutral” international financial center. It also partnered with AirCarbon Exchange to create the world’s first fully regulated carbon trading exchange and clearinghouse.
“While voluntary carbon markets are only one component of the global climate finance fabric, they have shown impressive growth over the past few years, surging from $146 million four years ago to more than $1 billion this year. In this context , creating a regional voluntary carbon market in conjunction with the necessary regulatory framework will provide another opportunity for the UAE financial sector.”
To support sustainability initiatives and innovation, ING is one of the banks that ADGM collaborates with 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 climate impact of our operations and source 100% renewable electricity for the buildings we manage to control. We have built sustainability into our procurement process since 2007 Over the years, we have been compensating for our remaining carbon emissions,” said Sebastian Frederiks, Head of Wholesale Banking Middle East at ING Bank.
Sebastian Frederiks, Head of Wholesale Banking Middle East at ING Bank.
“The biggest impact we can have is our financing. We have committed our loan book to meeting the Paris Agreement’s 1.5-degree climate target, or net zero by 2050. Our strategy to achieve this says For the Terra approach. It focuses on the nine industries with the highest emissions in our loan book: oil and gas, renewable and conventional power, automotive, shipping, aviation, steel, cement, residential mortgages and commercial real estate.”
Frederiks highlighted the “further acceleration” of client requests for support in the ESG space following the decision to host the United Nations Climate Change Conference COP 28 in the UAE.
ING has been supporting ADGM and the UAE in achieving their sustainability and climate goals.
“In January 2019, ING was one of the first 25 signatories to the Abu Dhabi Declaration on Sustainable Finance. Since then, ING and ADGM have continued to work closely together on sustainable finance topics. Financing, sharing our knowledge and delivering our innovative solutions to make a difference. We actively deploy all of this for UAE bank clients. For example, we organise ESG awareness sessions for boards, we share best practices in risk and due diligence, we To support sustainability-related lending instruments, we leverage our deep distribution network of ESG investors to purchase green bonds.”
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