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Thursday, November 30, 2023

“Sustainability-Linked Loans Gain Mainstream Traction, Affirms Leading Banker”

Sustainability-linked loans are gaining prominence as the financial sector witnesses a significant shift towards prioritizing Environmental, Social, and Governance (ESG) practices. This trend is particularly pronounced in light of the upcoming COP28 hosted by the UAE.

Optimistic Outlook from Emirates NBD

Vijay Bains, Chief Sustainability Officer at Emirates NBD, expressed optimism about the remarkably positive outlook of the ESG finance market. He highlighted the record-breaking performance of green sukuk, bond markets, and sustainability-linked loans, marking a transformative phase where sustainability has become an integral part of mainstream finance.

Emirates NBD’s Commitment to COP28

Emirates NBD, a key player in the Middle East banking sector, solidified its commitment to sustainability by announcing its role as an Associate Pathway Partner for the 28th edition of the United Nations Climate Change Conference (COP28).

Assets Aligned with Sustainability: Sustainability-Linked Loans

Bains emphasized that assets tied to sustainability will continue to be a top priority, aligning with global initiatives working towards achieving net-zero goals set by the Paris Agreement. Sustainability, he noted, has seamlessly integrated into mainstream finance, asserting its enduring significance.

Banking Sector’s Role in Net-Zero Target

Acknowledging the pivotal role of the UAE banking sector in achieving the country’s net-zero target by 2050, Bains highlighted Emirates NBD’s active participation in the UAE Banking Federation panel on sustainability. The collaborative efforts among financial institutions aim to share insights and lessons learned, contributing to the growth of the market.

SME Focus in Sustainability-Linked Finance

Bains stressed the importance of sustainability-linked finance for Small and Medium Enterprises (SMEs), considering their substantial contribution to the UAE economy. Recognizing that many SMEs lack dedicated ESG departments, he noted that these businesses turn to financial institutions for guidance.

Encouraging SME Adoption

Emirates NBD advises SMEs to embrace sustainability-linked loans as part of their Key Performance Indicators (KPIs), presenting an opportunity for these businesses to integrate sustainability into their overall governance strategy.

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