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UAE NBD launches compliant carbon market transactions

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Emirates NBD launches carbon market trading - GettyImages - 630846210

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Emirates NBD has launched trading in carbon futures contracts to meet growing demand from companies to manage carbon offsets.

The bank’s carbon futures contract trading facility also offers clients access to a fast-growing asset class worth an estimated AED850 billion across six global emissions trading schemes.

national bank of the emiratesCarbon contract trading complies with the guidelines set by the EU and the UK Emissions Trading System (ETS), providing full transparency, credibility and accountability.

ETSs follow a “cap-and-trade” system, whereby companies are limited, or “capped,” on the amount of greenhouse gases they can emit. If a company exceeds its limit, it needs to buy permits, called allowances, from other companies that emit less.

Emirates NBD offers incentives for companies to reduce emissions

This approach incentivizes companies to reduce emissions and facilitates a shift to cleaner technologies and practices to combat climate change.

The UAE government is supporting the development of a carbon trading market, with plans to launch a regulated carbon credit trading exchange and clearing house before COP28. The country has also designated 2023 as the Year of Sustainable Development with the theme “Today, For Tomorrow”.

As the demand for ESG-related financing continues to grow, the introduction of compliance carbon market trading capabilities will also enhance the opportunities for companies to obtain financing related to sustainable development.

Green and sustainable financing in the UAE will grow by 32% year-on-year in 2022, according to consultancy Arthur D Little.

Meanwhile, green debt instruments in the Middle East and Africa outpaced global growth in the sector, with USD 24.55 billion in green and sustainable debt instruments issued in 2021, a 532% increase from AED 3.8 billion in 2020 .

Making the UAE a climate change financing hub

Ahmed Al Qassim, Head of Wholesale Banking Group at Emirates National Bank, said: “Through our Global Markets team, clients will be able to seamlessly tap into the global carbon credit market to support their net Ambition Zero and Sustainable Development Goals.As the UAE becomes a hub for climate change finance, our client’s engagement will also contribute to the development of the region’s fast-growing capital markets, attracting more global ESG investors.

“Ahead of COP28, we will continue to provide our regional and global clients with a robust range of innovative green financing solutions, working together to make the global energy transition a reality.”

Vijay Bains, Chief Sustainability Officer and Head of the ESG Group at Emirates NBD, said the launch marked a significant achievement in accessing the most regulated carbon market in the world, In line with the Year of Sustainability 2023 and the UAE’s revised nationally determined target to reduce business-as-usual emissions by 31% by 2030.

“Access to the carbon market in the form of credits and offsets will become increasingly important for organizations to achieve net zero ambitions and targets in a structured way. The group’s development of carbon trading facilities is also in line with the COP28 climate change mitigation goals and the United Nations sustainable Development Goal 13,” he added.

In other news, Abu Dhabi Global Market (ADGM) immediately implemented a regulatory framework for sustainable finance.

The framework covers sustainability-oriented investment funds, rules for managing investment portfolios and bonds, and ADGM’s environmental, social and governance disclosure requirements.

read: Abu Dhabi Global Market introduces regulatory framework for sustainable finance

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