While it may seem unexpected that oil-rich countries would foreground sustainability, the Middle East has witnessed a remarkable surge in sustainable finance in recent years. There was a 532% increase in sustainable finance in the Middle East and North African region from 2020 to 2021, reaching $24.55 billion. In a recent article, Samir Atitallah, the CEO of Mirabaud Middle East, part of the Geneva-based Mirabaud Group, made the case for the benefits of this push to go green.
“With net-zero carbon emissions as the overarching goal by midcentury, sustainable finance represents a dual advantage: environmental responsibility and untapped economic potential,” he wrote.
He highlighted the United Arab Emirates as a leader in the sector, explaining that, with its Net Zero 2050 initiative, the nation has not only pledged its commitment to a greener future, but has also laid down an economic and policy framework to support this vision, with an investment of $160 billion earmarked for clean and renewable energy projects over the next 30 years. In addition to achieving net-zero emissions, the UAE’s goal is to derive 44% of its energy from renewables by 2050.
For Mirabaud Bank, this level of government and private sector commitment creates an opportunity to invest in sectors with large growth potential in addition to their positive environmental impact.
“The recently endorsed UAE Energy Strategy 2050 and the National Hydrogen Strategy aren’t mere environmental mandates; they are economic signals, laying out sectors ripe for investment and growth, underlining the nation’s alignment with its 2050 targets,” wrote Atitallah.
What Is Sustainable Finance?
At its core, sustainable finance recognizes that resources are limited and today’s investment decisions can have significant impacts on future generations. By directing funds toward businesses and projects that are environmentally friendly, socially responsible, and well managed, investors can help address critical issues such as climate change, inequality, and corporate misconduct.
One key aspect of sustainable finance is the idea that investments should do no harm, supporting activities that contribute positively to the world without detrimental effects — like investing in renewable energy projects rather than fossil fuels, or in companies that uphold high labor and ethical standards.
Sustainable finance also includes innovative financial products like green bonds, which are specifically designed to fund projects that have environmental benefits.
“[The Gulf Cooperation Council]’s green bond and sukuk [Sharia compliant] issuance, which accumulated $8.5 billion from 15 deals last year, further solidifies the region’s active engagement in green finance,” wrote Atitallah.
UAE’s Green Ambitions and Cop28
Held in the UAE, the 2023 Cop28 summit enabled the nation to showcase its green finance capabilities and ambitions on a global stage. This event helped highlight the UAE’s environmental initiatives and solidify its stature as an emerging hub for green finance and investment.
For private banks and financial institutions, Cop28 presented an opportunity to engage with and explore the burgeoning green finance market within the region.
“The outcomes of this conference will not only determine environmental policies, but also influence global financial flows,” wrote Atitallah.
Mirabaud Bank’s Investment
Mirabaud Middle East’s strategy moving forward resonates with the broader trends shifting toward sustainable finance in the region.
This involves seeking investment opportunities that align with sustainable development goals. By doing so, Mirabaud Bank aligns with the regional push for sustainability, but also caters to the growing global demand among investors for responsible investment options.
The 2023 COP28 in Dubai provided a strong focus on food systems, placing it on the agenda and allowing countries to commit to strategies around transformations of food systems, which account for a substantial share of emissions.
In 2023, Mirabaud Asset Management partnered with Swiss venture capital company Zebra Impact Ventures, which invests in nature technology companies that will enable us to transform our food systems. Together, they established a Sustainable Finance Disclosure Regulation Article 9 impact investing regenerative growth fund. The focus is on three sectors driving change: precision farming, alternative nutrition, and food waste.
This strategy is fully aligned with Mirabaud’s approach to private assets, where the group collaborates with innovative industry expertise aiming to impact and reward investing. Thereby, Mirabaud Bank brings unique investment opportunities to its clients that make a concrete contribution to protecting food systems for future generations, reduce their harmful environmental impacts, provide a growing population with a sustainable diet, and adapt to the evolving pressures of climate change.
