ADGM is working with its UAE equivalent regulators to develop a taxonomy of sustainable projects.
ADGM puts environmental and social goals at the forefront of its unique strategy.
Abu Dhabi Global Markets (ADGM), which celebrates its seventh anniversary this month, has implemented several sustainable financial initiatives over the years to preserve the UAE’s economy and environment for future generations.
Sustainable finance refers to the process of taking environmental, social and governance (ESG) into consideration when making investment decisions in the financial sector.
Mercedes Vera Montserrat, ADGM’s Head of Sustainable Finance, said the international financial center will not only support capital formation, but also create and develop products to meet economic, social and environmental goals. It aims to develop a vibrant sustainable finance hub to support issuance, he said.
“We are working closely with UAE initiatives to help Abu Dhabi, UAE and global stakeholders achieve the Sustainable Development Goals and the climate change goals of the Paris Agreement. With a recognized regulatory regime, direct application of common law, and proximity to the world’s largest sovereign wealth funds, institutional investors and private wealth, ADGM is a sustainable financial institution that serves the needs of domestic and international investors. We are in an ideal location to develop our ecosystem.”
Monserrate noted that ADGM puts environmental and social goals at the forefront of its own strategy, in line with national and international initiatives.
Since 2019, initiatives such as the Sustainable Finance Agenda, Sustainable Finance Working Group and Abu Dhabi Sustainable Finance Declaration have been launched to develop a thriving sustainable finance hub.
Mercedes Vera Montserrat, Head of Sustainable Finance at ADGM, said:
“The Abu Dhabi Declaration calls for cooperation and joint action to create a thriving and sustainable financial industry not only in the United Arab Emirates, but throughout the wider region. We will be the first global financial center in the region to build an ESG framework, incorporating the principles of ESG into its regulatory framework.”
According to Montserrat, the ADGM effort has resulted in coordinated collaboration by public and private stakeholders in the UAE to guide attention, resources and conversations on sustainable financing.
“To further our commitment to sustainable finance, ADGM is launching several new initiatives.”
In the past, ADGM published the UAE’s first set of Guiding Principles on Sustainable Finance, launched the Abu Dhabi Sustainable Finance Forum, launched the first social bond project and the UAE’s first sustainable real estate investment trust, We have adopted a set of internal sustainability principles that enhance the functioning of ADGM. Align with existing ESG practices, deploy gender equality initiatives and sustainable financial platforms to enable investors and stakeholders to develop UAE and wider region-specific financial instruments that reflect international standards and have customizable indicators. provided real-time access to their critical sustainable financial data.
Monserrate said ADGM is working with its UAE counterpart to develop a taxonomy of sustainable projects.
“To promote the adoption and growth of sustainable finance, ADGM has strengthened its regulatory framework to include clear ESG and sustainable finance requirements in its regulatory framework.
ADGM’s recent focus on developing standards for green-label financial products and services will help investors identify investments for sustainability and ensure that financial institutions incorporate climate change risk into their risk management. It is intended to “
The First ‘Carbon Neutral’ Financial Center
ADGM is the world’s first ‘carbon neutral’ international financial center. We are also partnering with AirCarbon Exchange to create the world’s first fully regulated carbon trading exchange and clearinghouse.
“While voluntary carbon markets are only part of the global climate finance structure, they have grown considerably in recent years, from $146 million just four years ago to more than $1 billion this year. In this context, the creation of a regional voluntary carbon market combined with the necessary regulatory framework will provide yet another opportunity for the UAE financial sector.”
To support sustainability initiatives and innovation, ING is one of the banks with which ADGM is collaborating in three areas of sustainable finance: regulation, cooperation 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 buildings under our control. We have integrated sustainability into our procurement processes and have offset our remaining carbon footprint since 2007,” said Sebastian Frederik, Head of Wholesale Banking Middle East at ING Bank.
Sebastian Frederik, Head of Wholesale Banking Middle East at ING Bank, said:
“The biggest impact that we can have is financing. We call our strategy for getting there the Terra approach: oil and gas, renewable and conventional power, automotive, shipping, aviation, steel, cement, mortgages and commercial real estate. We are focused on nine departments.”
Fredericks emphasized that the UAE’s decision to host the United Nations Climate Change Conference COP 28 has “further accelerated” client demand for support within the ESG arena.
ING has helped ADGM and the UAE reach their sustainability and climate goals.
“In January 2019, ING became one of the 25 signatories to the Abu Dhabi Sustainable Finance Declaration. Since then, ING and ADGM have continued to work very closely on the topic of sustainable finance. ING can play a role by funding change, sharing knowledge, and providing innovative solutions, all of which are actively working for UAE banking customers. For example, we host ESG awareness sessions for boards, share risk and due diligence best practices, support sustainability-related lending facilities, and deepen ESG investor engagement for green bonds. We are leveraging our distribution network.”