Dubai Sustainable Finance Working Group defines UAE industry approaches to delivering ESG innovation, net zero and sustainability-linked lending 

The Dubai Sustainable Finance Working Group (DSFWG), established in 2019 by Dubai International Financial Centre (DIFC) and Dubai Financial Market (DFM), the leading financial market across the region, has published three new reports that aim to help businesses in the UAE build resilience to the impact of climate change and move the economy to Net Zero.

The reports provide structured approaches on delivering Net Zero; Environmental, Social and Governance (ESG) innovation; and sustainability-linked lending.

These reports have been published as the UAE prepares to host the COP28 climate change conference in Dubai in November and 2023 being the UAE’s Year of Sustainability. They also align with DIFC’s year-long Path to COP28 programme and DSFWG’s commitment to making Dubai the region’s best city for sustainable finance.

A white paper on Unlocking the Potential of ESG Innovation in the UAE and Across the Globe aims to bridge the significant global gap for achieving the targets outlined as part of the United Nations Sustainable Development Goals (SDGs), which can be accelerated through greater innovation. The report considers the perspectives of start-ups, growth-stage companies, and larger corporate entities, and provides a step-by-step guide for businesses to effectively integrate sustainability practices using data-driven frameworks and industry-driven initiatives.

The Net Zero Guide provides a roadmap for companies, financial institutions, and critical sector stakeholders to chart their Net Zero ambitions. The guide includes sector-specific guidance for major industries in Dubai and across other emirates, serving as a high-level toolkit for developing sectoral decarbonisation strategies.

A report titled Sustainability-Linked Loans Guide presents an approach for any institution looking to raise Sustainability-Linked Loans to deliver on their financing requirements while supporting their sustainability goals. Sustainability-Linked Loans are increasingly being used in Dubai and the wider region, as companies look to ways to accelerate the adoption of their sustainability agendas by linking the terms of their borrowing to performance against their sustainability targets.

Christian Kunz, Chief Strategy, Innovation & Ventures Officer at DIFC Authority, said: “We all have a collective responsibility to address sustainability issues. Whilst this is no easy feat, it also creates opportunities in terms of greater access to capital, new markets, and sustainable growth. As a significant contributor to the economic growth of the emirate, DIFC is proud to be part of a comprehensive approach to sustainability and ESG innovation that spans industries and asset classes. DIFC and the Dubai Sustainable Finance Working Group members play a critical role in creating a Net Zero future and building resilient societies, and these reports will form an important basis to accelerate meaningful actions.”

The UAE was the first country in the Middle East to make climate commitments at COP26. Dubai has a track record of being a vibrant and dynamic city with innovation at its core, showing great promise in identifying opportunities and continuing to invest in its ESG journey to achieve its environmental and social commitments. The DSFWG was the first group of its kind in the UAE that set out a roadmap to achieve the sustainability objectives of the UAE.

The DSFWG and DIFC Authority also hosted stakeholders to an open industry event on 14 March at the DIFC Innovation Hub, where the reports were launched and provided an opportunity to learn more about the white paper and the two guides, ask questions and network with industry leaders.