A recent report by Bloomberg Intelligence reveals that banks in the UAE are at the forefront of expanding the sustainable finance sector. The study highlights the significant contributions of major banks such as First Abu Dhabi Bank and Emirates NBD in promoting sustainable financing through activities like underwriting and lending. This trend shows a robust utilization of balance sheets via green bonds, sustainability-linked instruments, and lending initiatives.
The UAE Banks Federation continues to drive long-term growth with a goal of achieving sustainable financing worth 1 trillion dirhams by 2030. The financial institutions are well-positioned to seize a $2 trillion opportunity across renewable energy, water management, and low-carbon infrastructure projects.
Bloomberg Intelligence’s report also pointed out the ongoing structural evolution in the sustainable finance market within the Middle East and North Africa (MENA) region. Since 2020, the volume of issuances has increased sevenfold, even though it is projected to drop to $35.1 billion by 2025, an 18% decline from the peak seen in 2023 due to headwinds in the global markets.
The report indicates a shift from sovereign issuances to a more diversified ecosystem that includes financial institutions and issuers from the energy sector. Financial entities accounted for approximately 50% of MENA issuances in 2025, up from 32% in 2020, driven by clearer regulatory signals and increased underwriting and lending activities. Banks are actively seeking to decarbonize their balance sheets and adopt sustainable ratings. Green-labeled instruments made up the majority of MENA issuances, surging by 60% to reach $25.8 billion by 2025.
Investment capital is primarily directed towards renewable energy projects, low-carbon infrastructure, and water efficiency initiatives that enhance climate resilience. This trend is bolstered by the region’s expanding data center capabilities.
Government Initiatives
Grace Osborne, an analyst for environmental, social, and governance (ESG) criteria at Bloomberg Intelligence, noted that sustainable finance markets in the MENA region have rapidly matured over the last five years, stimulated by government initiatives, supportive frameworks, and increased investor demand. Although the pace of issuances is expected to slow in 2025 in line with global trends, the shift towards bank-led financing and green bond issuance signifies a more sustainable market structure ready for further growth.
Regulatory Progress
The report also underlines that regulatory advancements across the region are laying the groundwork for future growth, despite the ongoing lack of a unified regional classification that limits the categorization of transition activities. As markets move towards sustainability disclosures aligned with the International Sustainability Standards Board, future assessments of climate risk and transition plans are anticipated to become key differentiators for issuers aiming to attract sustainable capital. Additionally, the rising investment in AI-supported data centers in the region is likely to enhance the focus on energy efficiency, water security, and climate-resilient infrastructure.