Driving sustainable finance
The Central Bank of the UAE (CBUAE) has forecasted a 3.9% overall growth rate for 2024. Celebrating its golden jubilee in 2023, the CBUAE has aligned its strategies with the UAE leadership’s climate goals, particularly through the Green and Sustainable Finance Initiative aimed at addressing climate-related risks. The CBUAE has also mobilized the UAE banking sector to generate AED 1 trillion in sustainable finance by 2030, a significant announcement made during COP28.
Strengthening partnerships for climate action
The UAE’s COP28 presidency has launched a significant collaboration with the two future climate conference hosts, Azerbaijan and Brazil, to support the crucial 1.5ºC climate target. This initiative, known as Mission 1.5ºC, aims to enhance cooperation and ensure a seamless transition between the hosts of the annual climate conference.
COP28 and future climate actions were prominently discussed during this year’s World Governments Summit, where COP28 President Dr Sultan Al Jaber announced the three nations’ collaboration. This partnership aims to ensure that the commitments made in Dubai are met through dedicated cooperation and credible support from nations to facilitate effective implementation. Given that global efforts are still insufficient to prevent temperatures from rising beyond 1.5ºC above pre-industrial levels, this alliance seeks to build momentum across consecutive COPs.
The upcoming COP29 in Baku will focus on climate finance, emphasizing how to allocate funds to those most affected by climate change. Issues such as desertification and drought will also be key topics on the agenda.
Focus on governance
This year’s World Governments Summit was held in February in Dubai and focused on shaping future governments. The event brought together governments, international organizations, thought leaders and private sector leaders from around the world to discuss innovative solutions for future challenges, inspiring and empowering the next generation of governments.
The 11th edition of the summit hosted over 25 heads of state, 120 governmental delegations, over 85 international and regional organizations, and more than 4,000 participants. Notable attendees included Turkish President Recep Tayyip Erdoğa, Indian Prime Minister Narendra Modi, Kenyan President William Ruto, and Rwandan president Paul Kagame. The event at Madinat Jumeirah also featured the Time 100 AI list of the most influential people in artificial intelligence to explore the technology’s future.
As ESG continues to shape the business landscape, the UAE’s commitment to sustainable finance and climate action through initiatives like the Green and Sustainable Finance Initiative and COP28 underscores the critical role of governance and innovation in driving both economic growth and a sustainable future.
Over half of CEOs in the UAE (56%) and the Middle East (51%) expect to see a significant return on their ESG investments within three to five years. A smaller segment anticipates returns in one to three years, including 20% of UAE CEOs and 13% of their Middle Eastern counterparts. 35% of Middle Eastern CEOs expect returns to materialize in five to seven years, compared to only 20% in the UAE.
Additionally, local (32%) and global (34%) leaders agree that the greatest impact of implementing an ESG strategy in the next three years will be in building customer relationships and positive brand association.
The greatest barrier to achieving Net Zero or similar climate ambitions differs slightly between regions. In the UAE, 20% of CEOs primarily struggle with the complexity of decarbonizing supply chains. In contrast, 29% of CEOs in the Middle East are more concerned about the lack of appropriate technology solutions to gather and analyze data.
While the risks of not meeting stakeholders’ ESG expectations can also vary across countries, CEOs in the UAE (24%) and Middle East (29%) reported threat to their continued tenure as a principal downside. Decreased reputational trust and recruitment challenges are the least prominent risks in this region.
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