Date trees enhance the beauty of places. John Varughese / Gulf Today

Mariecar Jara-Puyod, Senior Reporter

The UAE has been assessed to be the leader in the 22-country Arab Region on caring for the environment through sustainable finance practices, specifically on climate change finance, bolstered by regulations or legislation.

This is according to the 140-page “Promoting Sustainable Finance and Climate Finance in the Arab Region” dated January 2021. A copy was emailed to Gulf Today by the United Nations Environment Programme (UNEP)-West Asia Regional Office on Wednesday evening.

The extensive research-analysis was conducted under the auspices of two ongoing UNEP Finance Programme (UNEP-FI) and the 65-year-old League of Arab States which, among its numerous goals, wants to achieve sustainable development in the areas of water scarcity and climate change, taking into consideration the region’s arid topography and the severe challenges arising from increasing populations, high illiteracy rates, and low levels of infrastructure. UNEP FI is a partnership between the UN affiliate and over 450 banks, insurers, investors and supportive institutions, whose aim is to help create a financial sector for the people and for the planet through positive initiatives and advocacies.

The research-analysis focused on six countries, which, apart from the UAE are Egypt, Jordan, Morocco, Bahrain and Saudi Arabia. It was endeavoured as the UNEP FI noted that the “financing gap for achieving” the 17 UN Sustainable Development Goals” across the Arab World, particularly those which concern food-water-energy security namely water scarcity, rising sea levels, drought, land degradation, and desertification, was at approximately $230 billion, as of 2018.

UNEP FI head Eric Usher said: “Only by understanding the barriers that are inhibiting the financing of sustainable business activities in the region will we be able to change policy and practice.”

For UNEP, sustainable finance refers to a stable financial system that “creates values and transacts financial assets in ways that shape real wealth to serve the long-term needs of a sustainable and inclusive economy along all dimensions relevant to achieving those needs including economic, social and environmental issues.”

For UNEP, climate finance refers to “local, national or transnational financing which may be drawn from public, private and alternative sources of financing to significantly reduce greenhouse emissions and its adverse effects, notably from sectors that emit large quantities of greenhouse gases.”

The report pointed out the diversification Saudi Arabia had implemented in its national policy framework, moving away from its dependence on oil production and increasing their investment portfolios in the non-oil industries including public-private partnerships (PPPs).

The report stated that it is only the UAE, along with Morocco and Egypt which “have issued” Shariah-compliant environment-focused green bonds. All six countries are continually developing their sukuks which could be used to improve environment-related challenges.

The report mentioned that it was in 2019 when the UAE and Qatar expressed their intentions to issue green sukuks.

Moreover, the report stated that except for Saudi Arabia, UAE, Morocco, Egypt, Jordan and Bahrain already have instituted “Environment Social Guidelines” that promote awareness and education programmes for sustainable reporting and sustainable finance. The six are also into the regulation and legislation of policies and laws for PPPs to at least slow down environment-related challenges.

The report carries recommendations for the entire Arab Region as well:

• Strengthen governance, legislative and regulatory frameworks including issuing and enforcing green finance guidelines, building capacity and incorporate gender awareness in sustainable and climate financing.

• Raise awareness on the merits of sustainable finance and strengthen the capacity of financial sector stakeholders.

• Develop a pool of bankable green projects.

• Raise national readiness for climate change and finance reform measures to address institutional weaknesses, planning gaps as well as technical capacity and expertise constraints.