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Green Financing Experiencing Boost Within GCC | |
| Staff Writer |
Six major non-oil sectors in the GCC power, water, construction, mobility, food and waste management are forecast to potentially make a cumulative GDP contribution of about US$2tn in Green Financing through to 2030.
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This form of financing was initiated to leverage the level of financial flows from banking, micro-credit, insurance, and investment to sustainable development priorities. The key players include public, private, and nonprofit organisations too. To achieve this aim it is necessary to have better management of the environmental and social risks one is expected to gain from opportunities that give a greater ROI with an environmental benefit.
In June 2015, the Emirates Green Development Council (EGDC) was formed to coordinate and oversee the implementation and ensure effective collaboration between federal and local authorities as well as stakeholders, in line with the UAE Vision 2021. The upward trend shows that the macroeconomic scenarios examined in the development of the Green Agenda required an investment of at least 2% of the current GDP.
The Green Agenda consists of 5 Strategic Objectives (Competitive Knowledge-Economy, Social Development & Quality of life, Sustainable Environment & Valued Natural Resources, Clean Energy & Climate Action, and Green Life & Sustainable Use of Resources). It has 12 main programs and 31 sub-programs.
Later in June, the Emirates Green Development Council (EGDC) was established to coordinate and oversee the implementation of the Green Agenda and to ensure effective collaboration between federal and local governments. There are a total of 96 initiatives with 41 Green KPIs with Green Financing at its core.
An online questionnaire survey that was jointly developed by MoEW, the Central Bank of the UAE, and UNEP FI, consisting of 4 sections and 17 questions circulated among 455 financial institutions operating in the country during the summer of 2015, in cooperation with the Central Bank, the Insurance Authority, the Securities and Commodities Authority (SCA) and the Dubai Financial Services Authority (DFSA). 79 institutions responded (response rate: 17.4%) of which 60 (75.9%) were based out of the UAE.
Since no universal definition of green or sustainable finance exists, the ambit of the questionnaire broadened its scope to a more vague proposition that stated, “any of the financial institution’s practices supporting and facilitating sustainable development – whether it is for projects, businesses, industry, organizations, or general events and campaigns.”
The main areas for the current work on green financing are:
Green insurance is a lucrative option for investors. This is a type of insurance that helps to protect the environment and combat climate change in the best ways possible. Also known as eco-friendly insurance, it is an economic incentive to motivate behavioral change.
According to an earlier government report, 38 institutions offer green finance products, but it was also noted that the most impactful products had not yet been widely adopted.
Green Finance Products include but are not limited to, the promotion of renewable energies, energy efficiency, water sanitation, environmental audits. The reduction of transportation and industrial pollution, climate change, deforestation, and carbon footprint