ABU DHABI: Sustainable bond issuances in the Middle East hit $16.7 billion in the first nine months of 2024, according to a recent report by S&P Global Ratings titled “Sustainability Insights: Middle East Sustainable Bond Issuance Trends.”
This marks an 18 per cent drop compared with the same period last year, reflecting the ongoing challenge of implementing net-zero policies in the region.
While the decline highlights the complexities of aligning sustainability regulations and government initiatives, it also suggests room for further market growth as the region continues to push toward sustainability goals.
UAE, Saudi lead the pack
The UAE and Saudi Arabia remain at the forefront of the sustainable bond market in the Middle East, driven by their ambitious environmental policies and increasing investor interest in green and social projects.
Both nations have launched significant initiatives aimed at decarbonisation and achieving net-zero targets, such as the UAE’s Net Zero by 2050 Strategic Initiative and Saudi Arabia’s Vision 2030.
These programs foster a favorable environment for sustainable financing, enabling both nations to dominate the regional green bond market.
Qatar, Oman getting active
Despite the overall decline, other Gulf Cooperation Council (GCC) nations like Qatar and Oman have started showing more activity in the sector, contributing to the region’s growing sustainable finance landscape.
The momentum in the Middle East’s green bond market is likely to pick up as these countries refine their sustainability frameworks and attract more international investments aligned with ESG (Environmental, Social, and Governance) standards.
Core focus
As sustainability becomes a core focus in the region, key sectors such as renewable energy, infrastructure, and water management are expected to see heightened activity in green and sustainability-linked bond issuances.
This aligns with global efforts to address climate change, as well as the Middle East’s drive to diversify its economies away from oil dependence.
In the context of the GCC, especially the UAE, significant efforts are being made to increase green financing avenues. The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) have also supported this trend by promoting green finance frameworks, attracting global investors looking for sustainable opportunities in the region. The UAE is preparing to host COP28 in Dubai later this year, adding further momentum to the country’s sustainability agenda.
The report underscores that while the dip in issuance is notable, the increasing regulatory alignment with sustainability principles in the GCC, alongside large-scale projects in sectors like energy transition and green infrastructure, will continue to fuel long-term growth in sustainable financing across the region.
