Emirates NBD to expand sustainable finance offering

Reuters/Satish Kumar

• Services and finance linked to ESG
• Funds decarbonisation and social projects
• Global green sukuk grew 22% in Q2 2023

Dubai’s largest lender Emirates NBD plans to increase its provision of sustainable finance, including directly issuing green debt and other instruments to support social and environmental aims. 

The bank previously issued ESG-linked debt instruments via its investment banking arm, EmCap (Emirates NBD Capital), in 2019 for what it claims was the region’s first corporate green sukuk issuance, valued at $600 million.

On Wednesday, the bank launched a sustainable finance framework setting out its plan to expand its involvement in this area across all divisions, in both its regional and international markets. 

• Islamic finance tops $3.3trn but growth challenges remain
• Six UAE banks allocate $52bn for renewable projects
• GCC becoming a finance hub for global energy transition

“The new framework allows for the issuance of green and sustainable debt instruments to finance projects that enable the transition to a low carbon and climate-resilient economy,” Emirates NBD said in a statement. 

With investors placing an increasing importance on sustainability, the global ESG sukuk market grew 22 percent quarter-on-quarter in the second three months of this year, to $30.5 billion outstanding, according to a report by Fitch Ratings. 

ESG sukuk is expected to account for 7.5 percent of the total sukuk market over the next five years, up from 3.8 percent in the first half of 2023, Fitch added.

In particular, the Cop28 climate change conference, hosted by the UAE in a few months’ time, is expected to significantly boost interest in green sukuk in the sector’s core markets of the GCC, Malaysia and Turkey. 

Abu Dhabi Commercial Bank this week also launched a $650 million green bond, the proceeds of which will be used to finance eligible green assets as outlined in ADCB’s green bond framework.

Ports operator DP World has reportedly hired banks to help it issue its first dollar-denominated 10-year green sukuk.

Emcap’s current sustainable finance products and services offering includes structuring of green or social loans and syndication, sustainable bonds and green sukuks, as well as advisory, rating and ESG advisory.  

The new framework applies to all group entities, including Emirates NBD, Emirates Islamic, DenizBank and Emirates NBD Asset Management. 

It aims to encourage further lending and investments into assets with a positive environmental and social impact, and support the UAE’s target of reaching net zero by 2050, the bank said.

HSBC and ING were the sustainability structuring banks that helped Emirates NBD develop the framework.