Skip to content Skip to Search
Skip navigation

How banks are navigating fossil fuel financing

  • UAE banks increasing green finance
  • Finance a key Cop28 pillar
  • Data informs decisions

Banks are navigating a complex battleground over fossil fuel phase-out: deciding whether or not to fund companies in oil and gas and other high-emitting sectors, they told a Dubai event staged in parallel with the Cop28 summit. 

The chief executive of ING, the Netherlands’ biggest retail bank, said the company had stopped providing dedicated finance for “upstream” oil and gas field projects (involving exploration and extraction) as of last year. 

More recently, it expanded this approach by restricting finance to “midstream” activities – the infrastructure used to unlock new oil and gas fields, Steven van Rijswijk said. ING also aims to cut the volumes of traded oil and gas it finances. 

However, the bank has so far stopped short of curtailing all financing to oil and gas companies themselves. This would not reflect the reality of the global economy and current financial demand, the chief executive added. 

“Going green is not black and white,” van Rijswijk said. “At the end of the day, we need to finance society. And society is not yet green.”   

NatWest, too, has had to decide where high-emitting sectors sit within its company strategy, Maria Carvalho told the event on Monday organised by campaign and research group the Global Ethical Finance Initiative and Dubai International Financial Centre (DIFC).   

Like ING, the bank has decided not to finance new oil and gas projects. And when it comes to individual companies, it has adopted a nuanced approach based on analysis of individual decarbonisation strategies, Carvalho said. 

“We knew we needed to refocus our balance sheets, and this meant reviewing everything that has what we call a high [energy] transition risk to it,” she explained. 

“In some industries there are clear roadmaps that helped guide our decision making – for example the [International Energy Agency’s] target to phase out coal by 2030. For oil and gas, we need to look at what is happening globally – the picture is different.” 

NatWest has a target to be net zero by 2050 “across its financing emissions, assets under management and operational value chain,” it says. 

For these and other banks, “the importance of data in helping them make funding decisions cannot be underestimated,” said Naomi English, head of climate strategy at market index provider MSCI Group. 

“Ultimately, data is crucial in helping to unlock climate finance capital more generally.” 

Reform needed

Reforming climate finance is among the key pillars of Cop28. On Monday, summit president Sultan Al Jaber announced the creation of an Abu Dhabi think tank aimed at developing the financial frameworks to enable investment in low-carbon projects. 

The Global Climate Finance Centre is headquartered at Abu Dhabi Global Market (ADGM) and its nine founding members include ADGM, the World Bank, lackRock, Masdar, ADQ, HSBC and others. 

Meanwhile, the DIFC on Sunday launched what it described as a “centralised intelligence unit” focused on growing Dubai’s sustainable finance market. 

Through a portfolio of training programmes, events and roadshows, the Sustainable Finance Catalyst aims to grow the value of sustainable finance raised from the emirate to $100 billion by 2030.

AGBI revealed today that major national banks in the UAE – among them First Abu Dhabi Bank (FAB), Mashreq and Dubai Islamic Bank – have pledged to increase their green financing commitments to a collective AED1 trillion ($272 billion).

Latest articles

Saudi sport

Saudi sports push ‘winning global audiences’

Saudi sports investments are winning a global audience as the kingdom tries to overcome charges of “sport washing”, a major survey of media coverage said this month. Media analytics consultancy Carma found that coverage of human rights in Saudi Arabia fell in favour of “a sports-related narrative” around the world, including in the West. The […]

Knight Frank predicts that the value of the Saudi Arabia's construction projects will grow to $181.5 billion by the end of 2028

Riyadh dominates Saudi Arabia’s construction market

Riyadh and its surroundings account for nearly 40 percent of the value of existing construction contracts in Saudi Arabia, at US$54 billion, according to new research. The provinces of Mecca – which includes Jeddah – and Tabuk in the north of the kingdom follow the capital region, with $28.7 billion and $28.5 billion in awarded […]

'We need to be extra cautious, but... also opportunistic', says Bahrain FinTech Bay CEO Bader Sater about the country's approach to crypto

Bahrain remains cautious but crypto pursuit advances

Bahrain will not sacrifice its position as a trusted financial centre as it chases cryptocurrency millions, according to the boss of fintech incubator Bahrain FinTech Bay. Earlier this month the kingdom’s central bank gave BitOasis Bahrain, a regional crypto trading platform, a so-called Category 2 crypto-asset services licence. The regulatory approval means that the broker-dealer […]

A money exchange centre in Cairo. The World Bank funding is intended to support private sector growth in Egypt

World Bank’s $700m push for Egypt’s private sector

The World Bank will provide $700 million in funding to Egypt to address short-term economic challenges. The development policy financing (DPF) will aid in supporting the Egyptian government’s focus towards more private sector participation. The financing will further advance structural reforms to level the playing field to support private sector growth, build macroeconomic and fiscal […]