The inaugural ESG Majlis Dubai series event, delivered in partnership with PwC was themed “UAE COP28 Legacy: from Finance Sector Opportunities to Economic Sustainability”.

ESG Majlis Dubai

Following the success of its Path to COP28 campaign, GEFI, in partnership with PwC Middle East, has launched a pioneering ESG Majlis Dubai series. The series aims to convene financial leaders and senior financial services stakeholders for practically focused discussions on key regional ESG opportunities and challenges.

The inaugural ESG Majlis Dubai session took place at the PwC Middle East office in Dubai on Tuesday 5th March 2024. Almost 100 days on from COP28, the session presented a timely opportunity to reflect on the UN Climate Summit and consider the emerging commercial opportunities for banks as well as the potential for creating a new sustainable economy in the UAE.

The Majlis was attended by senior representatives from Commercial Bank of Dubai, Emirates NBD, HSBC, ING, Intesa Sanpaolo, London Stock Exchange Group, Mashreq, UAE Ministry of Economy, National Bank of Fujairah, National CSR Fund, Nuqi Capital, Sharjah Islamic Bank and Zurich Insurance.

Key discussion points that were covered during the lively and engaging session have been summarised below.

Maintaining Momentum After COP28

The opening remarks noted the considerable increase in climate-related regulations and transactions in the UAE since COP28. The hosting of COP28 in Dubai has helped to catalyse local action, with greater interest now being placed on international frameworks.

The need for clarity and cooperation, particularly between institutions and regulators, was highlighted as a critical success factor as the local finance sector navigates the journey from commitment to action.

Strong leadership and integrating sustainability into the organisational culture is a pre-requisite for financial institutions to play a meaningful role in the transition to a green economy.

A New Paradigm for Financial Services

Evolving from a traditional to a sustainable finance model is not easy. It requires institutions to take action to align their core strategy, decision-making, lending and investment with the UN Sustainable Development Goals, and international agreements such as the Paris Climate Agreement.

Financial institutions in the UAE are therefore increasingly looking for ways to reduce their climate-risk exposure, take their operations to net-zero carbon emissions, and develop new sustainability-related products.

The discussion coalesced around three key challenges:

  1. Pricing risk in unfamiliar financial endeavours
  2. Navigating the complexities of impact measurement and reporting
  3. Integrating green finance principles within institutions.

To drive the sustainable finance agenda forward at the sector, rather than institutional, level, an analogy between historical communal parliament gatherings and the contemporary realm of green finance, was made. This was to reinforce the importance of community and place in delivering collective impact. As a leading business centre, with a strong financial services ecosystem, Dubai is well positioned to become a global hub for sustainable finance fundraising, leadership, innovation, and capacity building.

This discussion concluded with a banking anecdote around a community development project in New York, which showcased the transformative power of unconventional thinking and community engagement, to deliver social impact without compromising financial performance.

Driving Sustainability Demand

There was a consensus that banks are well-placed to engage with customers about sustainability. An example was shared of a survey that was distributed to elicit customer interest levels in calculating their carbon footprint from transactions.

To drive market demand at scale, consideration was given to the feasibility of banks conducting syndicated, market-wide customer surveys that, for example, could gauge customer interests, attitudes, and behaviours in relation to sustainability. This could help inform product development, pricing, and marketing strategies.

As well as bottom-up initiatives, such as marketing campaigns, there was agreement that top-down policy interventions would help to expedite demand for sustainable finance products.

Sustainable Development in the UAE Real Estate Sector

Aa part of a wider shift towards sustainability, a deeper dive of UAE’s real estate sector highlighted the recent focus on eco-conscious development projects and energy efficiency improvement initiatives.

A deeper dive of UAE’s real estate sector highlighted the recent focus on eco-conscious development practices and energy efficiency, witnessing a remarkable shift towards sustainability. Whilst interest in sustainable real estate is growing, progress has been inhibited by fragmented regulations and a general lack of knowledge around developing and delivering best practice approaches.

The need for reskilling, financial incentives, and policy changes to foster sustainable development were proposed as solutions to drive the sustainable real estate sector forward in the UAE.

Summary

In summary, the first ESG Majlis provided a safe space for experts to discuss the complexities and opportunities in delivering a positive COP28 legacy for Dubai and the UAE. The key takeaways from the wide-ranging discussions include:

  • COP28 has helped to catalyse local action within the financial services sector
  • Embracing sustainable finance requires strong leadership and the creation of an enabling organisational culture
  • Collaboration is key – institutions should work more closely together and with the regulators
  • Challenges to overcome include pricing risk, measurement and reporting
  • Driving demand requires a two-pronged approach – engaging customers and policy interventions
  • The decarbonising of the real estate sector has started but there is more work to be done.

Looking ahead, the next ESG Majlis Dubai round table with PwC Middle East WILL take place in May 2024 and, based on feedback from the first session, it is likely to take a more detailed look at the decarbonising real estate topic.

In the meantime, please click here to read valuable insights and reports from PwC Middle East in sustainable finance: https://www.strategyand.pwc.com/m1/en/thought-leadership-strategy/reports.html

If you are interested in getting involved please contact angus@globalethicalfinance.com