Abu Dhabi Global Market (ADGM) has announced the implementation of its sustainable finance regulatory framework, following significant support received through public consultation, reinforcing its position as a leading sustainable hub for sustainable finance activities.
The framework encompasses rules on sustainability-orientated investment funds, managed portfolios and bonds as well as requirements for environmental, social and governance (ESG) disclosures by ADGM companies.
The measures will accelerate the growth of a sustainable finance ecosystem in the jurisdiction and support the UAE’s transition to net zero greenhouse gas emissions.
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The framework for green and climate transition funds and portfolios, green and sustainability-linked bonds and sukuks is a significant step in enabling capital to be channeled towards financing the transition to net zero.
H.E Dr Sultan Al Jaber, President Designate of COP28 UAE said: “I warmly welcome ADGM’s regulatory framework for sustainable finance.
"The lack of available, accessible, affordable finance is putting the world’s climate goals and sustainable development at risk and addressing this issue is one of the top priorities of the COP28 Presidency. To make transformational progress, we need to shift gears in mobilizing private finance.
"This initiative will play a vital role in mobilizing capital for the transition to net zero not only in the UAE, but also in EMDEs, and will enable increased green transactions from local and global financial institutions.
“I also welcome the ongoing work of the Sustainable Finance Working Group, chaired by ADGM and composed of UAE regulatory authorities, Federal Ministries and exchanges.
"These initiatives encompass joint efforts to advance frameworks for ESG disclosures, measures to require sustainability-focused corporate governance and the development of a UAE green taxonomy.
“Finance is the key to turn good intentions into real results. The Paris Climate Agreement set our collective ambition, and we need initiatives such as ADGM’s Sustainable Finance Regulatory Framework to help us keep 1.5C within reach.”
H.E Ahmed Jasim Al Zaabi, Chairman of Abu Dhabi Global Market said: “We believe our regulatory framework for sustainable finance is the most comprehensive in the Middle East and South Asia region, and comparable in scope and content with the most comprehensive regulatory frameworks globally.”
The new sustainable finance regulatory framework is further supported by several ongoing initiatives of ADGM such as the Abu Dhabi Sustainable Finance Declaration which has over 100 signatories, and the School of Sustainable Finance at the ADGM Academy.
ADGM Financial Services Regulatory Authority’s regulatory amendment to the capital markets framework (in 2022), introduced an environmental instrument as a class of financial instrument, allowing carbon offsets to come under its regulatory framework and AirCarbon Exchange.
These strategic endeavours, combined with a regulatory framework for sustainability-focused funds, portfolios, bonds and sukuks, as well as requirements for ESG disclosure and the regulation of carbon offsets distinguish ADGM as a premier hub for sustainable finance.
Read More: How ESG Investing made Sustainable Finance Mainstream