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UAE’s early adoption of ESG practices yields environmental, economic benefits

UAE’s early adoption of ESG practices yields environmental, economic benefits
24 Nov 2023 10:15

HOSSAM ABDELNABY (ABU DHABI) - The UAE was early to realise the importance of adopting the best environmental, social, and corporate governance (ESG) practices to enhance sustainability and took pioneering steps in this direction in 2020 when the country launched the first-of-its-kind index to measure the commitment of companies listed in local markets to adopt the ESG responsibility standards.

Every day, local companies and institutions are becoming increasingly committed to ESG practices, with assessments from international and local institutions showing that Emirati companies are leading in this endeavour, as demonstrated by several companies winning important awards in the field.

Increasing Importance of ESG StandardsKhaled Mohamed Al Qubaisi, Chief Executive Officer of Abu Dhabi Energy Services (ADES), said that the importance of ESG standards has significantly increased, especially after the announcement that the UAE would host the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28), making companies more keen to comply with ESG standards.

To keep up with this trend, companies are developing, implementing, and financing projects to enhance the sustainability of electricity and water consumption in buildings and existing assets in Abu Dhabi emirate, Al Qubaisi said, emphasising the importance of these efforts in achieving tangible savings, reducing expenses, and improving the environmental footprint of all strategic sectors.

Al Qubaisi explained that ADES is responsible for implementing the building retrofit programme within Abu Dhabi’s strategy for demand-side management and rationalising energy consumption 2030, which targets achieving savings of up to 22% in electricity and 32% in water, in line with the UAE’s circular economy policy 2021-2023.

Consumer Preferences

Al Qubaisi noted that despite the long-standing importance of ESG practices at the business level, these practices are now fundamental aspects to be adopted in dealing with customers and other stakeholders in the evolving market landscape.

Sustainability practices will quickly reshape the concept of competitive advantage and will contribute to setting new standards that completely change entire economic sectors and create new waves of growth, he added. Banks have immense capabilities to enhance sustainable behaviours among clients and contribute to supporting the UAE’s ambitious sustainable development agenda.

ESG-related products provide banks with the ability to transform sector trends in line with the country’s vision for a more sustainable future. Recent ESG Steps Bal Krishen, Chairman and CEO of Century Financial, stated that the recent period witnessed the launch of several initiatives focusing on the active participation of the financial community in creating a strong,

ESG-enhancing business ecosystem in the region. One of the most important steps, he said, is appointing a sustainability manager to successfully launch and lead ESG initiatives, which will help the regional financial sector to take decisive and effective action for a carbon-free future.

Awards and Recognition

As UAE companies and institutions are increasingly implementing ESG practices, many have received global awards. Emirates NBD Bank announced that it had received the “Best Bank for Environmental, Social and Governance in the UAE” award at the Euromoney Awards for Excellence 2023.

The bank’s win came in recognition of its success in developing ESG measures, quickly launching green products, changing internal governance structures, and making prominent sustainable deals. The bank’s role in financing companies, including a $500 million green financing agreement and its participation in issuing the UAE’s first green sukuk, were significant reasons behind the win.


The award organisers also praised the bank’s contribution to reducing greenhouse gas emissions in its operations, as the bank recorded a decrease in internal emissions per employee. The bank also doubled the number of green car loans and increased the issuance of biometric-friendly cards by 75%.

Vijay Bains, Chief Sustainability Officer and Head of ESG for Emirates NBD Group, said that financing plays a key role in sustainability.

“Winning this prestigious award from Euromoney is a tangible proof of the bank’s efforts to lead the path of sustainable finance in the UAE,” Bains said, noting that through issuing sustainable financing instruments like bonds, sukuk, and other debt tools, the bank will help enhance transparency around financed projects and assets that carry environmental and social benefits.

Sharjah Islamic Bank was also recognized for its sustainability and social responsibility initiatives, receiving the Community Impact Medal (Silver Category) presented by the National Corporate Social Responsibility Fund. The Community Impact Medal is a national symbol of social responsibility to assess, accredit, and reward institutions’ social responsibility and sustainable impact practices, in line with ESG standards.

Furthermore, Emirates District Cooling (Emicool) received the Platinum Award in the Global ESG Awards for its prominent initiatives in conserving water resources. The Global ESG Awards annually honour leading companies at the forefront of promoting sustainable development. The awards are given to winners in various categories that align with the UN Sustainable Development Goals.

ESG Indices

To keep pace with the increasing interest of global investment institutions in ESG issues within investment decision-making factors, Dubai Financial Market launched the first-of-its-kind index for ESG responsibility several years ago. Supported and accredited by the Securities and Commodities Authority, it is the first index of its kind in the Emirati and Gulf financial markets to measure the adoption and commitment of publicly listed companies in local financial markets to ESG standards.

Abu Dhabi Islamic Bank has reported that its strategy for corporate ESG practices is starting to reap positive benefits. The bank’s rating from the global agency Standard & Poor’s has improved more than twofold, reaching 38 points in the ESG practices.

Furthermore, its rating by the globally leading rating agency Sustainalytics has improved from high risk to medium risk, placing the bank in a more advantageous position compared to its local and global peers. This strategy covers a wide range of areas and key objectives, including integrating ESG considerations into investment and financing decisions, finalising a sustainable financing framework, and reporting on the bank’s corporate ESG efforts, according to market requirements and legal requirements.

Honeywell (listed on the NASDAQ) has released the fifth edition of the Environmental Sustainability Index, in collaboration with Futurum Research Group. The quarterly index results show that 92% of the institutions covered by the study are preparing reports related to ESG responsibility, while 30% believe that this responsibility lies with the executives. Moreover, an increasing number of local and global companies are joining the stakeholder capitalism standards system issued by the World Economic Forum.

Over 100 global companies have joined this system, aimed at aligning performance reports with ESG indicators and continuously measuring their contributions against the UN SDGs.

Support for African Countries

As a part of ESG standards and in support of sustainability in the African continent, the UAE, in addition to UAE companies and institutions, for many years has financed and implemented renewable energy projects in several African countries.

The Abu Dhabi Fund for Development is one of the main arms executing the UAE’s plans and initiatives to enhance environmental sustainability and climate change adaptation efforts in Africa. The Fund’s renewable energy projects, including those implemented or financed by the Fund, have improved the living conditions of millions of people, and have helped reduce harmful emissions.

The fund’s projects in Africa include the Mohamed bin Zayed Solar Power Complex in the Republic of Togo, a hybrid energy project (solar and wind) in Cape Verde, and a photovoltaic solar power plant on Rumminville Island in Seychelles, a solar energy project in Mali, a photovoltaic solar power station project in Senegal, and similar projects in Sierra Leone, Egypt, Comoros, and Mauritania.

Additionally, the Abu Dhabi Future Energy Company (Masdar), a global leader in renewable energy, is continuing its ambitious strategy to expand clean energy projects in the African continent. During Abu Dhabi Sustainability Week 2023, agreements were signed with Angola, Uganda, and Zambia to develop renewable energy projects with a total capacity of 5 gigawatts.

Masdar also signed an agreement with Côte d’Ivoire to explore ways to develop a 70-megawatt solar power station. In 2022, the company signed an agreement to develop up to 2,000 megawatts of solar energy projects in Ethiopia, and in the same year, announced the signing of an agreement with Tanzania Electric Supply Company Limited to develop 2-gigawatt renewable energy projects.

Masdar also participated in a project for solar home systems for more than 1,000 Moroccan villages, and contributed to the creation and development of the largest wind power station in the Seychelles. To more comprehensively organise these efforts, the UAE’s Ministry of Foreign Affairs and International Cooperation announced in 2022 the launch of the “Etihad 7” programme to secure funding for renewable energy projects in Africa.

The programme collects funds from the public and private sectors to invest in clean energy, based on the UAE’s strong relations with African countries, and in support of the pivotal efforts the country is making towards the next decade of global sustainability. The programme aims to provide clean energy to 100 million residents of the African continent by 2035.


The UAE was early to realise the importance of adopting the best environmental, social, and corporate governance (ESG) practices to enhance sustainability and took pioneering steps in this direction in 2020 when the country launched the first-of-its-kind index to measure the commitment of companies listed in local markets to adopt the ESG responsibility standards.

Every day, local companies and institutions are becoming increasingly committed to ESG practices, with assessments from international and local institutions showing that Emirati companies are leading in this endeavour, as demonstrated by several companies winning important awards in the field.

Increasing Importance of ESG Standards

Khaled Mohamed Al Qubaisi, Chief Executive Officer of Abu Dhabi Energy Services (ADES), said that the importance of ESG standards has significantly increased, especially after the announcement that the UAE would host the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28), making companies more keen to comply with ESG standards.

To keep up with this trend, companies are developing, implementing, and financing projects to enhance the sustainability of electricity and water consumption in buildings and existing assets in Abu Dhabi emirate, Al Qubaisi said, emphasising the importance of these efforts in achieving tangible savings, reducing expenses, and improving the environmental footprint of all strategic sectors.

Al Qubaisi explained that ADES is responsible for implementing the building retrofit programme within Abu Dhabi's strategy for demand-side management and rationalising energy consumption 2030, which targets achieving savings of up to 22% in electricity and 32% in water, in line with the UAE's circular economy policy 2021-2023. Consumer Preferences

Al Qubaisi noted that despite the long-standing importance of ESG practices at the business level, these practices are now fundamental aspects to be adopted in dealing with customers and other stakeholders in the evolving market landscape.

Sustainability practices will quickly reshape the concept of competitive advantage and will contribute to setting new standards that completely change entire economic sectors and create new waves of growth, he added. Banks have immense capabilities to enhance sustainable behaviours among clients and contribute to supporting the UAE's ambitious sustainable development agenda.

ESG-related products provide banks with the ability to transform sector trends in line with the country's vision for a more sustainable future. Recent ESG Steps Bal Krishen, Chairman and CEO of Century Financial, stated that the recent period witnessed the launch of several initiatives focusing on the active participation of the financial community in creating a strong, ESG-enhancing business ecosystem in the region.

One of the most important steps, he said, is appointing a sustainability manager to successfully launch and lead ESG initiatives, which will help the regional financial sector to take decisive and effective action for a carbon-free future.

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