Today's Edition
MAYS IBRAHIM (ABU DHABI)
The Middle East’s sustainable bond market is expected to reach between $20 billion and $25 billion in 2026, driven by strong activity in the UAE and Saudi Arabia, according to a new report by S&P Global Ratings.
The region bucked global trends in 2025, as sustainable bond issuance rose about 3%, even as worldwide issuance fell by 21%.
This growth was fuelled by Gulf Cooperation Council (GCC) countries, offsetting declines in markets such as Türkiye, where issuance dropped sharply.
Green bonds dominated the market, making up 68% of sustainable issuance, while sustainable sukuk accounted for nearly half (46%) of total regional issuance, reaching a record $11.4 billion.
According to the report, more than 70% of regional sustainable issuance last year came from the UAE and Saudi Arabia.
Key areas of investment expected to remain are renewable energy, energy efficiency, green buildings, sustainable water management, and clean transportation.
“Energy companies such as Masdar in the UAE will likely continue issuing green bonds to help expand renewable portfolios and the transition from fossil fuels,” the report noted.
Saudi Arabia plans to commission the world’s largest green hydrogen project in Neom in 2026, powered entirely by solar, wind and energy storage.
The Middle East is also seeing the emergence of new financial instruments, including sustainability-linked loans (SLLBs) and blue bonds.
For example, Emirates NBD raised $1 billion in January 2026 through a combined blue and green bond issuance, targeting projects such as offshore wind, coral reef conservation, and flood-resilient infrastructure. These instruments are expected to diversify financing options and attract foreign investment.
The report also highlighted the region’s evolving regulatory and market frameworks, supporting the growth of sustainable finance.
The UAE Sustainable Finance Working Group is working on a national taxonomy, while Federal Decree Law No 11 (2024) mandates all entities to measure, report and cut greenhouse gas emissions by May 2026.
Saudi Arabia’s Capital Markets Authority has issued guidance on labeled debt instruments, meanwhile Türkiye is developing its own Green Taxonomy, aligned with EU standards.
These frameworks aim to standardise sustainable finance and increase transparency, although S&P noted that volumes still fall short of the region’s climate adaptation and resilience needs.
