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On Thursday, the Financial Services Regulatory Authority of the Abu Dhabi Global Market published an advisory paper on proposals to formulate a comprehensive regulatory framework for sustainable finance, including rules for funds oriented towards investing in sustainable activities, portfolio management and bonds, as well as formulating a framework on the disclosure of environmental information by companies operating in Abu Dhabi Global Market.
The advisory paper aims to stimulate the growth of the sustainable finance system in the Abu Dhabi Global Market and support the efforts of the United Arab Emirates to achieve climate neutrality to reduce carbon emissions. The proposed comprehensive regulatory framework comes to complement the efforts of the Abu Dhabi Global Market to strengthen its position as a center for sustainable finance within its jurisdiction. In line with its role to develop a vibrant community of sustainable finance and to contribute significantly to directing capital towards economic activities that help reduce carbon emissions at the local and global levels. Accordingly, the proposed principles of the regulatory framework will establish basic and specific criteria for a range of investment products and financial services geared towards investing in sustainable activities. ADGM believes that setting such basic standards will help enhance investor confidence in “green certifications” for products and services, and enhance ADGM’s leading role as a global center for sustainable finance.
Proposals
The proposal includes a comprehensive regulatory framework: the first-of-its-kind regulatory framework in the region for “green” investment funds to help direct capital towards environmentally sustainable activities. and an innovative regulatory framework for climate investment funds, helping direct capital to assets that seek to go green to reduce their carbon footprint. As well as a regulatory framework for discretionary portfolio management services in environmental and climate transformation.
and a regulatory framework for green bonds and sustainability-related bonds issued in the market. And the development of the current disclosure requirements in the market to develop a more comprehensive regulatory framework at the regional level to disclose the extent to which the principles of environmental, social and institutional governance are applied by listed companies, financial services companies subject to the supervision of the Abu Dhabi Global Market and major private commercial entities.
In addition to introducing a regulatory framework for companies to disclose the extent of their commitment to the principles of environmental, social and corporate governance, ADGM is setting an example among its peers from other global centers with being the world’s first carbon-neutral international financial center. The market also works through its regulatory framework to provide the world’s first exchange for voluntary exchange and reduction of carbon emissions (environmental instruments), where they are traded and settled as spot commodities as regulated financial instruments within the Abu Dhabi Global Market.
In this way, the Abu Dhabi Global Market will provide the appropriate framework for the development of a vital ecosystem for companies concerned with the environment and that consider sustainability as a primary destination for their business models, such as disclosure of their environmental, social and institutional data and taking measures to reduce carbon emissions.
strategic priority
Ahmed Jassim Al Zaabi, Chairman of ADGM, said: “Sustainable finance is a strategic priority and a sector of special focus for ADGM, as we seek to contribute to advancing the UAE’s efforts towards achieving carbon neutral goals and its readiness to host the United Nations Climate Summit.” COP28” in 2023. Thanks to the Abu Dhabi Global Market providing the necessary resources to strengthen the sustainable financing system, today we see the fruitful results of our efforts, with the establishment of investment funds focused on sustainability and working towards the launch of the first regulated carbon exchange in the world.”
Al Zaabi added: “The issuance of this first-of-its-kind regulatory framework will cement our position as a center for sustainable finance in the Middle East, Africa and South Asia region, by issuing an internationally recognized regulatory framework and our presence in close proximity to some of the world’s largest sovereign wealth funds, investment institutions and private wealth. The Abu Dhabi Global Market has all the potentials to be a center for financial products and services that will have a positive impact on the efforts of the United Arab Emirates and the world to achieve the goal of completely reducing carbon emissions.”
