ADGM Launches Comprehensive Sustainable Finance Regulatory Framework to Propel UAE’s Net Zero Ambition

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Abu Dhabi Global Market (ADGM) has implemented its sustainable finance regulatory framework today, marking an essential step towards accelerating the UAE’s transition to net-zero greenhouse gas emissions. This framework comprises a broad range of environmental, social, and governance (ESG) disclosure requirements, as well as a regulatory system for sustainable funds, managed portfolios, bonds, and sukuks.

ADGM’s latest initiative harmonizes with the existing regulation of carbon offsets, contributing to the creation of the world’s first regulated carbon offsets exchange and clearing house in the region. This suite of actions underscores ADGM’s status as a front-runner in sustainable finance this year as the UAE prepares to host the 28th annual Conference of Parties (COP28).

The implementation of this framework, effective immediately, highlights the urgency of forwarding the green agenda in Abu Dhabi, the UAE, and around the world.

The sustainable finance regulatory framework, supported by robust public consultation, facilitates ADGM’s position as a natural base for sustainable finance operations. This platform addresses the rules for sustainable investment funds, managed portfolios, and bonds, and also includes ESG disclosure requirements for ADGM-registered companies. As such, the system is expected to foster the growth of a sustainable finance ecosystem and aid the UAE in achieving net zero emissions.

The infrastructure for green funds, portfolios, and bonds, coupled with sustainability-linked sukuks, represents a notable stride towards steering capital to fund the transition to net zero. ADGM will grant designations to compliant products and services, which can then utilize the ADGM “designation mark” in their promotional materials and customer communications. This seal of approval aims to instill investor confidence and stimulate further capital flow into the green transition.

Following the announcement, a feedback statement was issued, reflecting the constructive insights received and addressing the key points raised during the consultation phase. The overwhelming industry backing, including stakeholders who plan to launch products under the new framework, solidified ADGM’s decision to proceed with one of the region’s most holistic sustainable finance frameworks.

The feedback statement indicated that the industry’s involvement not only helped to mold the implemented framework, but also provided a clear insight into the areas that will be examined in a post-implementation review scheduled for 2025. As part of its commitment to constant development, ADGM will continue to rely on its stakeholders to shape its ecosystem into a world-class hub for sustainable finance.

His Excellency Dr. Sultan Al Jaber, President Designate of COP28 UAE, expressed his support, stating, “The lack of available, accessible, affordable finance is putting the world’s climate goals and sustainable development at risk. ADGM’s regulatory framework for sustainable finance is highly commendable and will play a vital role in mobilizing capital for the transition to net zero not only in the UAE, but also in EMDEs.”

His Excellency Ahmed Jasim Al Zaabi, Chairman of Abu Dhabi Global Market, added, “In the year that the UAE is hosting COP28, ADGM proudly aligns its actions with those of the country’s leadership. Our regulatory framework for sustainable finance is the most comprehensive in the Middle East and South Asia region.”

Ongoing initiatives by ADGM, such as the Abu Dhabi Sustainable Finance Declaration, the School of Sustainable Finance at the ADGM Academy, and the regulatory amendment allowing carbon offsets to come under its regulatory framework, strengthen the newly established sustainable finance regulatory framework. With these measures, ADGM distinguishes itself as a leading hub for sustainable finance.

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