Sustainable Finance Is Key To Transforming The GCC’s Economic Future, KPMG-FAB Report Reveals

The Gulf Cooperation Council (GCC) is strategically using sustainable finance to diversify its economies and meet net-zero targets. A report by KPMG Lower Gulf and First Abu Dhabi Bank (FAB) highlights the importance of sustainable finance in economic growth, job creation, and diversification in the GCC. The report, titled ‘The Sustainable Finance Imperative’, was released during Abu Dhabi Sustainability Week.

According to the report, climate-smart investments could reach $23 trillion across emerging markets. These investments are reshaping the GCC's economic landscape. The focus on green investments is expected to add up to $2 trillion to the region's GDP by 2030, particularly in renewable energy and sustainable infrastructure sectors.

The UAE has committed $16.8 billion towards renewable energy projects. Green investments are projected to create over one million jobs by 2030. CEOs in the region are increasingly valuing ESG-driven strategies, with 56% anticipating significant returns from sustainability investments within five years. This shift indicates a change in corporate priorities towards long-term resilience.

FAB, the largest bank in the UAE, has already facilitated AED216 billion in sustainable financing projects. This accounts for 43% of its 2030 target of AED500 billion. The demand for ESG-focused financing is clear among clients, driving these initiatives forward.

Flagship projects like the Mohammed bin Rashid Al Maktoum Solar Park in the UAE and Saudi Arabia's NEOM Green Hydrogen project exemplify how sustainable finance supports large-scale developments. These projects demonstrate green finance's potential for achieving environmental and economic goals, positioning the GCC as a leader in global energy transition.

Sustainable finance also plays a crucial role in attracting foreign direct investment (FDI) and accelerating economic diversification. By aligning financial flows with national sustainability strategies, the GCC is establishing itself as a global leader in sustainable finance.

Opportunities for Diversification

Fadi Al Shihabi from KPMG Lower Gulf stated: "This report illustrates how sustainable finance is not only transforming the GCC’s economic landscape but is also creating critical opportunities for diversification and value creation." As the region moves towards a low-carbon economy, collaboration between financial institutions and policymakers is essential to leverage these opportunities for a more sustainable future.

The report underscores how financial instruments aid in integrating ESG principles across the GCC's transition. It highlights that sustainable projects will drive GDP growth and create substantial employment opportunities, especially in renewable energy and infrastructure sectors.

The findings come at a pivotal time as the region intensifies efforts to combat climate change and reduce carbon emissions. Sustainable finance is key to addressing global climate goals while fostering long-term resilience within the GCC.

With inputs from WAM