Green Finance and Sustainable Development in MENA:
Over the past ten years, MENA regions have taken various steps to diversify their economies and make them more sustainable. Policies and actions have been taken to get more sectors to adopt sustainable structures and infrastructure. Also, governments have established an enabling environment to promote the growth of sustainable finance while implementing renewable energy sources.
In 2022, green and sustainable bonds and sukuk sold in the GCC were worth more than $8.5 billion. This is a huge increase from the $605 million issued in 2021. It also goes against the global trend since the number of green bonds and sukuk issued worldwide fell by 14% in 2022. Undoubtedly, sustainable finance is still making progress in the MENA region, as shown by the actions of several well-known banks and government-related organizations.
Green Finance And Sustainable Growth In MENA
Several forces are contributing to the region’s expanding green finance sector. Governments at all levels know the importance of preparing for the future by diversifying their economies into growing sectors like sustainability and green initiatives. Similarly, regional investors are looking to broaden their portfolios in these sectors. Additionally, there is a rising demand from people who want to incorporate environmentally friendly and sustainable practices into all of their current and future physical assets. In line with this and more, MENA is following the global trend of increasing interest in green investment and financing.
As the Thinkresearchandadvisory report explains, sustainable finance has experienced remarkable growth in the MENA region in recent years. This report summarizes the state of sustainable finance in the region and notes that the GCC region issued $10,030m in sustainable bonds in 2021. Though the report’s findings are positive, more work needs to be done before these countries’ sustainable finance approaches can be fully developed. Although some countries in the region have declared that they want to reduce their environmental impact, only the UAE, Egypt, and Morocco have put in place comprehensive Green Finance Strategies.
Creating a more conducive environment is crucial to the success of the field of Green Finance in the MENA region. Several factors will influence its direction, including national sustainability pledges, finance strategies, reporting standards, and financial disclosure of climate risk standards.
Takeaways
In the past few years, governments across MENA have taken steps to break away their economies from carbon-based industries and diversify their economies. They can accomplish much more by building on their strengths in renewable energy and using green finance. Current economic systems and processes are incompatible with long-term development goals. Thus, governments and organizations worldwide have adopted green finance as a strategic priority. Green financing can help the region quickly achieve its goals of economic diversification and job growth.
