UAE Sustainable Finance Agenda Moves From Frameworks to Execution

Key Takeaways

• From Frameworks to Execution: The UAE Sustainable Finance Working Group’s fourth statement signals a shift from policy design to practical implementation across financial markets.
• Governance Expectations Rising: Climate-related financial risks are being formally embedded into board oversight, strategy, and enterprise risk management.
• Disclosure Alignment: Sustainability disclosure principles aim to standardize ESG reporting and align UAE markets with international standards, including ISSB.
• Taxonomy Development Continues: The UAE Sustainable Finance Taxonomy is being shaped to balance domestic market needs with global interoperability.
• Transition Planning Takes Center Stage: Newly issued climate transition planning principles place clear accountability on boards and senior management to govern and disclose credible transition strategies.

Deep Dive

During Abu Dhabi Finance Week 2025, the UAE Sustainable Finance Working Group released its fourth statement, offering a look into how the country’s sustainable finance agenda is now moving from frameworks and into delivery. The update does not introduce a wholesale reset. Instead, it takes stock of what has already been built and focuses squarely on how those principles are beginning to shape real-world governance, disclosure, and financing decisions.

The statement reaffirms alignment with the UAE Green Agenda 2015–2030, the National Climate Change Plan 2017–2050, and the Net Zero by 2050 Strategic Initiative, while sitting alongside the ongoing rollout of the UAE’s Climate Change Law. Together, these are apart of a broader attempt to hardwire climate and sustainability considerations into the financial system, rather than treating them as parallel policy exercises.

The Working Group brings together financial regulators, ministries, and market authorities. In its fourth statement, it mapped progress across four pillars that now form the backbone of the UAE’s sustainable finance architecture.

On corporate governance, the focus remains on normalizing climate risk as a core financial risk. The Principles for Effective Management of Climate-Related Financial Risks, issued in November 2023, continue to serve as the reference point for embedding climate considerations into board oversight, strategy setting, and enterprise risk management. The aim is not to create a separate climate governance track, but to ensure climate risks are assessed and managed alongside credit, market, and operational risks.

Disclosure is another area where the emphasis has shifted from concept to consistency. The Sustainability Disclosure Principles for Reporting Entities, launched in 2024, are designed to bring greater clarity to how ESG information is reported across the market, at both entity and product levels. By aligning local disclosure practices with global benchmarks, including those developed by the International Sustainability Standards Board, the Working Group is seeking to reduce fragmentation and give investors clearer, more comparable information.

Work on the UAE Sustainable Finance Taxonomy has also continued, with an emphasis on balance. The taxonomy is being shaped to reflect domestic market realities while remaining interoperable with international frameworks. Building on general principles published in 2023, the approach includes a color-coded classification system and minimum social safeguards, signaling how economic activities align with sustainability objectives without cutting the UAE off from global capital markets.

The most substantive development in the fourth statement, however, is climate transition planning. Following a consultation earlier in 2025, the Working Group has now issued Climate Transition Planning Principles that spell out expectations for how financial institutions and corporates prepare, govern, and disclose their transition strategies. The principles place responsibility firmly with boards and senior management, and stress the importance of integrating transition planning into governance frameworks, scenario analysis, and risk management processes. Data quality, indicators, and credible assumptions are treated as central, not optional.

Senior officials used the fourth statement to underline that sustainable finance in the UAE is no longer a theoretical exercise, but an operational priority for regulators and markets alike.

Central Bank Governor H.E. Khaled Mohamed Balama said the update reflects the Central Bank’s role in embedding climate risk into governance and supervisory frameworks while maintaining financial stability, positioning the effort as part of a broader push to strengthen the resilience of the UAE’s financial system as it transitions toward Net Zero.

That shift from policy design to execution was echoed by H.E. Ahmed Jasim Al Zaabi, Chairman of the Abu Dhabi Department of Economic Development and ADGM, who framed the statement as evidence that regulatory clarity and sustained collaboration are now translating national climate objectives into practical expectations for financial institutions and investors.

From a fiscal and policy coordination standpoint, Ministry of Finance Undersecretary H.E. Younis Haji Al Khoori pointed to the Working Group’s role in aligning financial policy with the UAE’s long-term sustainability goals, emphasizing the importance of continued cross-government coordination to support an orderly and just transition.

Market regulators echoed that message. Securities and Commodities Authority CEO H.E. Waleed Saeed Al Awadhi said the transition principles give institutions and corporates a clearer path for aligning strategy with national climate ambitions, while strengthening governance and transparency. Mark Steward, Chief Executive of the Dubai Financial Services Authority, described the principles as a milestone in building credible transition finance and reinforcing market resilience within the DIFC.

The Working Group stated that the next phase will be less about issuing new statements and more about supporting implementation. Proportional regulation, international alignment, and ongoing consultation are expected to guide that process as the UAE works to embed climate and sustainability considerations into everyday financial decision-making rather than leaving them confined to policy documents.

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