The Global Surge of ESG Investing

In Europe, Environmental Sustainable Growth (ESG) funds dominate new fund launches, while the U.S. sees ESG criteria becoming embedded into asset management practices. Meanwhile, Asia-Pacific’s ESG assets are forecasted to exceed $3 trillion by the end of 2025, showing rapid adoption even in emerging markets. This reflects mounting evidence that strong ESG credentials correlate with lower cost of capital, reduced risk, and resilient returns. ESG is mainstream, and it’s here to stay.

The UAE’s Strategic Alignment with ESG Goals

ESG principles now define the UAE’s national framework. Under its Net Zero 2050 Strategic Initiative — the MENA region’s first net-zero pledge — the nation has mapped out investments, policy reforms, and technology deployment to cut emissions and pivot its economy. Hosting COP28 in Dubai in late 2023 was a clear statement: the UAE is committed to a leading ESG role. The leadership of Abu Dhabi Global Market, the free economic zone, has rolled out ESG regulations that are among the most progressive in the region, including mandatory sustainability disclosures for listed companies.

The UAE is boldly charting the future of climate policy with Cabinet Resolution No. 2.67 of 2024, launching the National Register for Carbon Credits (NRCC). Effective December 28, 2024, this mandate compels entities to comply by June 28, this year, signaling a decisive step toward sustainability.

The facts back the UAE’s ESG path. Masdar, the UAE’s renewable energy entity, acquired a 745MW renewable energy portfolio from Brookfield for $1.4 billion in 2024. Meanwhile, private sector AI investments, which often align with ESG tech goals, are projected to add $91 billion to the UAE economy by 2031.

Why ESG is a Growth Engine for the UAE’s Financial Sector

ESG isn’t just a feel-good story for the UAE; it’s a growth engine for its financial sector. The UAE’s banks and asset managers are leaning in hard. Emirates NBD, one of the region’s largest banks, issued a $750 million green bond in 2024, part of a broader trend where Middle Eastern green bond issuance hit $8.5 billion last year.

These instruments aren’t just financing solar farms — they’re signaling to global investors that the UAE is open for sustainable business. The financial sector’s embrace of ESG is also about reputation. In a world where 63% of consumers globally say that they buy or advocate for brands based on their beliefs and values, with environmental and social responsibility being top drivers, the ESG agenda must be in focus for every company.

The UAE, specifically Abu Dhabi, is positioning itself at the forefront of carbon markets with the AirCarbon Exchange, ACX. This isn’t just talk; it’s the first fully regulated carbon trading exchange in the Middle East, leveraging blockchain for tokenized carbon credits. And here’s the kicker: ACX, this very exchange right here in the UAE, just snagged the Environmental Finance “Best Carbon Exchange” award for 2024.

Fintech and ESG: A Natural Synergy

Fintech’s data-driven agility, blockchain’s transparency, and AI’s analytics power combine perfectly with ESG goals. For example, startup companies like Alaan Pay, a UAE-based fintech platform, have introduced digital payment solutions that streamline corporate spend management, enabling businesses to transition to paperless transactions. This digital approach enhances efficiency and supports sustainability by reducing reliance on physical processes, embedding ESG principle (sustainability through reduced waste) into everyday commerce.

Coral, UAE-based climate-tech startup offering an AI-driven carbon management and offsetting platform, secured $3 million in seed investment round in September last year to scale its innovative solutions.

On April 30, Zand, a UAE-based player, is touting Dubai’s forward-thinking stance on digital asset regulation. Why does this matter? Because it opens the door to tokenization, turning Dubai into a major hub for tokenized real-world assets. Now, tokenizing these assets, these once cumbersome paper deals, allows for a surge in transaction volume without, crucially, derailing sustainability goals. Furthermore, the very act of tokenization itself? That’s a digital move that neatly aligns with implementing the ESG agenda right into the fabric of financial life.

Neobank Wio states that “the bank’s exceptional performance underscores the UAE’s progressive regulatory framework and national vision.” Wio, which caters to the financial needs of Small and Medium Enterprises (SMEs) in the UAE, streamlines processes through digital solutions that reduce paperwork. In doing so, Wio aligns its activities with the UAE’s aspirations to move towards Net Zero ecological neutrality.

Online brokerage firms and apps like Sarwa, a UAE-based robo-advisor, offer ESG-focused portfolios that let retail investors align their money with their values. The synergy is clear: fintech lowers the barriers to ESG investing, while ESG gives fintech a purpose-driven edge in a crowded market.

Challenges and the Road Ahead

Despite the momentum, significant challenges remain. The biggest? Data. There is a significant ongoing effort to procure and securely store ESG data on the blockchain. While I served as Chairman of the Board of Directors of Otkritie Broker (2017–2022) and as Senior Vice President of Otkritie Bank, I directed my team to properly handle ESG data. This has been especially important for our high-net-worth individual (HNWI) clients, who have highly valued the sustainable ESG corporate practices of Otkritie Broker and Otkritie Bank. We have also been open to providing detailed analyses of ESG data and to shedding light on the compliance of various investment activities in the market with these core principles.

Regulatory complexity is another hurdle. While the UAE’s regulations are forward-thinking, aligning with global standards like the EU’s SFDR or IFRS sustainability disclosures will require heavy lifting. The evolving regulatory landscape demands businesses to stay updated.

While fintechs and neobanks are agile, larger financial institutions sometimes struggle with the cost and complexity of integrating AI and blockchain-based ESG solutions. Traditional banks face integration costs and skill gaps in blockchain/AI, even as fintechs sprint ahead. Robust, AI- enabled data governance and third-party assurance will be key.

Looking forward, the UAE’s trajectory is compelling. From top-tier government to corporate boardrooms, a shared resolve drives progress toward a sustainable tomorrow. They are laser- focused on leveraging the absolute edge — fintech, blockchain, AI — to power some seriously ambitious development plans. It’s a deliberate strategy, and frankly, it’s grabbing attention.