The Dubai Financial Services Authority (DFSA) and the Hong Kong Monetary Authority (HKMA) announced today a partnership aimed at exploring how to further develop policy and regulatory responses to support and enable climate finance in the Middle East and Asia.

The global financial sector has a critical role to play in supporting long-term sustainable development and a successful and orderly transition to a low-carbon economy. At the heart of this effort are the Sustainable Development Goals (SDGs)of the UN 2030 Agenda for Sustainable Developmentand the global commitment made by nations in the Paris Agreementto reducing emissions of greenhouse gases, via well-managed decarbonisation efforts, for the purpose of limiting global temperature rises. In recent years, political ambitions, public policy and private capital have focused on driving and enabling this change.

The financial sector plays a key role in helping finance this economic transition through business and investment decisions, corporate leadership and stewardship, data and ratings transparency and support of research and innovation. This task relies on a significant understanding of sustainable finance and more specifically Environment, Social and Governance (ESG) issues and undertaking a variety of initiatives and actions to address them.

OUR APPROACH TO SUSTAINABLE FINANCE

In 2021, we launched our Sustainable Finance Roadmap 2021-2024, covering our supervisory remit and setting out how the DFSA intends to respond to the current and potential impact of ESG issues on the financial sector.

The milestones are for illustrative purposes only and in no specific order. Many of these elements are in the process of being shaped at the international and UAE level and progressing in parallel.

DFSA Sutainable Finance Roadmap

As we delivered our sustainable finance vision over the recent years, we focused on:
- Supporting the industry in an effective and pragmatic manner by listening to their perspectives and direct experiences, particularly through our Task Force on Sustainable Finance (TFSF);
- Playing a leadership role domestically by participating actively in developing the UAE sustainable finance policy, alongside other UAE regulators, government bodies and the COP28 team; and
- Demonstrating our commitment, through our international engagement, to strengthening the global ESG-focused regulatory context in which the financial sector operates.

Building on this work, our sustainable finance agenda will accelerate further in 2023 ahead of and after COP28, which will be hosted by the UAE in November in Dubai. We set out our areas of focus in the DFSA Business Plan 2023/2024, including embedding ESG considerations in corporate governance and risk management; defining the desired approach to corporate ESG disclosures and reporting; and paving the way for a potential UAE ESG taxonomy.

In this fast-moving space, the DFSA will also focus on our approach to ESG-related capital markets, including bond and sukuk markets, so that our guidance continues to meet the objectives of sufficient transparency, consumer protection and discouraging greenwashing, in line with evolving international standards.

As we deliver our priorities, we are working with the UAE Government, UAE regulators, industry and the wider stakeholder community to set robust and pragmatic regulatory frameworks that shape the UAE’s domestic approach to sustainable finance and position the UAE at the forefront of the discussion in the region and globally.