In line with the nation’s Year of Sustainability, the ‘Principles for the Effective Management of Climate-related Financial Risks (‘the Principles’) were launched. The Principles were developed by the UAE Sustainable Finance Working Group (SFWG) and are a declaration of common understanding among the group members on the minimum standards for the management of climate-related financial risks for all financial sector entities operating in the UAE. The launch of these Principles reaffirms the UAE’s commitment to addressing climate change and pursuing a sustainable growth pathway.
On November 13, 2023, the Central Bank of the UAE (CBUAE) hosted an official ceremony with members of the SFWG to launch the Principles. The Principles were signed by H.E. Khaled Mohamed Balama, Governor of the Central Bank of the UAE; H.E. Ahmed Jasim Al Zaabi, Chairman of Abu Dhabi Global Market (ADGM); H.E. Dr Maryam Buti Al Suwaidi, CEO of the Securities and Commodities Authority (SCA); and H.E. Essa Kazim, Governor of Dubai International Financial Centre (DIFC). The launch of the Principles comes ahead of the UAE’s hosting of COP28, defining the expectations of the UAE regulators for the governance and risk management of climate-related financial risks by financial-sector entities operating in the UAE. A key area of focus within the Principles is that of oversight and allocation of responsibilities for these risks for all licensed financial institutions, and their integration into the strategy-setting process, the risk management framework, the capital and liquidity planning processes, and scenario analysis exercises.
In developing the Principles, the SFWG considered a number of international standards on the topic, undertook industry consultations and explored key areas of alignment to the global policy priorities set by the G20 Sustainable Finance Roadmap. The SFWG, which includes among its members the UAE Regulatory Authorities and relevant Federal Ministries, was established in 2019 to support the development of sustainable finance in the UAE and facilitate regulatory cooperation amongst the UAE authorities on practices and frameworks that can enable the finance sector to deliver on this goal. https://shorturl.at/iF247
Source: IBP