By 2030, per capita renewable water availability in the Mena region is expected to fall below 500 cubic metres per year —the threshold for absolute water scarcity. In fact, climate-related water shortages could lead to GDP losses of up to 14 per cent by 2050 .
While the region has made strides in embedding sustainability within corporate frameworks and leadership structures, financing the transition remains a roadblock. Addressing this challenge lies in implementing fundamental changes in how we power our economies and finance our future. The key question is: how do we mobilise capital to support a sustainable transformation?
Sustainable finance is reshaping markets, with green, social, and sustainability-linked bonds projected to exceed $1 trillion in issuances by 2025. For Mena, this transformation is both a challenge and an opportunity. The region is balancing a transition from oil dependence while building new resilient industries. Following the landmark commitments made at COP28, 70 per cent of Mena’s emissions are now covered by net-zero pledges – up from 60 per cent two years ago. Green investments are projected to contribute up to $2 trillion to regional GDP by 2030 , primarily through sectors such as renewable energy and sustainable infrastructure. For instance, the UAE alone has committed $270 billion to meet its environmental goals by 2030.
Economic benefits of the green transition
Some argue that green projects are too expensive, but global clean energy investments reached $2.1 trillion in 2024 — an 11 per cent increase from 2023 . These investments drive job creation and economic growth. Saudi Arabia’s NEOM project is expected to employ over 200,000 people by 2025, demonstrating how sustainability initiatives can also be economic catalysts.
Instead of hampering economic growth, the shift to renewables is attracting investors and diversifying economies. The Middle East is now the fastest-growing renewables market outside China. The UAE is investing $163 billion into renewables, targeting 44 per cent of its energy mix to come from clean sources by 2050. This transition not only enhances economic resilience but also strengthens investor confidence.
The current landscape of sustainable finance in the Mena region: progress and initiatives
Mena region has witnessed encouraging progress, with key initiatives underscoring its potential. Masdar’s Green Bond Program, for instance, has raised $1 billion through its second green bond issuance, financing renewable energy projects expected to mitigate 5.4 million tons of CO2 emissions annually. Egypt’s $750 million green bond issuance in 2020 marked a milestone, setting a benchmark for other nations, while Saudi Arabia’s PIF raised $3 billion in 2022 to finance clean energy and sustainable urban development projects.
Private-sector contributions are equally transformative. Mashreq’s involvement in sustainability-linked finance reflects how banks can drive meaningful change. For example, GEMS Education’s $3.25 billion sustainability-linked loan supports clean energy adoption and expanded scholarships for equitable education. Similarly, Mashreq’s financing for Chalhoub Group integrates ESG goals, linking carbon reduction, leadership diversity and sustainable supply chain practices. By setting ambitious yet achievable ESG targets, banks such as Mashreq enable companies to integrate sustainability into their core operations while fostering accountability.
Bridging challenges through policy and innovation
Despite these advancements, challenges persist. Limited ESG literacy and a lack of robust data frameworks hinder many companies from leveraging sustainable finance effectively. Governments and financial institutions must bridge these gaps through incentives and advisory support collaborations. Oman’s Vision 2040 exemplifies how sustainability can be embedded into economic diversification strategies, with banks financing projects such as the smart city, tailored to regional priorities.
Fintech is also emerging as a key enabler, facilitating carbon credit trading and pioneering green mortgage solutions. As sustainable finance evolves, collaboration between banks and fintech companies will unlock new opportunities for businesses and consumers alike.
The path forward: unlocking the potential of sustainable finance in Mena
Unlocking the full potential of sustainable finance in the Mena region requires a comprehensive approach that focuses on aligning policies, building capacity, and fostering regional collaboration. Governments must align regional policies with global frameworks to attract foreign investment in sustainable projects. For instance, initiatives such as the UAE’s Net Zero by 2050 Strategy can serve as a model for other nations, offering a clear roadmap for climate conscious developments.
Banks play an essential role in raising ESG awareness and equipping businesses to embed sustainability into their operations. Mashreq’s advisory on sustainability-linked loans, such as setting and monitoring KPIs, highlights how banks can guide businesses to achieve higher ESG standards and drive meaningful changes.
Collaboration is key. Joint ventures and cross-border partnerships will amplify impact, enabling nations to pool resources for large-scale green projects. Sustainable finance is no longer a choice but a necessity for economic resilience.
