Analysis

The ADGM has published a Consultation Paper on a proposed comprehensive Sustainable Finance Regulatory Framework, covering rules on sustainability-orientated investment funds, managed portfolios and bonds, and a framework on environmental disclosures by ADGM companies.

Details

The aim is to enable accelerated growth of a sustainable finance ecosystem in the jurisdiction and support the UAE’s transition to net zero greenhouse gas emissions.

This proposed, comprehensive regulatory framework will build upon ADGM’s efforts to foster a vibrant and thriving sustainable finance hub within its jurisdiction. The proposed framework will establish minimum standards for a wide range of sustainability-orientated investment products and services to facilitate this. ADGM believes that setting such standards will help to nurture transparency and investor confidence in the green credentials of those products and services and advance ADGM’s drive to become a leading centre of sustainable finance.

The proposals encompass:

• The region’s first regulatory framework for green investment funds to channel capital towards environmentally sustainable activities.
• An innovative regulatory framework for climate transition investment funds to channel capital to assets and entities on a path to reducing their greenhouse gas emissions.
• A regulatory framework for green and climate transition discretionary portfolio management services.
• A regulatory framework for green bonds and sustainability-linked bonds offered in ADGM.
• Building upon ADGM’s existing disclosure requirements to create the region’s most comprehensive environmental, social and governance (ESG) disclosures framework, to now cover disclosure by listed companies, regulated financial services firms and large private commercial entities.

In addition to proposing a framework for companies to undertake ESG disclosures, It is also in the process of facilitating through its regulatory framework the establishment of the world’s first regulated voluntary carbon exchange and clearing house, where carbon offsets (Environmental Instruments), while traded and settled as Spot Commodities, are treated as regulated Financial Instruments within ADGM.

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