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Sustainable finance offers $75bn investment opportunity by 2030

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Measures to cut greenhouse gas emissions, launching a number of sustainability-related products, and the various measures introduced by the government and the private sector in Qatar under sustainable finance present an investment opportunity of at least $75bn by 2030, a report on ‘Road to ESG Investing Financing Sustainable Growth in Qatar’ by Invest Qatar stated.

Sustainable finance in Qatar has a huge potential, both from the supply side and demand side.

Qatar’s supply of sustainable finance reached a new height with the launch of the first-ever green bond of $600m by Qatar National Bank (QNB) in 2020, the report stated noting that financial institutions are also launching multiple sustainability-related products for retail customers, such as green car loans and green mortgage home loans by Doha Bank. Moreover, Qatar has set a target to reduce its greenhouse gas (GHG) emissions by 25 percent from the business-as-usual scenario by 2030.

Qatar Energy is committed to zero routine flaring by 2030, along with a long-term goal to reduce flaring in onshore facilities to the absolute minimum.

To tap into these immense opportunities, the Investment Promotion Agency (IPA Qatar) is making a concerted effort through a range of approaches for businesses – from providing a platform to accessing government incentives, helping them find the right business partners, and reducing information asymmetries and other investment barriers, it stated.

IPA Qatar acts as a gateway for investors to get access to key stakeholders – regulators, lawmakers, supervisors, financial institutions, large corporations, SMEs, NGOs, and universities that have been playing a crucial role in sustainable development.

The recent milestones achieved by the nation have been made possible by these different entities working in tandem with each other to achieve a common goal and vision. Sustainable finance is a new concept whose meaning is still evolving.

The European Commission, which has been one of the frontrunners in the climate change and sustainability agenda, defines sustainable finance as – the process of taking environmental, social, and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects.

Investors are increasingly applying these non-financial ESG factors as part of their analysis process to identify material risks and growth opportunities. However, there is no single exhaustive list of ESG examples. Moreover, ESG factors are often interlinked, and it can be challenging to classify an ESG issue as only an environmental, social, or governance issue, the report notes.

Sustainable finance is an emerging area that is rapidly gaining traction around the world.

Even though the definition of the term is still evolving, it is most succinctly defined as the process of taking environmental, social, and governance considerations into account when making financial investment decisions.

The emerging international consensus on sustainability with the adoption of the UN SDGs and Paris Agreement in 2015, in addition to the 2021 United Nations Climate Change Conference (COP26 Summit), has brought the importance of sustainable finance to the forefront.

Its most critical areas include green financing, climate financing, and financing aimed at improving social indicators and governance outcomes. Businesses and industries are adopting green initiatives with various goals – ranging from ambitious carbon neutrality objectives to disclosure of their ESG initiatives to the shareholders.

These have led to the burgeoning of sustainable finance instruments, such as ESG bonds, green bonds, and climate funds in the last few years.

Source and image credit: The Peninsula.