Faisal AlShimmari, Head of ESG and Corporate Strategy at Mashreq, highlights the importance of sustainable financing and the pivotal role banks can play in enabling a net-zero economy and shaping a more resilient future.
Climate change is among the most urgent challenges facing the world today, with wide-ranging consequences for the environment, societies, and global economies. Rising temperatures, extreme weather events, and sea-level rise increasingly threaten ecosystems and human livelihoods. Addressing the climate crisis and achieving net-zero ambitions demand coordinated global action, with closing the climate finance gap emerging as both a pressing priority and a powerful solution.
Sustainable finance as a catalyst for net zero
Despite growing awareness, current funding levels fall far short of what is required. Estimates show that only a small portion of global climate finance needs are currently being met, while achieving net-zero targets will require trillions of dollars in annual investment over the coming decades. The financing gap is particularly pronounced in developing regions, including parts of the Middle East and Africa, where adaptation and resilience needs represent a significant share of economic output.
Clean energy is a cornerstone of the net-zero transition, yet its research, development, and large-scale deployment remain capital-intensive. Meeting rising energy demand while reducing emissions will require sustained, long-term investment at unprecedented levels. While countries such as the UAE have committed substantial funding to clean energy and climate initiatives, independent assessments indicate that significantly more capital will be required to fully achieve national and global climate goals.
Closing this gap requires a comprehensive approach to sustainable finance that fully integrates environmental, social, and governance considerations into investment decisions. These considerations extend beyond emissions reduction to include biodiversity protection, pollution prevention, social inclusion, and the reduction of inequality.
Focusing on the social dimension of ESG is particularly important. Sustainable finance must ensure that vulnerable communities are not left behind in the transition. Innovative solutions such as microfinance and inclusive funding models can play a critical role in enabling equitable growth, redefining public-private partnerships, and encouraging investment in underserved sectors. Clear ESG frameworks and taxonomies are also essential to guide capital toward genuinely sustainable outcomes.
How banks can bridge the financing gap
Banks are uniquely positioned to help close the sustainable finance gap by placing climate and social priorities at the heart of their strategies and aligning their operations and portfolios with net-zero commitments. This includes expanding the use of sustainable finance instruments such as green and sustainable bonds, as well as embedding ESG principles into credit, investment, and risk frameworks.
At Mashreq, this commitment is reflected in the pledge to facilitate $30 billion in sustainable finance by 2030. The bank’s Climb2Change initiative brings together its ESG efforts, combining sustainable finance ambitions with targeted environmental and social impact programs to accelerate meaningful change.
Public-private collaboration is another critical enabler. Partnerships in areas such as renewable energy, water treatment, and climate-resilient infrastructure can significantly enhance long-term resilience. By working closely with governments and industry stakeholders, banks can help increase risk appetite for priority sectors and mobilize capital at scale.
Stronger alignment between national sustainability objectives and corporate ESG strategies can also reduce fragmentation and unlock greater impact. Initiatives that bring together government entities, financial institutions, and private-sector players help create shared frameworks, raise awareness, and support the sustainability journeys of organizations across the economy.
Looking ahead
Banks have a unique opportunity and responsibility to contribute to a more sustainable and inclusive future. By mobilizing sustainable finance, embedding responsible practices, investing in climate-positive projects, and helping close the financing gap, the banking sector can play a defining role in the transition to a net-zero economy.
Through sustained commitment and collaboration, financial institutions can help build a greener, more resilient world—one that balances economic growth with environmental stewardship and social progress.
