The Middle East and North Africa’s sustainable finance market has moved from a niche sovereign-driven space into a bank-anchored, multi-sector capital engine led overwhelmingly by the UAE and Saudi Arabia, as issuance climbed to $35.1 billion in 2025 despite a challenging global funding environment.
According to Bloomberg Intelligence, the region’s sustainable finance volumes have expanded sevenfold since 2020, underlining how climate-linked capital has become structurally embedded in Gulf financial systems even as worldwide green bond issuance cooled amid higher interest rates and risk-off investor sentiment.
The report shows that while total issuance in 2025 was 18 per cent below the record set in 2023, the composition of the market has fundamentally shifted. Financial institutions now account for almost half of all Mena sustainable finance issuance, up from 32 per cent in 2020, marking a decisive move away from a model dominated by government and quasi-sovereign borrowers. This bank-led transformation is particularly visible in the UAE, where large lenders have turned sustainable finance into a core profit centre through green bonds, sustainability-linked loans and transition finance for energy-intensive sectors.
Saudi Arabia emerged as the region’s largest issuer by volume in 2025, raising $19.7 billion after the launch of its 2024 Green Financing Framework gave investors greater clarity on how capital would be allocated across renewables, clean transport, water management and energy efficiency.
The UAE, meanwhile, continues to anchor market depth and liquidity through its banks and corporate champions, making it the operational hub of sustainable finance in the region.
Green-labelled instruments dominated issuance, rising by 60 per cent to $25.8 billion in 2025, as capital flowed primarily into renewable energy, low-carbon infrastructure and water-efficiency projects. This aligns with wider regional investment trends. The International Energy Agency estimates that the Middle East needs to invest more than $100 billion a year by 2030 in clean energy and grid infrastructure to stay on track with net-zero pathways, while the World Bank has warned that water scarcity could shave up to 14 per cent off regional GDP by 2050 without large-scale efficiency upgrades. Sustainable finance is increasingly the bridge connecting these macro risks to investable projects.
UAE lenders such as First Abu Dhabi Bank and Emirates NBD have been at the forefront of this transition, underwriting and originating billions of dollars of green and sustainability-linked instruments across the Gulf, North Africa and South Asia. The UAE Banking Federation’s target of Dh1 trillion in sustainable finance by 2030 continues to provide a powerful growth anchor, and Bloomberg Intelligence estimates that banks are well positioned to capture a $2 trillion opportunity across renewables, water systems and low-carbon infrastructure over the coming decades.
For lenders, these products also offer attractive risk-adjusted returns, given the long-term contracted cash flows of solar parks, wind farms and desalination projects.
The rise of Saudi Arabia and the UAE is mirrored in broader capital-market data. The Climate Bonds Initiative shows that cumulative green, social and sustainability bond issuance from the Gulf Cooperation Council has crossed $150 billion since 2015, with the UAE and Saudi Arabia accounting for the majority. Meanwhile, S&P Global Ratings has noted that sustainable finance is becoming a “mainstream funding channel” for regional corporates, particularly in utilities, real estate and transport, as climate-linked disclosures improve and investor demand deepens.
Bloomberg Intelligence ESG analyst Grace Osborne said the easing in 2025 should be seen in context rather than as a reversal. “Mena’s sustainable finance market has matured rapidly over the past five years, driven by government initiatives, supportive regulations and increased investor demand. While issuance eased in 2025 in line with global trends, the shift toward bank-led and green-labelled financing reflects a more durable market structure well positioned for further growth. Saudi Arabia’s emergence as the largest issuer highlights how national frameworks and regulatory clarity can accelerate capital mobilisation at scale,” she said.
Regulatory momentum across the region is reinforcing this trajectory. The UAE, Saudi Arabia and Qatar are aligning their disclosure regimes with the International Sustainability Standards Board, while central banks are integrating climate stress testing and green-lending guidelines into prudential frameworks.
The next growth wave is likely to be driven by energy-hungry data centres, hydrogen projects and climate-resilient infrastructure as the Gulf accelerates its digital and industrial ambitions. With AI-driven data centres already becoming a major power and water consumer, investors are increasingly demanding that new capacity be built around renewable energy, efficient cooling and recycled water systems.
