Steady momentum, strategic shifts: Inside EMEA's sustainable finance landscape

Gulf Business

6 hours ago

Image: Supplied
In this interview with
Gulf Business
, Lina Abou Diab, EMEA Sustainable Fixed Income & Middle East Securities Lead at
From the resilience of green and social bond markets amid macroeconomic uncertainty to the growing prominence of Gulf issuers like Saudi Arabia and UAE's Omniyat, Diab highlights how policy, investor appetite, and long-term sustainability goals are shaping the region's fixed income strategies in 2025.
How would you summarise the state of the global and EMEA sustainable fixed income market as of Q1 2025? What are the most notable shifts compared to previous quarters?
The year's first quarter marked a steady start for global sustainable fixed income markets, with issuance volumes holding near the $300bn mark. While there was a slight decline compared to the previous quarter, mainly due to macroeconomic volatility, activity has generally remained solid and broadly aligned with recent trends.
In EMEA, green bonds continue to anchor the region's sustainable finance landscape. Climate remains and will continue to be a central focus, particularly as the energy transition faces increasing pressure from the rising power demands of AI.
The market is holding firm, but we are seeing a gradual shift in strategies as issuers and investors respond to this evolving dynamic.
In Q1 2025, we saw nearly $300bn in sustainable bond and loan issuances globally, despite a slight dip in volume. What key factors are driving investor resilience in this space, particularly in EMEA?
Investor resilience in EMEA stems from structural factors rather than short-term sentiment.
Regulatory support, long-term policy commitments, and market familiarity with green and social instruments continue to underpin demand. Green bonds lead overall market supply, but social bonds also gained traction, with $20.9bn issued in Q1. This suggests a broadening investor appetite for sustainability themes.
Green bonds continued to dominate GSS (
green, social, and sustainability
) issuances this quarter, with social bonds also seeing significant traction in EMEA. What does this shift in balance signal about the region's sustainability priorities?
In Q1 2025, both France and the Netherlands made significant contributions to the social bond market reflecting their commitment to addressing social challenges through sustainable finance instruments. Their issuances accounted for 45 per cent of social issuance in Q1 in EMEA. France's Caisse d'Amortissement (CADES) issued EUR2.6bn of social bonds focused on healthcare and social inclusion and UNIDEC issuing 2.18 bn focused on access to education and employment generation. This underscores France's approach to financing social initiatives.
In Netherlands, BNG Bank continued its support for social housing through its bond programs focusing on affordable housing with a similar size issuance of more than $2.5bn.
These bonds underscore the EMEA region's dedication to addressing social challenges through sustainable finance. These actions signal a strategic shift towards a more inclusive and comprehensive approach to sustainability, balancing environmental goals with social imperative.
The continued dominance of green bonds, which accounted for more than half of global GSS issuance in Q1, highlights that climate and environmental goals remain at the core of sustainability strategies in EMEA.
Countries and corporates in the region are prioritising decarbonization, renewable energy, energy efficiency, and green infrastructure, supported by government policy and market expectations.
Saudi Arabia topped the list of debut GSS bond issuers in Q1 2025 with $1.6bn in green bonds. How do you interpret the growing participation of Gulf economies in sustainable finance markets?
The surge in GSS activity from Gulf economies, led by Saudi Arabia in Q1 2025, reflects a deliberate strategy to diversify funding sources and signal greater alignment to global markets. The kingdom's inaugural sovereign green bond, part of a $1.5bn euro-denominated issuance, anchors its Green Financing Framework in high-profile environmental targets.
This move is not symbolic. It aligns with broader national development goals under Vision 2030 and demonstrates a growing readiness among Gulf issuers to compete in international capital markets on sustainability credentials.
The use of euro-denominated instruments also suggests an intent to broaden the investor base.
Your report highlights SDG 11 ('Sustainable Cities and Communities) as the most commonly referenced goal in GSS frameworks. Why do you think this SDG is leading, and what does this say about issuer strategy in 2025?
We see that issuers are prioritising SDG 11, with a particular focus on energy-efficiency infrastructure, in response to growing concerns over climate-related risks such as extreme heat and flooding, especially in urban areas. As cities continue to bear the brunt of climate disruptions, resilience and sustainability have become a top priority.
Rather than simply meeting disclosure requirements, issuers are using SDG 11 as a framework to future-proof assets and mitigate long-term operational risks. For example, UAE-based Omniyat's debut green bond targets environmentally sustainable real estate, a move that reflects both regulatory momentum and growing investor scrutiny on the real-world impact of GSS-labelled instruments.
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