Let universities start taking up ‘green finance’ courses in a big way

Besides business and management, specialized courses in green finance should be part of the curriculum.
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With the UAE hosting COP28 in 2023 and pledging to become Zero Zero by 2050, the country is on the cusp of a changing landscape of sustainable growth. This phenomenon has pushed climate finance to the fore in political debates in the region to achieve the goals of the Paris Agreement, with universities becoming the instigators of transformation.

Climate finance is vital to effectively addressing climate change through adaptation and mitigation activities. The GCC countries have started to adopt green initiatives, paving the way for the development of a sustainable green finance sector. How can universities prepare graduates to develop skills to become more climate savvy for finance?

Climate finance needs to rise sharply to $5 trillion a year globally by 2030 to fund anti-crisis measures, according to industry leaders at the 2021 Global Manufacturing and Industrialization Summit held in Dubai. The sharp uptake of universities has seen a growing realization of their responsibility to prepare students – and society – to make an effective contribution to climate change mitigation and adaptation.

This role sees universities adopt and promote carbon neutral goals and practices across all degrees, particularly funding.

From business, finance and management to accounting degrees, universities teach students the importance of financial technology and environmental sustainable finance to make a difference in the environment. To increase climate finance flows, students must also be taught how strategies can increase public funds, integrate climate considerations into financial systems, provide adequate incentives while increasing investment opportunities, and reduce risks to private actors.

green growth

Environmental and climate finance has huge potential for the GCC countries, particularly through the introduction of renewable energy technology including solar and wind energy, green institutions, green bonds or sukuk, which are Shariah-compliant debt instruments in the region. These countries can benefit from developing sustainable finance, which can help them save money while reducing carbon emissions, conserving resources, and creating new jobs.

For example, the demand for energy in the United States has increased as a result of stable economic growth, which has led to a desire to protect energy export income in the future. Green growth technologies such as climate finance and sustainable development must become important economic policies in the GCC countries to fulfill these requirements, such as meeting current needs while ensuring future economic growth.

In Abu Dhabi, the 2030 Economic Strategy examines strategies to reduce the emirate’s dependence on oil while increasing the contribution of non-oil industries to GDP to 65 percent. According to Dubai’s Integrated Clean Energy Policy 2050, renewable energy will make up 75 percent of the city’s total generation mix by 2050, up from the current 35 percent.

These are the reasons that prompted the countries of the Gulf Cooperation Council, led by the United Arab Emirates, to invest in renewable energy sources, especially solar electricity, and it has already established itself as an active and expanding market in this field. By early 2020, the International Renewable Energy Agency estimates, nearly 7 gigawatts of additional renewable generation capacity will be available online worldwide.

All of these deals have the potential to be supported by green finance. However, the green bond market in the GCC is still in its infancy, despite the significant expansion over the past five years. National Bank of Abu Dhabi (now First Abu Dhabi Bank, after its merger with First Gulf Bank) issued the first and only green bond we saw in the region in March 2017, for a total of $587 million.

In addition, Abu Dhabi-based Masdar has raised $75 million through an Environmentally Friendly Revolving Credit Facility (RCF) to fund its environmental initiatives. There are no green sukuk issued by issuers in the GCC.

With so much activity in sustainable finance taking place across the region, this opens the door for students to access a larger pool of capital, while also inspiring them to think from broader perspectives.

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