Fitch: Saudi Arabia’s Green Financing Framework Facilitates Sustainable Funding

Saudi Arabia’s Green Financing Framework enhances trust among investors (SPA)
Saudi Arabia’s Green Financing Framework enhances trust among investors (SPA)
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Fitch: Saudi Arabia’s Green Financing Framework Facilitates Sustainable Funding

Saudi Arabia’s Green Financing Framework enhances trust among investors (SPA)
Saudi Arabia’s Green Financing Framework enhances trust among investors (SPA)

Bashar Al Natoor, global head of Islamic finance at Fitch, praised Saudi Arabia’s launch of its “Green Financing Framework” as a key move to support sustainable funding efforts and boost investor trust.

The Saudi Ministry of Finance introduced the Green Financing Framework on Thursday, outlining eight types of projects eligible for funding through green bonds.

These projects include support for clean transportation, renewable energy, and initiatives to help the kingdom adapt to climate change.

Under the framework, the government can sell green bonds for projects that meet set standards. These bonds will be issued by the Ministry of Finance, with oversight from two committees. They’ll handle sales and funding allocation for the projects.

According to Al Natoor, Saudi Arabia’s Green Financing Framework release is a big step towards smoother sustainable funding efforts, boosting trust among investors and stakeholders in environmental safety.

This move follows other efforts by Saudi Arabia to improve transparency and governance in the environmental sector, like setting up bodies such as the National Compliance Center for Environmental Affairs and the National Waste Management Center.

Al Natoor stressed that these steps are vital for enhancing the credibility of the Green Financing Framework.

He further explained that using sukuk to fund green projects adds depth to sustainable financing, appealing to Sharia-compliant investors while supporting environmental goals."

Following Islamic finance principles alongside green initiatives offers an attractive option for diverse investors, stressed Al Natoor.

Sukuk and Islamic finance are expected to play a crucial role in funding, as the Kingdom needs significant investments from both public and private sectors to fulfill climate commitments, he explained.

In 2023, sustainable governance-related sukuk notably grew, reaching $36.1 billion globally by year-end, revealed Al Natoor.

Fitch expects the market share of ESG-compliant sukuk to rise to over 7.5% from the current 4.3% by the end of 2023.

This growth could be driven by issuers diversifying funding to meet the needs of global investors focused on ESG, along with government sustainability efforts.

The Public Investment Fund (PIF) issued $5 billion in green bonds early last year, with strong demand indicating interest in such investments from Saudi Arabia.



Gold Edges Higher in Holiday Trade; Eyes on Fed's 2025 Plan

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
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Gold Edges Higher in Holiday Trade; Eyes on Fed's 2025 Plan

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo

Gold inched higher on Thursday in holiday-thinned trade, as investors focused on the US Federal Reserve's interest rate strategy and anticipated tariff policies under President-elect Donald Trump, both of which could influence the metal's direction in the coming year.

Spot gold rose 0.2% to $2,619.59 per ounce, as of 0023 GMT.

According to Reuters, bullion has surged approximately 27% so far this year, scaling multiple record highs, fueled by significant Fed rate cuts, including a jumbo reduction in September, and heightened geopolitical uncertainties.

Meanwhile, US gold futures steadied at $2,637.10.

In a holiday-curtailed week, trading volumes will likely thin out as the year-end approaches, and Markets are eyeing jobless claims data due later in the day, while preparing for major policy shifts, including tariffs, deregulation and tax changes, in 2025 as Trump returns to the White House in January.

On the geopolitical level, the Palestinian militant group Hamas and Israel traded blame on Wednesday over their failure to conclude a ceasefire agreement despite progress reported by both sides in past days.

Gold is considered a safe investment option during economic and geopolitical turmoil and tends to thrive in a low interest rate environment.