Saudi Arabia on Monday unveiled proposals for making financial institutions compatible with sustainable development and expand the scope of sustainable finance as part of the Kingdom’s plans for issuing green bonds.
Building the sustainable financial system for Saudi Arabia is a strategic step within the goals of Vision 2030 towards sustainability and commitment to the concept of environmental, social, and corporate governance (ESG) and its implications for the global financial system, Minister of Finance, Mohammed Al-Jadaan, said in the closing speech of the first session of the Financial Sector Conference.
On behalf of Al-Jadaan, Assistant Minister of Finance for Macro Fiscal Policies and International Relations, Abdulaziz Alrasheed, said that the announcement by Crown Prince Mohammed bin Salman about the Saudi Green Initiative Forum (SGI) and Middle East Green Initiative Summit (MGI) clearly showed the environmental protection’s roadmap.
More details will be announced later, he noted.
Renewable energy is at the heart of the energy requirements of mega projects, in addition to the efficiency and accuracy driven by advanced technology applications; that will attract sustainable financing.
He pointed out that The Red Sea Development Co. is a clear example, as it will secure a loan of about SAR 14.12 billion and will be the first “green finance through credit facilities”.
“We implemented sustainable and innovative financial solutions to design the environment in a way that does not require, for example, paying companies to renovate lighting or air-conditioning units in schools, hospitals, and government buildings, but rather a percentage of energy savings is shared,” Al-Jadaan said.
“We see a return in capital expenditures in a period not exceeding 20 months, after we have implemented the latest technologies in the water desalination field due to the improvement in energy efficiency,” he further continued.
“We are fully aware that the journey is still long, and that there are many things that must be done. Accordingly, the government pledges to redouble its efforts to fulfill its promises and actions that it recently announced,” the minister noted.
He confirmed total commitment to work with governments and businesses around the world in order to provide citizens and future generations, and the world at large, with a more sustainable economy.
The Kingdom is determined to lead through a sustainable economy based on the ESG concepts and their implications for the global financial system and sustainable financing.
Over the past few years, the efforts made by Saudi Arabia towards sustainability came at the top of the priorities of Vision 2030’s policies and agenda.
The Kingdom has dealt with the sustainability issue not only directly but also indirectly through the capital markets. Al-Jadaan believes that the financial sector is one of the main enablers to enhance the Kingdom’s efforts to achieve the country’s goals towards sustainability.
“We reviewed our strategy and commitments to include sustainability as the main goal during the overall development of the Saudi financial system,” the minister said.
“We launched the Environmental, Social, and Corporate Governance and its Implications on the Global Financial System initiative and the Financial Sustainability in the Kingdom initiative, with the aim of providing the financial sector with the necessary tools to enhance and strengthen the Kingdom’s capabilities in the financing and investment sustainability field,” Al-Jadaan concluded.