Emerging markets need 350 trillion dirhams of investment
Standard Chartered: 2.5 trillion dirhams, the requirements for climate neutrality financing in the UAE
The UAE announced a strategic initiative to achieve climate neutrality by 2050. Archive
Rola Abu Mneh: "The UAE has a leading position, and it is well positioned to take advantage of the economic opportunities offered by the climate-neutral path."
picture
Standard Chartered Bank announced yesterday the launch of a study entitled “Just in Time”, which it recently conducted to measure the financing requirements required for the transition to climate neutrality in emerging markets, and how to finance them. The study revealed that the financing requirements in the United Arab Emirates The United States is estimated at 2.5 trillion dirhams (671.1 billion US dollars) for the transition to climate neutrality.
The study found that if the financing required for the transition to climate neutrality were provided from developed markets, household spending in the UAE could rise by two trillion dirhams ($551.2 billion) compared to self-financing, and if emerging markets financed their transition to climate neutrality themselves, without any help from In developed markets, household spending in these markets may decline by an average of 5% each year.
The UAE government had previously announced, in the presence of His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, at the UAE pavilion at Expo 2020 Dubai, the UAE's strategic initiative to achieve climate neutrality by 2050, which is the culmination of For the Emirati efforts aimed at contributing positively to the issue of climate change, and working to transform challenges in this sector into opportunities that guarantee a bright future for future generations.
Funding Gap
While the value of the investment required to transition to climate neutrality in the UAE amounts to 2.5 trillion dirhams, the study reveals that emerging markets as a whole need an additional investment of 350 trillion dirhams ($94.8 trillion) to move to climate neutrality, an amount higher than the global GDP. Annually, at a time when there is an urgent need to meet long-term global warming goals.
This is in addition to the capital already allocated by governments under their current climate policies.
Private sector investors can contribute more than 300 trillion dirhams ($83 trillion) out of the total required investment, which amounts to 350 trillion dirhams, which confirms the urgent need for financial institutions to fulfill green and transitional financial pledges.
However, encouraging investment in emerging markets is a difficult task, as the total assets under management of the world's 300 largest investment companies amount to more than $50 trillion, of which only 2%, 3% and 5% are allocated to the Middle East, Africa and South America, respectively.
Strategy and Finance
The study reveals the importance of greater cooperation in terms of strategy, financing and public policies for the transition to climate neutrality.
It also points to the importance of banks fulfilling the commitments they made during the United Nations Climate Change Conference (COP26) if they are to avoid families bearing the costs of transitioning to climate neutrality.
The study looks at two tracks to bridge the financing gap for the transition to climate neutrality in emerging markets, self-financing by emerging markets and advanced market financing, where capital is provided through grants and loans.
Exclusive self-financing of emerging markets is expected to increase taxes and government borrowing, which will be reflected in household spending in emerging markets, as the family's spending ability to meet its daily needs will decrease.
However, developed market financing has the opposite effect.
However, developed market financing may witness an increase in household spending in emerging markets at a rate of 6.25 trillion dirhams ($ 1.7 trillion) each year, compared to self-financing, and it will also stimulate global growth, as the gross domestic product can achieve about 400 trillion dirhams ($ 108.3 trillion). ) cumulatively higher between now and 2060, if developed markets finance the transition, so the ability of emerging markets to reach climate neutrality without impeding their growth or prosperity would represent a fair transition.
In this context, Rola Abu Mneh, CEO of Standard Chartered Bank in the UAE, said: “The UAE has a leading position and is well positioned to take advantage of the key economic opportunities offered by the climate-neutral path.
It is worth noting that reaching this goal requires a strong focus on ensuring economic prosperity during the transition process, as well as a significant amount of investment.”
"The public and financial sectors must come together to help facilitate the flow of investment into climate neutrality," she added.
Failure to provide financing for the transition may result in not achieving the required climate goals, which will lead to an environmental catastrophe.”
Climate Neutrality
Standard Chartered has announced its commitment to reach climate neutrality in its financed emissions by 2050, with interim targets for the carbon-intensive sectors by 2030.
It also plans to mobilize more than 1.1 trillion UAE dirhams ($300 billion) of green and transitional financing by 2030 to support the transition to climate neutrality in the markets it can access, with support from its Transitional Financing Framework.
Follow our latest local and sports news and the latest political and economic developments via Google news