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By: Samer Eido, Afsha Karim, Allen & Overy

The last few years have seen a steady expansion of sustainable lending practices tied to achieving environmental, social and governance (ESG) goals as the world looks for new ways to meet the huge costs of decarbonisation and sustainable development.

Financing decisions are increasingly focused on matching up the interests of financiers and borrowers with sustainability goals, such as reducing carbon emissions, securing access to clean water and sanitation, promoting social inclusion and diversity, and improving the transparency of governance systems.

This trend is likely to accelerate as the world races to achieve Net Zero by 2050. Some predict that sustainable lending will become one of the biggest, if not the dominant, financing market in the near future.

Middle Eastern governments are increasingly aware of this market potential as they also pursue their own decarbonisation agendas and diversify their economies away from oil and gas dependence. Regional financial institutions also see the chance to develop a whole range of new financial products that not only address the ESG agenda but - in a market where Islamic Finance exerts considerable influence - can also complement the principles-based ethos that underpins the Shariah compliant Islamic Finance practice.

Responsible investment activity has been spurred on by various international climate conferences. The fact that COP27 was held in Egypt and that this yea......................

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