Emirates NBD, the largest bank in Dubai, is actively integrating digital technology, particularly AI, to streamline the substantial data load associated with sustainable finance and ESG reporting. This digital push is crucial for managing the sheer volume of information—up to 500 different data points—required for ESG, covering Scope 1, 2, and 3 emissions.
For Vijay Bains, Chief Sustainability Officer and Group Head of ESG at Emirates NBD, digitisation is key to automating this process, helping the bank “see the wood from the trees” and avoid manual, counter-sustainable practices like printing out reports.
Digitalisation for Data and Lending
The bank’s focus is on automating and digitising as quickly as possible, including through partnerships with fintechs, to manage the heavy reporting burden. On the lending side, Emirates NBD uses digital tools to analyse its financed emissions, ensuring its lending portfolio is de-risked and aligned with industries that are actively decarbonising.
The practical application of AI is already evident, Bains explained, pointing to an AI chatbot on the bank’s website that handles approximately 500 inquiries a month related to sustainable finance. This is not just a customer support tool; it provides the bank with valuable analytics on what customers are asking for, such as simple data on products, reporting, and future plans. The AI ensures queries are handled instantly, even outside of UAE time.
Bains also detailed plans to use AI to simplify sustainable finance terminology, which he described as an “alphabet soup”. With 600 to 800 sustainable finance KPIs, the bank is looking to integrate a chatbot that can put the power and speed of information into the hands of relationship managers and customers, explaining what financing options, discounts, and products apply to them. Given the high energy demand of AI, the bank has built a new data centre and is offsetting its emissions using nuclear and renewable energy.
The Rise of Transition Finance
Sustainable finance is broadly defined by the bank as any capital allocated towards a sustainable project, which includes financing for solar and renewable energy globally, electric vehicles (EVs), and green buildings. Green buildings are prioritised for their energy efficiency, lower emissions, and reduced stress on the power grid. The bank provides discounts to corporate clients who meet sustainability KPIs aligned with their net zero trajectory and offers sustainable finance advisory services.
Bains highlighted that while the market for Green Bonds and sustainable sukuks is growing rapidly—Green Bonds currently account for around 70 per cent of the sustainable bond market—the next significant theme will be transition finance. Transition finance focuses on decarbonising “conventional industries,” such as oil and gas, steel, and aviation, which are hard-to-abate sectors. He noted that the International Capital Markets Association (ICMA) and Loan Market Association (LMA) have recently produced transition finance principles to help accelerate the decarbonisation of the broader economy.
This approach acknowledges the reality that a shift from 100 per cent emissions to zero is a gradual process. Transition bonds, similar to Green Bonds, help companies align their corporate strategy and provide investors and regulators with a clear five-year pathway for integrating green considerations. Bains also predicted growth in Blue Bonds (focused on water and ocean issues) and Orange Bonds (focused on gender diversity).
Short-Term ESG and Carbon Markets
Responding to the idea that ESG investing is purely a long-term strategy, Bains affirmed its place in short-term market returns, citing his background as a climate scientist. He pointed out that climate change is already affecting commodity prices and creating inflationary impacts, specifically noting rising futures for cocoa, oranges, and coffee due to shifting precipitation patterns. This volatility in commodity trading offers short-term benefits that have, in some months, outpriced gold. Furthermore, a company’s transition plans now affect their short-term liquidity and revolving credit facilities as part of sustainability-linked loan updates.
Finally, Bains sees the carbon market debate coming back into focus. Carbon trading desks are key to integrating offsets into financing, as most clients will reach a point where they cannot reach net zero without credible, science-based offsets. This is viewed as a necessary mechanism to give companies the time needed to properly and effectively reduce emissions. The scrutiny and standards around carbon offsets have “really improved” following recent global conferences.
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