A new report by Bloomberg Intelligence has revealed a significant maturation of the Middle East and North Africa’s sustainable finance market, with issuance expanding sevenfold since 2020 to reach $35.1 billion in 2025. Despite a slight ease from its 2023 peak amidst global headwinds, the report highlights a fundamental shift in the market’s structure and key drivers of growth.
A Structural Shift Towards Financials and Energy
The region’s sustainable finance market has transitioned from being predominantly led by sovereign entities to a more diversified ecosystem. In 2025, financial institutions and energy-related issuers anchored the market, with financials alone accounting for nearly 50% of total issuance, a notable increase from 32% in 2020. This change reflects stronger regulatory signals and increased underwriting and lending activity as banks decarbonize their balance sheets.
Green-labelled instruments represented the largest share of issuance, growing by 60% to $25.8 billion in 2025. Capital was primarily channeled into renewable energy, low-carbon infrastructure, and water-efficiency projects aimed at strengthening the region’s climate adaptation and resilience.
Saudi Arabia Emerges as Regional Leader
In a significant development, Saudi Arabia overtook the UAE to become the region’s largest sustainable finance issuer by volume in 2025, reaching an impressive $19.7 billion. This surge was substantially supported by the publication of the country’s Green Financing Framework in 2024, demonstrating how national policies can effectively mobilize capital at scale.
UAE Banks Anchor Growth and Innovation
While Saudi Arabia led in volume, UAE banks played a prominent role in the market’s bank-led expansion. Lenders including First Abu Dhabi Bank and Emirates NBD have been instrumental in underwriting and lending for green bonds, sustainability-linked instruments, and direct loans. The long-term growth trajectory is further supported by the UAE Banking Federation’s ambitious target of facilitating AED 1 trillion in sustainable finance by 2030, positioning the sector to capture a potential $2 trillion opportunity across renewables, water, and low-carbon infrastructure.
Grace Osborne, ESG Analyst at Bloomberg Intelligence, commented on the market’s evolution. “MENA’s sustainable finance market has matured rapidly over the past five years, driven by government initiatives, supportive regulations and increased investor demand. While issuance eased in 2025 in line with global trends, the shift toward bank-led and green-labelled financing reflects a more durable market structure well positioned for further growth.”
Regulatory Progress and Future Catalysts
Regulatory advancements across MENA are strengthening the foundations for future growth, although the absence of a harmonized regional taxonomy remains a challenge for classifying transition activities. As regional markets move toward aligning with International Sustainability Standards Board (ISSB) disclosures, forward-looking climate risk assessment and transition planning will become key differentiators for issuers. Furthermore, rising investment in AI-driven data centers is expected to sharpen the focus on energy efficiency, water security, and climate-resilient infrastructure.
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Bloomberg Intelligence (BI) provides interactive data and research across industries and global markets. With a team of 400 research professionals, BI delivers an independent perspective on company fundamentals, covering over 135 industries and 2,000 companies. The research also includes dedicated analysis of government policy, litigation, and ESG factors to help clients make more informed decisions.
Source: Bloomberg
