DFSA Joins UAE in Climate Transition Planning Consultation

In a significant move to bolster the sustainable finance landscape in the UAE, the Dubai Financial Services Authority (DFSA), in collaboration with other members of the UAE Sustainable Finance Working Group (SFWG), has opened a public consultation on a set of draft “Principles for Climate Transition Planning.” This development underscores the country’s continued commitment to integrating sustainability into its financial systems.

Supporting Financial Institutions in Climate Strategy

The newly proposed Principles aim to guide financial institutions in crafting effective, transparent, and credible climate transition plans. These forward-looking strategies are intended to align an organisation’s core operations, including governance, risk oversight, and strategic planning, with its climate-related ambitions. The draft framework outlines guidance across eight thematic areas: goal-setting for the transition, leadership and governance, integration into business strategy and risk protocols, metrics and performance targets, data utilisation and customer engagement, disclosure practices, implementation frameworks, and periodic reviews for continual improvement.

A Flexible and Inclusive Framework

Built with adaptability in mind, the Principles are designed to suit a diverse range of financial entities and to evolve in step with international standards. By embedding climate considerations into their decision-making, financial institutions can improve risk resilience, shape strategic direction, develop climate-aligned products, and contribute more meaningfully to national and global climate objectives.

The Role of the UAE Sustainable Finance Working Group

Formed in 2019, the SFWG was established as part of the UAE’s broader economic transition toward climate responsiveness and sustainability. Its mission aligns with the UAE’s Green Agenda 2015–2030, aiming to mainstream sustainable finance practices nationwide. The group brings together a wide range of key stakeholders, including financial regulators such as the Central Bank of the UAE, Securities and Commodities Authority, Financial Services Regulatory Authority of Abu Dhabi Global Market, and the DFSA. It also includes national ministries - Finance, Economy, Climate Change and Environment - as well as the Office of the UAE’s Special Envoy for Climate Change. The UAE’s main stock exchanges, namely the Abu Dhabi Securities Exchange, Dubai Financial Market, and Nasdaq Dubai, also form part of this collaborative body.

Milestones in Sustainable Finance Guidance

Since its formation, the SFWG has released several important frameworks that have shaped the sustainable finance agenda in the UAE. In 2020, it introduced the Guiding Principles on Sustainable Finance, encouraging financial institutions to embed Environmental, Social, and Governance (ESG) considerations into their governance structures, business strategies, and risk management practices.

In 2023, the group published the Principles for the Effective Management of Climate-related Financial Risks, offering financial institutions a roadmap for assigning responsibilities, integrating climate risk into business planning, and conducting scenario analysis to better prepare for climate impacts.

Most recently, in 2024, the SFWG launched the Principles for Sustainability-related Disclosures, providing a framework to help financial firms generate reliable, consistent, and high-quality sustainability reporting that supports investor confidence and regulatory alignment.