ADGM’s Financial Services Regulatory Authority (FSRA) takes pride in its progressive and innovative approach to sustainable finance and digital asset regulation — aligning with global best practices to foster a transparent, resilient, and competitive financial ecosystem. Abu Dhabi and the broader United Arab Emirates (UAE) have set an ambitious yet vital objective for themselves: To diversify the economy and meet its net-zero goals by 2050. ADGM, the international financial centre (IFC) of Abu Dhabi, has an essential role to play, not only in accelerating sustainable finance in Abu Dhabi – the UAE’s capital, but also in contributing to the achievement of the overall country’s targets.
To do so, ADGM launched its Sustainable Finance Agenda in 2019, which revolves around four key pillars: Regulation, Awareness, Cooperation, and Ecosystem. In the same year, the UAE Sustainable Finance Working Group (SFWG), chaired by ADGM, was established to enable the UAE’s economic transition and encourage the adoption of sustainable finance at a national level. In 2020, the SFWG published its Guiding Principles on Sustainable Finance in the UAE, highlighting its commitment to developing standards for the financial sector to integrate ESG factors including disclosure, corporate governance and risk management.
This was followed by the publication of three public statements by SFWG in 2021, 2022 and 2023. In 2023, the FSRA of ADGM introduced into its regulatory framework, Rules for Green and Climate Transition Funds and Portfolios and Sustainability-linked Bonds and Sukuk, ensuring that investments in these vehicles align with internationally recognized standards while addressing investor concerns about greenwashing.
In June 2024 – the ‘Year of Sustainability’ in the UAE – the SFWG launched the ‘Principles for Sustainability-Related Disclosures for Reporting Entities’, as part of the joint efforts of the UAE supervisory authorities to upgrade requirements for sustainability-related disclosures for the financial institutions based in the country, according to best international practices.
According to Emmanuel Givanakis, CEO of ADGM’s FSRA, “These efforts create greater clarity and confidence in our commitment to sustainable finance, further empowering issuers and investors to channel capital towards impactful projects.”
Advancing sustainable finance
Today, ADGM is a renowned global financial hub with a strong sustainability-driven ecosystem. It is home to key think tanks and accelerators like the Global Climate Finance Centre (GCFC), the UAE Independent Climate Change Accelerators (UICCA), and ALTÉRRA, a $30 billion private investment vehicle for climate action. ADGM also hosts local and global players, including Masdar Green REIT, Vortex, and energy giant TAQA, which owns Noor, the world’s largest standalone solar power plant. ADGM organises the annual Abu Dhabi Sustainable Finance Forum (ADSFF), a flagship event showcasing the efforts being made and various initiatives taken for driving sustainability within not just the UAE but also regionally and globally.
One of the key challenges for the growth of the sustainable finance ecosystem is capacity building in the sector. ADGM is taking a lead role in developing professionals with the right skill set needed for this sector and the ADGM Academy’s Executive Certificate in Sustainable Finance stands as a prime example of this. This unique certification provides professionals with the skills to navigate the expanding field of ESG and sustainability-focused finance.
“By integrating established international standards including taxonomies as part of our innovative green and climate-transition investment products framework, the FSRA successfully positioned sustainability as a core pillar of ADGM’s financial ecosystem. Some other key milestones and achievements include ADGM becoming the first jurisdiction globally to regulate carbon offsets within the financial ecosystem in 2022 and introducing the region’s most comprehensive ESG disclosure requirements in 2023,” Givanakis explained.
Building on its commitment to sustainable finance, the FSRA reached a new milestone in 2024 when it published guidance for ESG Investment Vehicles to strengthen the ecosystem against greenwashing. It reinforced the FSRA’s commitment to enhancing transparency, accountability, and integrity in ESG-focused investment products within the centre while keeping pace with leading global efforts to combat greenwashing. The published guidance is a key pillar of ADGM’s sustainable finance vision and supports investors, issuers, and market participants in driving meaningful ESG outcomes.
“Looking forward, the FSRA is working to integrate climate-related financial risk management and transition planning into its regulatory framework over time. This includes enhancing disclosure requirements, implementing climate risk stress tests, requiring clear transition plans from financial institutions, strengthening governance and risk management processes, and encouraging sustainable investments. The FSRA will also continue to collaborate with international standard setters and regulators to align on the application of global standards, ensuring the financial sector can effectively manage climate risks and support the transition to a low-carbon economy,” Givanakis said.
Innovation and regulations in the financial ecosystem
The FSRA is focused on maintaining ADGM’s status as a progressive, innovative and transparent financial marketplace. By maintaining a strong and progressive regulatory framework, the FSRA ensures clarity and confidence for businesses and investors within ADGM. Additionally, by adopting a risk-based supervision approach, leveraging technology-driven regulation, and enhancing market surveillance safeguards will enhance financial stability while also fostering innovation.
The FSRA and ADGM are also at the forefront of fintech innovation with first-of-its-kind and globally leading regulatory frameworks to assist in the rapid advancements in digital finance. With initiatives like the ADGM Regulatory Sandbox in 2016 and its world-leading Digital Assets Framework published in 2018, the FSRA has positioned ADGM as a credible, forward-thinking and innovative financial hub.
“The fintech sector has emerged as a significant growth driver for ADGM, with companies utilizing cutting-edge technologies to address challenges in banking, market infrastructure, asset management, brokerage, and other finance-related activities. Several global virtual assets players have established themselves in ADGM and operate trading platforms, brokerages, custody and other activities. There are a number of other global firms which have also announced their expansion into ADGM and others in the pipeline, solidifying its position as a hub for financial innovation,” Givanakis stated.
Moreover, the FSRA fosters emerging technologies within a secure and well-regulated financial ecosystem, ensuring a balance between innovation and oversight.
By aligning with international standards and introducing regulatory enhancements, including the introduction recently of a specific framework for Fiat-Referenced Tokens (FRTs), IT Risk Management guidance, and proposed new updates to its Virtual Asset framework, the FSRA continues to reinforce ADGM’s status as a leading digital finance hub. This is complemented by other initiatives launched in ADGM, including the DLT Foundations framework, which supports blockchain-based organizations in issuing utility tokens and implementing decentralized governance models.
Givanakis said: “ADGM’s ecosystem ensures that emerging technologies can thrive within a secure and resilient financial ecosystem. The FSRA recently signed an MoU with the UAE Ministry of Interior to enhance coordination in combating financial crime related to virtual assets, ensuring robust regulatory oversight. This proactive approach and collaboration facilitates the exchange of information, strengthens risk mitigation frameworks, and aligns with the UAE’s broader strategy to safeguard the financial system.”
Key challenges
As the FSRA continues to uphold its objectives, which encompasses promoting a fair, transparent, and efficient financial market in ADGM, supporting innovation and business growth, and maintaining global standards of financial regulation, challenges cannot be ignored.
“One of the biggest challenges is keeping pace with innovation while ensuring financial stability and consumer protection. Additionally, emerging technologies such as blockchain, digital assets, and decentralized finance present new risks, such as cybersecurity threats, and fraud,” Givanakis said.
“Regulators must strike a balance between fostering innovation and maintaining robust oversight, something we believe we have achieved and continue to ensure that we can achieve as we enhance our comprehensive regulatory framework going forward,” he added.
“Regulators can be assisted in striking this balance by engaging both with international standard setters and regulators as well as with industry stakeholders to create a holistic, resilient and competitive financial ecosystem,” he concluded.
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