Gulf economies are sitting on oil wealth. Now they’re betting heavily on climate capital. Green financing is gathering speed. Investment appetite is shifting. And the Gulf is vying to be a global hub for sustainable finance.
Gulf green bond issuance is breaking records
In 2023, the UAE and Saudi Arabia together issued about $16.1 billion in green bonds and sukuk —UAE leading with $8.4 billion, Saudi at $7.7 billion — making up most of the region’s issuance. Abu Dhabi’s Masdar raised $1 billion in a green bond, oversubscribed five times, to fuel renewable energy plans that include reaching 100 GW by 2030.
This surge reflects a deliberate shift: hydrocarbon-rich nations are using their capital market muscle to finance green infrastructure.
Family offices are turning green
Globally, nearly half of family offices are now allocating capital to sustainability. In the Gulf, family wealth is fast following suit. Abu Dhabi, Saudi and Qatar-based family offices are quietly shifting portfolios toward clean energy, green infrastructure, and climate tech start-ups.
Behind the scenes, energy transition is becoming a strategic legacy play. Gulf dynasties see long-term value in ESG, both for returns and reputation.
VC and climate tech start-up interest is rising
Middle Eastern VC funds are stepping into climate. In 2024, regional backers directed over US$3.6 billion into global climate tech—though domestic early-stage ClimateTech funding dropped 41%, to US$114 million.
This split shows two trends: Gulf investors are seeking climate exposure, but often through global deals rather than local start-ups. The imbalance signals an opportunity. Savvy VCs see a significant gap in domestic ClimateTech infrastructure.
Sustainable finance frameworks are maturing
Sovereign entities are building green finance platforms. In 2022, Saudi’s Public Investment Fund released a green finance framework, then followed up with a US$5.5 billion green bond in 2023. Meanwhile, Abu Dhabi’s Etihad Rail launched a sustainable finance framework in 2024, preparing future green bonds for clean transport infrastructure.
Such moves are signalling to investors: green capital is here to stay, backed by policy and sovereign assurances.
Hurdles remain
Despite progress, challenges loom:
- ESG disclosure varies across Gulf stock exchanges and regulatory bodies.
- Market depth is thin. Compared to global ESG funds, Gulf AUM in ESG is modest—around US$21 billion across UAE and Saudi combined.
- Oil dependence still influences cycles. When oil prices dip, green finance momentum tends to slow.
What’s next
To solidify its position, the Gulf must:
- Expand domestic ESG fund assets to rival global peers.
- Standardise reporting and taxonomy across GCC markets.
- Channel family office capital into local ClimateTech, not just global players.
- Support VCs targeting regional climate start-ups, through incentives, co-investment, and visibility.
Gulf climate capital is rising, and CARE is part of the shift
The Gulf is waking up to the climate opportunity. Green bonds are breaking records. Family offices are quietly pivoting. VC is sniffing innovation. But much remains fragile.
To truly lead, the region needs deeper markets, smarter regulation, and stronger ties between capital and climate solutions. That’s exactly where CARE – Climate Action & Renewable Energy Expo comes in.
CARE brings together climate investors, sovereign funds, and innovators shaping the Gulf’s green finance future. Whether you’re deploying capital or looking for it, this is where climate ambition meets financial action, in real time.
