MENA Sustainable Finance Market Reaches $35.1 Billion As Banks And Energy Drive Growth

The sustainable finance market in the Middle East and North Africa (MENA) continues to show significant growth and structural evolution, according to a new report by Bloomberg Intelligence. Although issuance in the region eased to $35.1 billion in 2025, representing an 18% decline from its peak in 2023, the market has expanded sevenfold since 2020, reflecting its rapid development and growing importance. Analysts attribute the slight slowdown in issuance to broader global market headwinds, but the underlying growth trends suggest a maturing and resilient market.

Historically, MENA’s sustainable finance market was largely sovereign-led, with government bonds and public sector initiatives dominating the landscape. Over the past five years, the market has shifted to a more diversified structure, increasingly driven by financial institutions and energy-related issuers. In 2025, financial sector issuers accounted for nearly half of all sustainable finance activity, up from 32% in 2020. This increase highlights the role of banks in driving market expansion through decarbonizing balance sheets, adopting green taxonomies, and increasing underwriting and lending activity.

Saudi Arabia has emerged as the largest sustainable finance issuer in the region, reaching $19.7 billion in 2025 and overtaking the United Arab Emirates. This growth was supported by the publication of the country’s 2024 Green Financing Framework, which provides clear guidelines for issuers and strengthens investor confidence. The UAE, meanwhile, continues to play a prominent role, with major banks such as First Abu Dhabi Bank and Emirates NBD actively participating in the expansion of sustainable finance through underwriting, lending, and balance-sheet deployment across green bonds, sustainability-linked instruments, and sustainable lending. The UAE Banking Federation’s ambitious target of AED 1 trillion in sustainable finance by 2030 underpins the country’s long-term growth strategy, positioning banks to capture opportunities worth $2 trillion across renewables, low-carbon infrastructure, and water-related projects.

Green-labelled instruments have consistently represented the largest share of issuance in MENA, increasing by 60% to $25.8 billion in 2025. Funds raised through these instruments are primarily directed toward renewable energy projects, low-carbon infrastructure, and water-efficiency initiatives, all aimed at enhancing climate adaptation and resilience. Analysts also note that as the region expands its data-center capacity, sustainable finance will increasingly support energy-efficient and climate-resilient technologies, reflecting the growing intersection between finance, sustainability, and digital infrastructure.

Bloomberg Intelligence ESG Analyst Grace Osborne highlighted the market’s rapid maturation over the past five years. She noted that government initiatives, supportive regulations, and rising investor demand have been key drivers of growth. While issuance levels eased in 2025 in line with global trends, the shift toward bank-led and green-labelled financing indicates a more durable market structure, capable of sustaining long-term development. Osborne also emphasized Saudi Arabia’s emergence as the largest issuer, demonstrating how clear national frameworks and regulatory certainty can accelerate large-scale capital mobilization.

Despite these positive developments, the report points out that challenges remain. One of the main limitations is the absence of a harmonized regional taxonomy, which restricts the ability to classify transition-related activities comprehensively. As regional markets move toward alignment with the International Sustainability Standards Board (ISSB) for disclosures, climate risk assessment, forward-looking reporting, and transition planning are expected to become critical differentiators for issuers seeking sustainable capital.

Looking ahead, investment in AI-driven data centers and other digital infrastructure is expected to increase the focus on energy efficiency, water security, and climate-resilient solutions in the region. The combination of regulatory support, active bank participation, and growing investor appetite positions the MENA sustainable finance market for continued growth, even amid fluctuating global market conditions. The evolving landscape reflects a more resilient, diversified, and future-ready market, capable of supporting the region’s transition to a low-carbon and climate-resilient economy.

Overall, the Bloomberg Intelligence report illustrates that MENA’s sustainable finance market is no longer just a government-led initiative but a dynamic ecosystem where banks, energy companies, and investors collectively drive sustainable development. With increasing clarity in regulatory frameworks and rising demand for green and transition finance, the region is set to remain a key player in global sustainable finance markets.