The UAE Sustainable Finance Framework and Green Taxonomy: What Reporters and Financiers Must Prepare

Banks in the UAE have promised to mobilise more than AED 1 trillion in sustainable finance by 2030. Every dirham of that has to be labelled green, transition or sustainable by someone, against some definition. The UAE sustainable finance framework and green taxonomy are meant to supply that definition, and in 2026 the gap between the promise and the rulebook is where reporters and financiers carry the most risk.

Spectreco, a US-headquartered sustainability technology and advisory company working with issuers and lenders across the GCC, sees one misunderstanding repeatedly: many teams believe a final “UAE Green Taxonomy” was issued in 2024. It was not. The UAE Sustainable Finance Working Group (SFWG) has published design principles and is still building the taxonomy itself. This article sets out what exists, what is coming, and what to prepare now.

Sources: CBUAE: AED 1 trillion sustainable finance pledge, Dec 2023, ADGM: SFWG Fourth Statement, Dec 2025

In this article

• What the UAE Sustainable Finance Framework is

• What the UAE green taxonomy is, and its real status

• The disclosure principles reporters must meet

• How taxonomy alignment shapes green lending and issuance

• What reporters and financiers should prepare

• FAQ

What Is the UAE Sustainable Finance Framework?

The UAE Sustainable Finance Framework 2021-2031 is a ten-year national policy published by the Ministry of Climate Change and Environment (MOCCAE). It sets three pillars for moving capital toward green investment and explicitly calls for a common, nation-wide taxonomy for sustainable finance.

The framework is policy, not regulation. It does not impose reporting duties on its own. Its value is that it named the building blocks every later UAE rule has followed.

The Three Pillars

• Pillar 1: mainstream sustainability in financial decision-making and risk management, including a national taxonomy and standardised ESG and climate reporting guidance aligned with the Task Force on Climate-related Financial Disclosures (TCFD).

• Pillar 2: enhance supply and demand for sustainable finance products and green investment projects, including assessing readiness for sovereign green bond issuance.

• Pillar 3: strengthen the enabling environment through collaboration between financial and real-sector stakeholders.

Source: MOCCAE: UAE Sustainable Finance Framework 2021-2031 (FAOLEX copy)

Who Turns the Framework Into Rules

Delivery sits with the UAE Sustainable Finance Working Group, established in 2019 and coordinated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM). Its members include the Ministry of Finance, Ministry of Economy, MOCCAE, the Central Bank of the UAE (CBUAE), the Securities and Commodities Authority (SCA), the Dubai Financial Services Authority (DFSA), and the ADX, DFM and Nasdaq Dubai exchanges.

In November 2021 the SFWG committed to three deliverables: a UAE taxonomy of sustainable activities, consistent ESG disclosure standards, and stronger corporate governance. Every principle issued since maps back to that list.

Sources: DFSA: SFWG High-Level Statement, Nov 2021, CBUAE: SFWG Second Public Statement, Nov 2022

What Is the UAE Green Taxonomy, and Has It Been Issued?

The “UAE Green Taxonomy” is the UAE Sustainable Finance Taxonomy being designed by the SFWG. It will classify which economic activities count as sustainable. Only high-level design principles exist so far, published in 2023. As of the SFWG’s December 2025 statement, the full taxonomy was still in design.

This matters for anyone citing a “2024 UAE Green Taxonomy” in a bond framework or loan policy. There is no such final instrument to cite. What can be cited is the design direction.

What the Design Principles Say

• A traffic-light classification: activities are graded rather than sorted into a simple green or not-green binary, leaving room for transition activities.

• A qualitative approach to assessing climate efforts, in place of a fully quantitative screen at the outset.

• Minimum safeguards, including social safeguards, to encourage adherence.

• Local fit: alignment with existing UAE economic classifications and sustainability initiatives, while staying interoperable internationally.

Sources: DFSA: SFWG Third Public Statement, Dec 2023, ESG News: SFWG Execution Agenda, Dec 2025

Why the Traffic Light Matters for the UAE

A strict green-or-not binary would leave much of the UAE’s hydrocarbon and heavy-industry base with no label to aim for, however fast those companies decarbonise. A graded system gives financiers a way to fund credible transition without calling it green.

Our read: the amber category will decide how useful the taxonomy is. If its thresholds are vague, lenders will fall back on the EU Taxonomy or Climate Bonds Initiative criteria anyway. If they are specific, the UAE gets a definition built for its own economy.

The Disclosure Principles: What Reporters Must Meet

On 10 June 2024 the SFWG launched the Principles for Sustainability-Related Disclosures for Reporting Entities. They were signed by the heads of the SCA, CBUAE, DIFC and the FSRA, and set minimum expectations for ESG disclosure by licensed financial institutions.

The Four Considerations

• Systems: adequate policies, procedures and systems for sustainability reporting.

• Quality tests: transparency, materiality, relevance and stakeholder engagement.

• Consistency: disclosures must mirror how the entity actually operates, across governance, strategy and risk management.

• Products: firms offering sustainability-related products must disclose specific product-level elements.

Source: CBUAE: SFWG Disclosure Principles launch, Jun 2024

The Principles Around Them

Two companion sets complete the picture. The Principles for the Effective Management of Climate-related Financial Risks (November 2023) set governance, risk and stress-testing expectations. The Climate Transition Planning Principles, issued with the December 2025 statement, set a reference for how firms prepare, govern and disclose transition plans.

For listed issuers, these sit beside the SCA sustainability report duty and the UAE Climate Law GHG obligation. Free-zone firms have their own layer, covered in our guide to ESG reporting in DIFC and ADGM.

Sources: Central Bank of the UAE: Sustainable Finance, ADGM: SFWG Fourth Statement, Dec 2025

How Does Taxonomy Alignment Affect Financing?

Taxonomy alignment decides whether a loan, bond or fund can carry a green label. Lenders and investors use it to count green assets, price sustainable debt and defend labels against greenwashing claims. Issuers without activity-level evidence get excluded from those pools or face more due diligence.

The Numbers Behind the Label

• AED 1 trillion: the UAE banking sector’s pledge, announced at COP28 Finance Day on 4 December 2023, to mobilise sustainable finance by 2030.

• 3% growth: Middle East sustainable bond issuance rose about 3% in 2025 while global volumes fell 21%, according to S&P Global Ratings.

• USD 20-25 billion: S&P Global’s forecast for Middle East sustainable bond issuance in 2026.

• USD 1 billion: Emirates NBD’s combined blue and green bond in January 2026.

Sources: CBUAE: AED 1 trillion sustainable finance pledge, Dec 2023, Arab News: S&P Global on Middle East sustainable bonds, Feb 2026, Aletihad: UAE issuances boost ME sustainable bond market, Feb 2026

Where Taxonomies Already Bite

ADGM’s Sustainable Finance Regulatory Framework, in force since 4 July 2023, created green labels for funds, bonds and sukuk. Exempt funds investing in taxonomy-aligned assets need third-party attestation of that alignment. FSRA guidance points firms to a credible, publicly available third-party taxonomy to evidence that alignment.

Choosing the instrument comes first: our green bond, green loan or SLB decision guide covers that. For Shariah-compliant issuers, see green sukuk and ESG disclosure in the GCC.

Sources: GCC BDI: ADGM Sustainable Finance Regulatory Framework in force, Cleary Gottlieb: ADGM Sustainable Finance Framework enhancements

What Reporters and Financiers Should Prepare in 2026

Waiting for the final taxonomy is the wrong call. The data it will demand is the same data the disclosure principles, the CBUAE’s climate-risk work and the UAE Climate Law already require. Build it once, map it twice.

1. Split activity at revenue and capex level. Break revenue, capex and opex down by economic activity. Every taxonomy, UAE or international, assesses activities, not companies.
2. Pick an interim reference taxonomy and document it. Map activities to the EU Taxonomy or Climate Bonds Initiative criteria now, and record why. ADGM already expects a credible third-party choice.
3. Measure emissions intensity per activity. Scope 1 and Scope 2 data built for the UAE Climate Law becomes the evidence for amber and green grading.
4. Evidence minimum safeguards. Hold labour, human rights and governance evidence in one place. The SFWG design principles make safeguards a condition, not a footnote.
5. Write a transition plan you can disclose. Align it with the December 2025 Climate Transition Planning Principles so amber activities have a credible decarbonisation path.
6. For lenders: tag the book now. Tag loans and bonds by activity and label basis, so pledge reporting and future taxonomy re-mapping do not mean rebuilding the portfolio.

A cloud-native ESG platform keeps one activity-level dataset feeding the sustainability report, the Climate Law inventory and taxonomy mapping. Where teams are thin, a Virtual Sustainability Office can run the cycle.

Frequently Asked Questions (FAQs)

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The Bottom Line

The UAE has a framework, a working group, disclosure principles and a pledge worth AED 1 trillion. What it does not yet have is a final taxonomy. Reporters and financiers who build activity-level data now will map to the UAE taxonomy in weeks when it lands. Those who wait will rebuild their green books under deadline pressure.

Spectreco helps UAE issuers and lenders get taxonomy-ready before the rules are final. Book a taxonomy-alignment and disclosure readiness assessment with our Climate Finance and Green Capital team, supported by our Compliance, Reporting and Disclosures practice.

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