The United Arab Emirates and Saudi Arabia are set to dominate the Middle East’s sustainable finance market in 2026, with regional issuances expected to hit up to $25 billion. While global green markets saw a 21% decline the previous year, the Gulf region defied the trend with a 3% increase, showing resilience.
This growth is fueled by aggressive net-zero targets and a shift toward innovative funding tools like ‘blue bonds’ and sustainable sukuk. These tools have positioned the region as a global leader in ethical investment.
The growth in green money is a smart plan to move away from oil. Saudi Arabia is using its large banks to fund the new construction projects. Many private companies in the UAE are also starting their own green programs. These investments pay for more than just solar panels, including giant hydrogen plants and eco-friendly AI data centers.
Rawan Oueidat, an expert at S&P Global Ratings, talked about this shift in a report published at The Arabian Mirror. She informed that, “The region's bond market will remain dominated by green projects. In the lending market, sustainability and sustainability-related products ought to continue to be more appealing.”
She further added, “Sustainable sukuks, transition finance, and to a lesser extent blue bonds are likely growth areas.” This shows the market is growing and can now support the ‘green transition’ in multiple ways.
People in the UAE can now start investing smaller amounts of money through mobile apps. This suggests that green finance is not limited to giant banks anymore and offers regular families the opportunity to grow their savings.
Local businesses also receive a boost from these changes. A guide by Standard Chartered UAE explains: "The UAE Securities and Commodities Authority (SCA) has established the regulatory framework defined for green bonds, sustainability-linked bonds, and sukuk... SCA has extended fee exemptions for businesses listing green and sustainability-linked bonds to encourage the issuance of these investment vehicles."
Overall, the Middle East is changing from an oil exporter to a green finance hub. This $25 billion goal shows global investors that the Gulf is a safe place for clean money. New laws will soon require companies to report their carbon footprints by May 2026. Green bonds will soon become the go-to option to fund all large-scale projects in the region.