RIYADH -- Minister of Finance Mohammed bin Abdullah Al-Jadaan stressed that Saudi Arabia's efforts towards sustainability have been on the forefront of the Kingdom’s Vision 2030 policy agenda for several years. He pointed out that the Kingdom did not only tackle the sustainability topic directly, but also indirectly through financial markets.

He added that "we believe that the financial sector is a key enabler to support the Kingdom's efforts toward achieving our sustainability goals."

The minister made the statements during his closing remarks at the Financial Sector Conference Talks, delivered on his behalf by Assistant Minister of Finance for Macro Fiscal Policies & International Relations Abdulaziz bin Mutib Al-Rasheed.

"Today, I speak to you on my capacity as the Chairman of the Financial Sector Development Program (FSDP), one of the Kingdom’s vision realization programs and I am pleased to say that we have reviewed our strategy and commitments to now include sustainability as a core objective while developing our robust financial system.

"We have launched an initiative “ESG and Sustainable Finance in the Kingdom of Saudi Arabia” with the aim of providing our financial sector with the necessary tools to enable and broaden the Kingdom’s capabilities in sustainable financing and investing", the minister said.

Al-Jadaan said this initiative was only the tip of the iceberg under FSDP. "Our commitments towards sustainable finance are ever growing and this successful conference acts as another key step on our sustainable finance transformation journey. As all of you may have read or heard, various sustainable finance activities have already started to hit headlines in the Kingdom and internationally", he added.

He further said: "We have seen the eagerness and commitment of various government organizations to launching Green Bonds. We have also seen publicly listed companies on the Tadawul stock exchange putting ESG in the forefront of their strategies. Examples from the private sector include the Saudi Electric Company issuance of a $1.3 billion dual tranche International Green Sukuk which was four times subscribed and priced 10 and 15 basis points inside SEC’s yield curve for the five- and ten- year tranches respectively."

The minister went on: "In the public sector, over a year ago the Kingdom made its ESG-linked financing debut in July 2020 with a deal size worth more than USD 250 Mn for the purchase of public transportation buses. The Kingdom also hired leading knowledge houses and advisory firms to build our ESG framework. In addition, the Public Investment Fund hired 5 advisors for its medium-term capital-raising strategy. Work has also started on the launching of an ESG Index in our local capital market by Tadawul and many more activities in the sustainable finance sphere in the Kingdom. I sincerely welcome you to join our efforts at FSDP, alongside the program’s valuable partners the Ministry of Finance; Saudi Central Bank; Capital Market Authority; National Debt Management Center, in spearheading the development of the sustainable finance ecosystem in the Kingdom of Saudi Arabia."

Al-Jadaan pointed out that the structuring of Saudi Arabia's Sustainability Financing Framework is a strategic step in line with the Kingdom's Vision 2030 direction towards sustainability and ESG commitment.

He added that as recently announced, Crown Prince Mohammed bin Salman, Deputy Prime Minister and Minister of Defense, launched the Green Saudi Initiative and Green Middle East Initiative that clearly demonstrate the roadmap to environment preservation. Further details of the initiatives will be announced in due course, he said.

The minister of finance said renewable energy provision was also at the heart of the Giga projects’ energy requirements, efficiency and efficacy driven by technology applications which attract sustainable funding. He added that as an illustration of this, the Red Sea Development Company secured SR14.120 billion loan and first ever riyal-denominated Green Finance credit facility.

Al-Jadaan said: "We have also applied innovative sustainable financing techniques to the build environment, where for example we do not pay companies to replace outdated lighting and air conditioning units in our schools, hospitals and government buildings but share a percentage of the energy savings. Also by applying the latest technologies to our desalination developments we are seeing a return of our capex within 20 months due to the improved energy efficiency. We are aware though that much remains to be done, the government is determined to re-double its efforts to deliver on the promises and actions it has announced".

He concluded, "We are committed to working fully with governments and businesses from around the world to provide a more sustainable economy for ourselves, our future generations and the world at large firmly based on ESG and sustainable based financing". -- SPA