FAB will offer financing to three of the highest carbon emitting sectors to meet specific reduction targets. Image Credit: AP

Dubai: UAE’s biggest bank FAB is going all out on the ‘Net Zero’ mission – and it is making sure key industries are doing the same. FAB has become the first bank in the MENA markets to set ‘financed’ emission reduction targets for the oil and gas, power generation, and aviation industries.

These three sectors, incidentally, are the three highest emitting ones as well, and ‘account for 80 per cent of the bank’s global emissions’.

“By integrating specific targets across high-emitting industries, we are combining near-term action with a long-term view,” said Hana Al Rostamani, Group CEO. “We believe that the road towards net-zero is about much more than financing the transition - it’s also about collaborating with our clients and partners, helping them leverage the latest and fit-for-purpose solutions, in addition to realigning our portfolio to their new realities and growth objectives.

How it works

For aviation sector clients, FAB is targeting 15 per cent reductions in Scope 1 and Scope 2 carbon emission by 2030 compared to the sector’s 2019 baseline. To help meet the targets, FAB will fund their fleet renewals – and these will have to be used on next-generation aircraft and should also be running on Sustainable Aviation Fuel. Clients in aviation will also be encouraged to use ‘high-quality’ offsets for any residual emissions.

“While we acknowledge this journey will be an evolving process, we’re built for agility and able to adapt as new practices emerge in the future,” the CEO added.

What are Scope 1-2-3 emissions?
Based on the carbon emissions, scope 1 and 2 relate to those brought on by operations owned or controlled by a company. Scope 3 emissions, in contrast, are from activities of a company but brought on from sources not owned or controlled by it.

Oil and gas

From oil and gas sector-related clients, FAB targets a 7-15 per cent reduction in Scope 1- 3 production intensity in the years up to 2030. FAB will help these entities with raising ‘operational efficiency’, by financing less carbon-intensive hydrogen and ammonia projects. Plus, there will be leveraging of carbon capture utilization and storage technologies for any residual emissions.

According to Shargiil Bashir, Chief Sustainability Officer at FAB, “Today’s announcement is a regional first that represents tangible action within FAB’s ongoing sustainability journey.

“Within that journey it was decisive to identify clear targets and a transparent mechanism to support our clients in meeting their obligations to stakeholders as well as their responsibility to the planet.

“Our reduction targets are based on a scientific methodology that’s structured to take into account impact and risks associated with our environment. In the road to net zero, environmental action needs to be coordinated effectively across business decision-making processes.

“At FAB we have the capabilities to inform this path with innovative solutions, strategic advisory, and defined targets.”

Power generation

FAB’s emission reduction cut-off for clients in power generation is a substantial 64 per cent in Scope 1 and 2 production carbon intensity by the end of the decade from a 2021 baseline. “This is line with the International Energy Agency’s Net Zero Emissions scenario,” FAB said in a statement. “To meet the target, FAB will engage with clients to support their transition, and finance clean energy technologies such as solar, wind and green hydrogen.”

Each sector has been analysed individually alongside considerations that may be unique to that industry and takes into account regional variations too.

Last year, FAB committed to support sustainable financing of more than $75 billion by 2030 to support green transition in the UAE. In 2022, the bank extended $9.1 billion of such funding.