UAE companies accelerate climate investments amid rising ambition and funding challenges

As world leaders and investors gather in Abu Dhabi for Sustainability Week, new survey data points toward a surprisingly quick acceleration in climate-related investments among UAE companies. This shift isn’t just driven by regulatory or reputation concerns, though those certainly play a role, it’s also fueled by a genuine business drive and ambition. According to HSBC’s Global Sustainability Pulse Survey, a striking 94% of businesses in the UAE now see the transition to a greener economy as a real opportunity for growth and profit. Even more notably, 90% plan to speed up their climate strategies over the next three years, which is more than 12 percentage points higher than the global average.

These findings, shared during Abu Dhabi Sustainability Week, paint a picture of a business community shifting from just making promises to actually taking concrete steps. For example, about 55% of the UAE respondents said they’re planning to invest in infrastructure and technology that can withstand physical climate risks. Meanwhile, 56% described themselves as “advanced adopters” of climate tech, meaning they’re already integrating such solutions into their operations. Interestingly enough, over half of these firms, about 53%, highlighted a significant need for more affordable financing options to help scale and adopt climate technologies. That gap between their intentions and actual access to capital is pretty clear.

“The survey really highlights how sustainability has become an integral part of the UAE’s economic strategy,” Mohamed Al Marzooqi, CEO for HSBC in the UAE, explained. “It’s shaping how businesses compete, innovate, and grow. The country’s proactive approach is encouraging investments in new tech, resilient infrastructure, and future-ready talent, all moving ahead of many other nations. We’re working closely with clients and stakeholders across the broader ecosystem to unlock the capital and expertise needed for this shift, so the UAE stays at the forefront of sustainable growth and global competitiveness,” he added.

This confidence isn’t just limited to HSBC’s survey. The bank’s Navigator report for the UAE also shows that 41% of businesses now see sustainability as more important than ever before. And 56% expect stricter regulations to be a main driver to become more eco-friendly. The report indicates that the climate transition will impact many areas, like air quality, sanitation, pollution control, digital healthcare, and the circular economy, things that are increasingly on the radar for businesses.

Industry watchers say these signals matter because they suggest the UAE is trying to blend economic growth with concrete climate outcomes. A Gulf News summary of the HSBC survey even points out that a huge 89% of UAE firms view the impact of climate transition on their reputation and brand image as highly important. So, reputation, along with direct business gains, seems to really motivate many.

That said, the survey also flags some hurdles. A key concern is access to affordable, scalable finance and climate tech solutions. Jennifer Chammas, HSBC’s Regional Head of Sustainable Finance and Transition for the Middle East, warned that despite high ambition, real progress will depend heavily on practical enablers, especially funding and suitable technologies. She emphasized, “Turning plans into real action, well, at least that’s what it will take, requires collaboration across the ecosystem, from policymakers and companies to financial institutions.”

In fact, two reports released during ADSW, both sponsored by HSBC, zero in on these critical enablers. One was produced by the UAE Alliance for Climate Action, which mapped out over 80 non-governmental actors working on decarbonization, providing a detailed overview of their roles and potential. The other study from the Mohammed Bin Rashid School of Government looked at climate change’s physical risks within the Gulf Cooperation Council and stressed how vital good policy, strong finance, and resilient institutions are for adaptation and resilience.

Put together, these studies imply that while UAE companies are eager and ready, effective implementation will require better coordination among institutions, government policies, and private sector activities. For example, banks and policymakers must work together to reduce capital costs, lower risks related to early-stage technologies, and move promising pilots into the broader market.

The urgency of all this is backed up by what businesses themselves worry about. The HSBC survey found that 44% of UAE firms believe their market position could suffer if climate targets aren’t met, more than other global peers, who mainly worry about losing investor confidence or facing financing problems. That’s a pretty clear sign that UAE firms view failure in this transition as a direct threat to their competitiveness.

For providers and investors in climate tech, the UAE’s ambitious projects, like major infrastructure or sovereign-backed initiatives, are very attractive. HSBC, which is the largest international bank operating across the MENAT region, is in a prime position to help finance these efforts. As of the end of 2024, the bank reported assets totaling around $73 billion in the region and has been actively linking corporate clients with transition funding.

But even with all this ambition, turning it into real emissions reductions will demand strict standards and clear reporting frameworks. As industries upgrade and adopt new measures, regulators and investors will scrutinize the credibility of their progress closely. It’s interesting, well, at least to me, that regulatory pressure is increasingly seen as a key driver, urging firms to ensure their transition efforts are transparent and impactful.

All of this momentum also plays into a bigger regional picture. HSBC’s outreach found that UAE’s mid-market firms see sustainability as a crucial growth driver. Plus, many businesses in the UAE are planning to increase investments in neighboring countries like Saudi Arabia, partly because of their sustainability goals.

For those involved in climate technology, these trends are a double-edged sword, they offer great opportunities but also come with responsibilities. Demand for resilient infrastructure, digital solutions, and circular economy models is clearly on the rise. Yet, to really scale these solutions, well, it will require patience from investors, mechanisms to share risks, and strong public-private partnerships to move beyond early adoption into mainstream deployment.

As policymakers, investors, and project sponsors assemble during ADSW, the takeaway from HSBC’s survey is pretty clear: UAE business leaders largely view the climate transition as a vital, profitable opportunity and are ready to act. But making that happen at scale will depend on unlocking affordable financing, deploying scalable technologies, and strengthening institutional frameworks to translate strategic plans into ongoing, meaningful action toward decarbonization and resilience.

Source: Noah Wire Services