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Friday, September 30, 2022

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Qatar establishes itself in Islamic sustainable finance space: Masraf Al Rayan’s Sustainable Finance Framework

Masraf Al Rayan (MAR) has launched its Sustainable Finance Framework, the first of its kind for an Islamic bank in Qatar. The framework closely follows the launch of Qatar Financial Centre’s Sustainable Sukuk and Bonds Framework, indicating a deliberate effort from Qatar to establish itself as a key player in the Islamic sustainable finance space.

The framework seeks to contribute to achieving Qatar’s National Vision 2030 with the focus on human, social, economic and environmental development. It also emphasizes climate change in accordance with Qatar’s National Environment and Climate Change Strategy and National Climate Change Plan. Under the framework, MAR seeks to increase financing to different economic sectors that will help Qatar contribute to climate change mitigation and reach its greenhouse gas emissions reduction objectives.

SME development plays a central role in the Sustainable Finance Framework. MAR is working closely with the Qatar Development Bank on programs supporting local SMEs and programs that financially support the businesses during a crisis. Notably, the framework highlights SME funding for start-ups aligned to the UN Sustainable Development Goals (SDGs), social impact initiatives and women entrepreneurs.

The use of proceeds from financing under the framework will be focused on green buildings (SDG11), renewable energy (SDG7.2) and SME financing/employment generation (SDG8,9).

Figure 1: Use of proceeds

Source: S&P Global Ratings’s Second Party Opinion of Masraf Al Rayan’s Sustainable Finance Framework

MAR has appointed S&P Global Ratings to provide an external review of the Sustainable Finance Framework. The rating agency has confirmed the framework’s alignment with the ICMA Social Bond Principles, Green Bond Principles and Sustainability Bond Guidelines 2021. The annual report will also be subject to external verification to verify the assets financed and amount allocated, while the management of proceeds (and unallocated proceeds) is in line with the criteria outlined in the framework.

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