GENEVA — A new report provides the first in-depth analysis of sustainable finance practices in a part of the world most vulnerable to the effects of climate change: the Arab region. Issues such as water scarcity, rising sea levels, drought, land degradation and desertification will have serious repercussions for food, energy and water security in this area. Implementing the Sustainable Development Goals — in particular those that help deal with the interlinked water-energy-food challenges — will be key to build resilient, fairer economies. “Promoting Sustainable Finance and Climate Finance in the Arab Region” concludes that the adoption of sustainable finance practices can provide numerous benefits to financial institutions and wider access to finance for climate-vulnerable communities. The study also emphasizes the importance of sustainable finance resources to transition from mainstream economic systems to responsible and resilient ones. It highlights the reform measures that financial sector governance bodies would need to consider in order to scale up sustainable finance and provides policy recommendations to tackle the challenges. The report investigates the most prevalent sustainable finance practices in six countries in the Arab region: Egypt, Jordan, Morocco, Bahrain, the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA). It provides insight into developments in this area over the past two decades and consolidated data on how all six countries have adopted green growth strategies. It also includes insights from policy makers, as well as feedback from practitioners in the focus countries. Policy recommendations include: • Strengthening governance, legislative and regulatory frameworks including issuing and enforcing green finance guidelines, building capacity and incorporate gender awareness in sustainable and climate financing; • Raising awareness of the merits of sustainable finance and strengthening the capacity of financial sector stakeholders; • Developing a pool of bankable green projects • Raising national readiness for climate change and finance reform measures to address institutional weaknesses, planning gaps as well as technical capacity and expertise constraints. “Only by understanding the barriers that are inhibiting the financing of sustainable business activities in the region will we be able to change policy and practice”, said Eric Usher, UNEP FI Head. “This is the first research to consolidate this kind of information in the region and contributes to narrowing the data gap on sustainable and climate finance. It will be an essential tool for policymakers and financial institutions in the MENA.” In Arab countries, the financing gap for achieving the SDGs is estimated to be at least $230 billion annually (AFED 2018). That is why it is important to enhance the role of the financial system in the region to support their transition towards sustainable development by bridging the green financing gap, mobilizing resources, and re-directing financial flows towards more sustainable and responsible investment. Sustainable finance practices in the Arab region are still in the early development phase but are expected to deepen in the years ahead. The report also assesses the status and the development in national strategies for climate finance in four countries in the Arab region: Egypt, Jordan, Iraq and Tunisia. It includes recommendations for policy makers, financial institutions and financial regulators on strategies to achieve the SDGs. This report was conducted under the auspices of two ongoing UNEP FI projects in the region with the League of Arab States and with the UNDP. The latter being the SDG Climate Facility Project: Climate Action for Human Security to which the Arab League is also a partner agency. — SG