Over the past year, efforts to accelerate the energy transition have run into fresh challenges. Critical concerns have risen around energy strategy, security and prices, posing a major challenge to a Mena region historically dependent on oil and gas exports. In this roundtable discussion, hosted at the GTR Mena event in Dubai in February in collaboration with the International Trade & Forfaiting Association (ITFA), leading trade experts from across the region discuss the importance of sustainability, the parties responsible for driving progress, and what challenges must still be overcome.


Roundtable participants:

  • Maninder Bhandari, CEO, Safety Electrical Group (SEG) (moderator)
  • Silvina Bruggia, director of emerging markets, Refinitiv
  • Ersoy Erkazancı, financial correspondent, Bloomberg
  • Shiran Moodley, speaking at the time as regional head of sustainable trade finance, Menat, HSBC
  • Semih Ozkan, executive director, EMEA energy, power, renewables, metals and mining, JP Morgan
  • Anirudha Panse, managing director and head of trade product management, First Abu Dhabi Bank


Bhandari: We are hearing a lot about the energy transition in the context of serious concerns about energy security. In your view, has the momentum shifted more towards energy security, or is sustainability still the key goal at this time? In other words, how serious are you about the energy transition at the moment; are people still going to implement what they had promised, or is the transition becoming a buzzword?

Erkazancı: It’s a bit of both. In this region, there was some caution at the beginning because it’s such an oil-dependent region, and there is still talk of under-investment in the sector. But while the energy transition and sustainability are important, unfortunate events like the Russia-Ukraine war show that we have to keep investing in the oil and gas industry too, for energy security and affordability reasons.

Not long ago, we saw news of a state of disaster in South Africa, on the basis that there were lots of electricity outages – and that’s in a market that is still highly dependent on coal. In that context, you have to say energy security is more important in the immediate term than sustainability.

But, on the other hand, we are seeing more progress on sustainability all the time, both from governments and companies, announcing net-zero targets or investing in hydrogen, ammonia, carbon capture, and so on. There are geopolitical differences; it’s probably fair to say Europe and the US are more committed, while this region is lagging behind a little.

But it’s more than just a buzzword now. If we don’t adopt sustainability now, if we delay the transition, we will see more natural disasters, more food scarcity, and ultimately we will bear a greater cost.

Moodley: If you think about developing markets where access to finance can be a challenge, you have to relate it back to pricing. The benefits of sustainable finance need to be highlighted in order to encourage transition at all levels; otherwise, it may be mistakenly construed as simply another cost.

Bruggia: I agree there is a difference between developed and emerging markets, and access to capital in emerging markets is a bit concerning. However, there is some good news on the evolution of the transition. We still need to accelerate the process, but we are in a better place compared with two years ago. Today 10% of total debt is sustainable debt; this is important, and these numbers would not have happened in the past.

In this region, new products like green sukuk are also good news and will be an important vehicle to connect demand and supply. There was a recent survey from Deloitte and the Institute of International Finance that found 25% of the banks surveyed have already created products for financing the transition, which is also good news compared with previous editions of the same survey.

But for banking, it’s a very difficult task. They are doing their own transition while also helping clients with theirs. Their own targets depend on what their clients are doing. What we are seeing is this is proving a difficult task.


Bhandari: If institutions are making the transition a necessity, it suggests they are not just doing it for show. Do they genuinely think these transactions have been de-risked, that sustainability is the natural way forward, and that if you don’t jump onto the boat now you will miss it completely?

Moodley: We’ve seen an exponential growth in sustainable finance over the last couple of years. Since 2017 we have seen a significant growth in green, social and sustainable assets that is now contributing around 10% of that total market – which is notable in such a short period of time.

It means sustainable finance plays a significant role in the financial economy, much of this stemming from government commitments, their NDCs and ultimately the regulatory environment. There is a clear recognition of how significant the impact of climate change is, and the responsibility on all of us to tackle and mitigate its effects is paramount.

Sustainability and climate change are also a huge part of what consumers think about, especially among the younger generations, and so that has to be implicit in your brand. So not only is it a responsibility, but it also follows market trajectory and regulatory requirements, meaning that businesses can’t afford not to be placing sustainability at the core of their approach.

Ozkan: Are banks doing this because it’s the right thing to do, or for other reasons? First, there is empirical evidence out there showing strong ESG practices can have a positive impact on performance – and that is growing all the time, albeit not conclusively, especially on the corporate side but increasingly among the banks as well.

Second, you have pressure from shareholders. Sustainability is so important to them now, and businesses – whether banks or corporates – realise they have to prioritise that in order to continue operating in whichever sectors or countries they are in.

Third, there are disclosure requirements coming in around non-financial information, there are integrated reporting standards coming in in the US, for example, and so in future companies know they will need to disclose their emissions data. That is challenging when you get to scope 3, because it relies on data coming from different sources along your supply chain, but ultimately ESG is a lot more quantifiable, and targets and KPIs are more science-based. It’s so important that you can verify your progress.

Panse: There is undoubtedly growth in sustainable finance, but if you think about the overall journey we’re on, is that growth fast enough?

You can draw a parallel with the pandemic. Covid vaccines were only invented a couple of years ago, and today something like 6 billion of the global population has been vaccinated at least once. How was that change adopted so fast, within the span of around one year? Is it just because the pandemic was affecting the current generation, rather than several future generations, and so it felt more urgent?

It is clear that for the transition to continue at a progressive pace, each of us will have to play a role, because it is only a collaborative effort across the whole industry that will help us meet that 1.5°C target.


Bhandari: Ultimately, it’s up to the individual consumer, corporate or bank to put its hand up and say ‘I’m willing to pay the price for sustainability’. What incentives, investments or products can be put in place to make that happen?

Or does it have to be a matter for the regulators?

Panse: Regulators do have a major role. In many developed markets there are standards around adopting sustainability, but in many parts of the world those regulations just don’t exist. At the same time, there are still a lot of subsidies being given to carbon fuels. That means some people might want to change, but are worried about being accused of greenwashing because there are no standards with which to align themselves.

Another issue is the level of awareness. If you talk to the banks, or the large corporates, the level of conversation is very advanced. But in those lower tiers, the smaller corporates and the SMEs are focusing primarily on sustaining themselves, making sure the lights stay switched on. This is where events like the Cop conferences increase the pace of change, because they raise a lot of awareness and emphasise the seriousness of the situation.

Finally, developments in technology mean renewable energy is becoming much cheaper. That will make a huge difference to the transition, because naturally if people are asked to spend more they will think twice.

Ozkan: There is no quick fix to the world energy dilemma. Globally, the transition is not going to happen overnight, and it needs to be equitable and affordable. If you look at the Mena region, there is a lot happening around clean and renewable energy, but on a day-to-day basis you need to ensure households have energy security – particularly the most vulnerable ones. That means conventional energy systems have to keep operating at the same time.

Looking ahead, significant investment is coming in, and this region sits in a fortunate position to have assets like natural gas in the immediate term, which can be leveraged to move towards hydrogen and carbon capture in the future. More investment is still needed of course, but this is being seen as a real opportunity.

Erkazancı: National oil companies have an interesting role in this. I believe they have a bit more say now in pushing the transition, and might take more of a lead, even if most of the pressure is coming from regulators, activists and other parties.

Bruggia: On the financing side, one of the keywords is blended finance. The collaboration between the private and public sector will accelerate progress, especially in emerging markets – on renewable energy for example, how to de-risk long-term investment from a market perspective is crucial.


Bhandari: What challenges are there to introducing these kinds of incentives, or supporting the transition more widely, and do those vary according to country or region?

Erkazancı: Every region and every country has different resources and differently structured economies.

Europe and the US have taken the lead so far, but I think the Mena region is well placed to join them, because it has so much flexibility in terms of cash from natural resources. And clearly, it wants to jump into sustainability; almost all countries in this region have now announced net-zero targets.

Also, we’re hearing every day about growing investment in green energy, hydrogen and sustainability in general, but that’s not just coming from the banks. Sovereign wealth funds are also helping the move towards renewables, and that will really accelerate the transition.

Bruggia: The energy transition is not a singular thing. There are many, many transitions happening at the same time, in each country, in each sector and at each company. They are all in different places along that journey, and they all need to continue on their own path. So when we talk about best practices, it’s really a case-by-case question and that’s what makes it so complex. There is no one-size-fits-all solution that we can use to set best practices.

However, you can address that complexity. Some companies are not in a good position now to say ‘this is my full transition path’, but they can still do something. They could start with energy efficiency, for example, and take immediate steps towards reducing emissions. If you separate your short and long-term goals, you can start to be more realistic around your day-to-day targets.

Ozkan: One interesting aspect is people often look at exposure to climate change from a physical risk perspective. What happens if there is a tsunami that hits your operation’s data centre, for example? But there is growing awareness around your transition risk exposure, and what that means for your capital. Central banks need to ensure the banking system remains stable, and that means knowing the extent to which banks are able to finance sustainable products and the energy transition.

Also, if you look at banks’ reporting around net zero, some are reporting based on carbon intensity, some are reporting absolute emissions, and some are reporting on financed emissions. At some point there will have to be convergence and alignment, depending on which way forward is the most practical and has the most integrity.

Moodley: There is an interesting point around credit risk. Credit is still the driving factor behind financing decisions, and there’s not really an explicit or consistent view of how that translates into sustainability. Across the industry I expect we will see progress in formalising this relationship between sustainability and credit score.

Panse: The ICC is doing important work to help define what sustainable trade finance looks like in practice. That gives a level playing field for the banks to start calculating how much of their business is sustainable, and to avoid the risk of greenwashing.

One thing that has eased some of the pain for smaller companies is the launch by banks of solutions like sustainable supply chain finance. If you can drop pricing in line with sustainable practices, that allows more lower-tier suppliers to benefit from these kinds of programmes. In turn, that motivates the anchor buyer to keep extending this to their entire supply chain, and there is a financial benefit for everyone.


Bhandari: As closing remarks, do you have any final thoughts or key takeaways from today’s discussion?

Ozkan: We often end up discussing the energy transition versus energy security, but I think in a way, these objectives are not mutually exclusive. I think we can and must do both at the same time.

Erkazancı: Just on the consumer demand side, it’s true younger generations are more conscious about this, but we can’t leave it to the public for momentum to flow from the bottom to the top. This will also need regulations, which come from top to bottom.

Moodley: Much as we talk about the energy transition in global terms, a key takeaway for me is that transition has to take place in a way that makes sense for that particular geography.

Bruggia: Funding and investment in sustainability is not enough. Innovation is hugely important to accelerate the transition, and that requires ongoing research and development so we have long-term cost-effective solutions.

Panse: To quote His Excellency Dr Sultan bin Ahmed Al Jaber: ‘What the world needs is more energy and less emissions.’ Future energy needs are likely to be 30% higher than today as the world population increases, so there is no on/off switch right now that will facilitate the transition. We need investment, innovation, awareness and standards.