HSBC has issued the first green mortgages in the UAE, as the Arab country races to find new ways to incentivise green investment.
The London-based bank approved three mortgages for customers purchasing homes in The Sustainable City community in Dubai, the bank said in a statement. The green home loans will be available for properties across the UAE if they meet sustainability criteria.
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The green home loans offer an interest rate discount of 0.25% for properties that meet certain sustainable criteria and a 50% reduction in bank processing fees, the lender said.
HSBC also offers other sustainable finance products in the UAE, including green car loans and sustainable investment fund options, the statement said.
The green finance boom is led by the younger generation
Lenders around the world are increasingly offering green finance products to customers, particularly younger generations, who are choosing their bank based on their ESG credentials, according to a recent report by global consultancy KPMG.
The UAE has set targets to limit greenhouse gas emissions over the next decade by 23.5 percent, with a focus on increasing clean power capacity, especially through solar and nuclear energy.
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By GlobalData“Sustainable development is more important now than it’s ever been, and it’s vital that banks support customers with competitively priced green finance, and to encourage more sustainable behaviours,” said Daniel Robinson, head of wealth and personal banking at HSBC UAE.
HSBC has seen a six-fold increase in sustainable finance activity
HSBC is expecting to provide between $750 billion and $1 trillion in sustainable financing and investment by 2030 as clients switch to more sustainable ways of doing business. The bank aims to be net-zero in its own operation by 2030.
In January 2021, HSBC formed a dedicated sustainable and transition finance team (STFT) in the Middle East to help institutions, corporates, and individuals transition to a more sustainable economy.
HSBC saw a six-fold increase in sustainable and transition finance activity in the region in 2020 compared with the previous year, the lender said.
