Ibrahim Abdulrahim Al Zakwani 

AVP-Head of Sustainable Investments & ESG

Sohar International

The Gulf stands at a strategic inflection point; abundant capital, deep energy expertise, and ambitious national visions combine with mounting climate risks and a global reallocation of capital toward sustainability. For financial institutions in the region, the immediate challenge is not whether to act but how to redirect capital, so it builds resilience and long‑term value rather than serving short‑term yield cycles.

Drawing on practical experience from banking, fintech investment, and structuring regional deals, I address four core questions that should guide how the Gulf scales climate‑aligned investment: how to integrate climate risk and ESG into financing decisions, which financing structures make projects bankable, what regulatory reforms will accelerate market confidence, and how digital finance unlocks new pathways for investment.

Integrating climate risk and ESG into financing must move from optional reporting to core commercial logic. At the beginning of the loan deal, we may apply a staged, binding approach: standardized ESG and climate scorecards or evaluation matrixes that evaluate emission intensity, transition readiness, physical‑risk exposure and social impact; those scores feed directly into credit underwriting and RAROC models; and financing terms include explicit, enforceable sustainability covenants. This means the ESG assessment is not a checkbox but a variable that adjusts pricing, tenor, collateral requirements and capital allocation. Practically, higher physical‑risk exposure translates into scenario stress tests and a built‑in climate premium; weaker governance scores trigger additional monitoring and conditional disbursements. Post‑deal, continuous monitoring through quarterly climate dashboards and independent verification ensures outcomes align with commitments. Embedding these practical scorecards to pricing to covenant to monitoring, creates a feedback loop where underperformance is met with agreed contractual adjustments and success is rewarded through better interest rate pricing or access to follow‑on capital. The result is capital that prizes resilience and predictable returns over high‑risk yield.

Making green projects bankable in the Gulf requires combining de‑risking tools with project design that prioritizes predictability and scalability. The most effective stack is layered or blended finance: concessional first‑loss capital from development partners or government or sovereign funds absorbs early performance risk and attracts senior commercial debt at marketable rates; mezzanine funds and strategic equity bridge the remaining return expectations. Sovereign and multilateral partial credit guarantees, political risk insurance and climate‑risk insurance provide further protection against related shocks. Revenue support mechanisms including offtake floor prices for renewables and secured PPP models for adaptation would certainly create stable cash flows that banks can underwrite. Equally important is modularization of projects, breaking large projects into smaller mockups or standardized tranches that promote repeatability will result on reduced execution risk, and would broaden the investor base, and enable secondary trading, which in turn improves liquidity and market confidence. Technical rigor and robust feasibility studies, demand aggregation and procurement and construction oversight would also complement financial structuring and converts theoretical bankability into real.

Regulatory reforms and policy incentives are the accelerant that converts pilot transactions into a self‑sustaining market. A clear, Gulf green taxonomy aligned to international best practice is essential; it removes ambiguity about what constitutes a green or transition activity and reduces green washing risk. Mandatory climate risk financial disclosure for regulated financial institutions that are tailored to sector materiality, creates a baseline of transparency necessary for investors to compare exposures across jurisdictions. Targeted capital incentives, such as reduced risk weights for verified green loans or assets or central banks green lending facilities will lower the cost of capital for sustainable projects and create immediate commercial appeal. Also, governments can catalyse demand by integrating ESG requirements into public procurement and infrastructure planning, thereby providing a pipeline of investable projects. Finally, mandatory climate data standards reduce friction: using consistent data formats will shorten due‑diligence cycles and will results with a proper carbon credits or stock pricing which in return will raise investor confidence.  Together, these reforms shift the market from ad hoc deals to a predictable, investable asset class.

Technology is another powerful enabler. Digital finance and fintech tools are opening new pathways for climate-aligned investment. One example is tokenization, which allows us to turn a large project like a solar park or a green logistics hub into digital units that investors can buy and trade. This lowers the entry barrier and brings in a wider range of participants, including retail investors and smaller institutions. In addition, Real-time climate data platforms help us track environmental performance of these assets and manage risks more effectively. They also support new products like parametric insurance, which pays out automatically when certain climate conditions are met. Moreover, smart contracts can automate payments based on project milestones, ensuring that funds are released only when real progress is made. By embedding green finance into everyday systems like payroll, mobile banking, or supply chains, we can reach small businesses and households that are often left out of traditional finance. These tools make climate investment more inclusive, transparent, and scalable.

The pathway to a resilient, green Gulf is not singular; it requires simultaneous progress across institutional practice, project structuring, regulation and technology. Financial institutions must internalize climate risk and bind it to commercial outcomes, while project developers and governments must design deals that deliver predictable cash flows and scalable modules. Regulators must create transparent, clear frameworks that build market confidence. Likewise, fintechs must provide the plumbing that provides easier access and compresses costs. When these elements move in a comprehensive scorecard that shape pricing, blended stacks that protect commercial lenders, clear taxonomies that signal credibility, and digital tools that broaden participation; capital will flow at the scale and speed needed to secure long‑term resilience and sustainable economic growth for the region.

It is also important to remember that green and sustainable projects go far beyond renewable energy. They include social infrastructure like schools and hospitals built to withstand climate stress, sustainable transport systems that reduce emissions and improve mobility, agricultural and fisheries programs that protect food security, and green buildings that cut energy use and improve quality of life. Each of these sectors offers real opportunities for investment and real impact for communities.

The Gulf region has the resources, the expertise, and the ambition to lead in climate finance. But leadership means more than deploying capital, it means designing solutions that are resilient, inclusive, and replicable. At Sohar International Bank, we are committed to building those solutions, and through FinTech Investments, we are exploring how digital innovation can accelerate the transition. Acknowledging that execution takes collaboration, I want to thank the conveners of this dialogue for creating a forum where policy makers, financiers and technologists can convert ideas into investable pipelines and measurable outcomes.