A. Introduction

1.	The UAE Sustainable Finance Working Group (SFWG) was established in 2019 to enable the UAE’s economic transition and encourage the adoption of sustainable finance at the national level. This is in line with the Paris Agreement ratified by the UAE in 2016 and domestic acts and initiatives, such as the UAE Green Agenda 2015-2030, the National Climate Change Plan of the UAE 2017-2050 and the UAE Net Zero by 2050 Strategic Initiative.
2.	The members of the SFWG include ministries (Ministry of Finance, Ministry of Economy, Ministry of Climate Change and Environment, the Office of the UAE's Special Envoy for Climate Change), financial services regulators (the Central Bank of the UAE, the Securities and Commodities Authority, the Financial Services Regulatory Authority of Abu Dhabi Global Market and the Dubai Financial Services Authority), and UAE exchanges (Abu Dhabi Securities Exchange, Dubai Financial Market and Nasdaq Dubai).
3.	In 2020, in its Guiding Principles on Sustainable Finance in the UAE², the SFWG committed to developing standards for the financial sector to integrate ESG factors into corporate governance, strategy and risk management. In its First Public Statement published in November 2021, the SFWG set out its roadmap and refined its focus setting out three interlinked work areas including on ESG reporting, corporate governance and risk management, and taxonomy. In November 2022, in its Second Public Statement, the SFWG reported on the progress of its three workstreams. In particular, the Workstream Two on Sustainability-focused Corporate Governance announced it would start working on developing enhanced standards to help embed and address climate-related risks in corporate governance and risk management in financial services entities in the UAE.
4.	This document is the result of the efforts of Workstream Two and contains Principles for the effective management of climate-related financial risks (the Principles) which are issued in accordance with the relevant laws in each jurisdiction. The Principles have been developed in consideration of a number of standards on this topic published by international standard-setters. The key standards used for the purpose of the Principles include the Principles for the effective management and supervision of climate-related financial risks from the Basel Committee on Banking Supervision (BCBS) and the Guide for Supervisors Integrating climate-related and environmental risks into prudential supervision by the Network for Greening the Financial System (NGFS). A more complete list of international standards covering, for example, risk scenarios or details of the insurance sector is included in the Annex.

² Principle One of the Guiding Principles, available here.