Dubai Islamic Bank (DIB) has introduced its inaugural Sustainability-Linked Finance Facilities Financing Framework, becoming the first Islamic bank globally to establish such a framework. This initiative aligns with the International Capital Market Association’s (ICMA) Sustainability-Linked Loan Principles (SLLP) and underscores DIB’s commitment to integrating sustainability into its financial operations.
The framework delineates criteria for Sustainability-Linked Finance (SLF) facilities, enabling DIB to issue financial instruments aimed at funding projects that contribute to climate change mitigation. It incorporates predefined Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs) to ensure measurable environmental impacts. These components are designed in accordance with ICMA’s SLLP, which provides guidelines to promote environmentally and socially sustainable economic activities.
“Having published our debut Sustainable Finance Framework in 2022, the development of this new Framework is an important step in our ESG journey,” said Dr Adnan Chilwan, DIB’s Group CEO. “The Framework underpins a key pillar in our Sustainability Strategy – ‘Finance a Sustainable Future’ – and will contribute to the bank’s commitment to achieving 15% of our portfolio in Sustainable Finance by 2030.”
To maintain transparency and accountability, DIB will publish an allocation and impact report annually throughout the lifespan of the sustainability-linked financial instruments. The SLF facilities will be evaluated by an independent party, and the report will receive limited assurance to verify its accuracy. Additionally, DIB has secured a second-party opinion from ISS-Corporate Services, which assessed the framework’s alignment with ICMA’s SLLP.
Standard Chartered Bank assisted in developing the framework as the sole service provider. This collaboration reflects a growing trend among financial institutions to integrate environmental, social, and governance (ESG) considerations into their operations, aligning with global sustainability standards.
In 2024, DIB renewed its Asset-Based Sustainable Finance Framework, also receiving a Second Party Opinion from ISS. This progression from asset-based to sustainability-linked financing indicates DIB’s evolving approach to sustainable finance, focusing on broader environmental impacts and performance-based targets.
This move reflects a broader shift in the financial industry towards sustainability-linked financial products. According to the Loan Market Association, sustainability-linked loans incentivise borrowers to achieve ambitious, predetermined sustainability performance objectives, promoting sustainable economic activity and growth.
