Arab Bank has published an updated Sustainable Finance Framework that broadens the scope of its sustainable financing activity to encompass transition finance for carbon-intensive industries, alongside the use-of-proceeds green and social bond categories that underpinned its previous sustainability framework. The Amman-headquartered bank launched the revised framework in February 2026 as it seeks to deepen its engagement with clients in high-emitting sectors that are navigating the shift towards lower-carbon operations and require financing solutions tailored to the specific challenges of industrial decarbonisation.
The updated framework is structured around three distinct financing categories: use-of-proceeds instruments, which include green bonds, social bonds, and mixed-use sustainability bonds where proceeds are directed to pre-defined eligible projects; sustainability-linked financing, in which the financial terms of a loan or bond are linked to the borrower's performance against specific, measurable sustainability targets; and transition finance, a category designed to direct capital to companies in industries with significant emissions but a credible and time-bound plan to reduce them in line with net-zero pathways. The three-category structure positions Arab Bank to serve clients across a far wider range of sustainable finance needs than a single-category green framework would permit.
FRAMEWORK ALIGNED WITH ICMA STANDARDS
The framework has been aligned with the International Capital Market Association's Green Bond Principles and Social Bond Principles, the globally recognised industry standards that define use-of-proceeds eligibility criteria and disclosure expectations for labelled instruments. Alignment with ICMA principles is increasingly a prerequisite for issuers seeking to access the international investor base that purchases sustainability-labelled bonds, and Arab Bank's adoption of this alignment reflects both the cross-border nature of its capital markets activity and its ambition to attract global ESG-focused investors to future issuances.
As of June 2024, Arab Bank's eligible sustainable lending portfolio totalled USD 266 million. Green projects accounted for 82% of that figure, with renewable energy representing the largest sub-category at 32%, followed by clean transport at 29% and green buildings at 21%. Social projects comprised the remaining 18% of the eligible portfolio. These figures, included in the bank's framework documentation, provide a baseline against which the growth of the sustainable lending book can be measured as the new framework's broader scope brings additional clients and transactions within the eligible perimeter.
TRACK RECORD IN SUSTAINABLE CAPITAL MARKETS
Arab Bank has prior experience in the sustainable capital markets. In October 2023 it issued a USD 250 million perpetual Sustainable Additional Tier 1 bond, a regulatory capital instrument structured to meet sustainability criteria that attracted demand from investors seeking exposure to Middle Eastern financial institutions through a labelled format. The bank has also reported that its financed renewable energy projects have to date avoided 155,528 tonnes of greenhouse gas emissions, providing tangible evidence of the real-world environmental impact its sustainable finance activity has generated in the region.
The introduction of transition finance as a third category is particularly relevant given the composition of Arab Bank's client base, which includes companies operating across manufacturing, transport, construction, and related sectors in Jordan and throughout the broader Arab world. Many of these businesses face significant capital requirements to fund the equipment upgrades, process changes, and infrastructure investments that a credible decarbonisation transition demands. By offering a dedicated financing category structured specifically for this purpose, Arab Bank is positioning itself to serve a share of the regional economy's climate financing needs that would otherwise remain outside the scope of a purely green finance framework.