Middle East

What you need to know about the CBUAE Climate Forum 2025

23 July 2025

3 minute read

4most were pleased to attend the Central Bank of UAE (CBUAE) Climate Forum under the patronage of H.H. Sheikh Mansour bin Zayed. The forum brought together regulators, economists, risk professionals, and sustainability experts from across the globe, and focused on how financial systems in the region can be both resilient to climate impacts and adaptive to transition pathways.

What was covered?

Topics covered at the forum included:

Climate risk integration
Regulatory frameworks and resilience
Monetary policy
Green Islamic finance
Industry best practice

Climate stress testing

Climate stress testing is crucial in allowing financial institutions to evaluate their resilience against potential climate-related disruptions.

Physical risk – lenders should use models to understand potential impacts on collateral values and the long-term insurability of assets.
Transitional risk – lenders can use models to assess their portfolio’s resilience to increasing carbon prices and market sentiments.

By conducting these tests, organisations can identify vulnerabilities within their portfolios, prepare for a variety of climate scenarios, and develop strategies to mitigate risks. This proactive approach not only ensures regulatory compliance but also long-term sustainability and stability within the financial sector.

Challenges of modelling climate risk

From the work 4most have been involved in within climate modelling in other geographies, we are aware of the challenges lenders run into when attempting to manage climate related risks within their portfolios. Lenders in the UAE will face similar hurdles and how to overcome these were a key point of discussion during the forum.

The forum highlighted several key data challenges:

Data on physical risk: There is a lack of comprehensive, high-quality data on physical risks such as extreme weather events, rising sea levels, and other climate-related hazards that could impact financial stability.
Granularity of scenarios: Existing climate risk scenarios often lack the necessary detail and granularity to accurately assess and predict the impacts at the macro and micro levels. More detailed and localized scenarios are needed to better understand the potential economic and financial consequences.
Geographical coverage: There is insufficient data coverage for certain regions, particularly those that are more vulnerable to climate change. This gap makes it difficult to develop accurate risk assessments and implement effective mitigation strategies.

How 4most can help:

Stress testing

We have significant experience developing stress testing solutions for a range of clients across the globe, including developing climate stress testing models, taking a micro and macro view to enable a bottom up (collateral/counterparty) to top down (macro/business sector) approach.

We aim to align our solution with the existing models used by lenders to ensure that any risks or losses arising solely from climate risk are clearly visible. So far, our approaches have included scenarios from the Network for Greening the Financial System (NGFS), central banks, and our own custom-tailored scenarios.

Developing ESG risk scores

To enhance ESG scores and drive positive behavioural changes through insightful, actionable recommendations 4most developed an approach called Knowledge Elicitation Process (KEP). The approach allows ESG modelling and overcomes data challenges by incorporating knowledge from in house subject matter and portfolio experts. This method ensures the creation of a transparent and auditable model which can stand up to regulatory review and internal validation but more importantly ranks lenders portfolios for longer term sustainability.

Climate scenario analysis

Our experienced consultants can help organisations develop comprehensive climate scenario analysis models that encompass a range of potential climate scenarios futures. This enables institutions to assess the potential impacts of various climate-related events on their financial positions and operational stability.

Summary

The CBUAE Climate Forum showed the UAE is focusing on a better understanding of climate risks, including understanding the impacts of physical risks and transitional pathways. Challenges remain in the face of quality data, more granular scenarios, and modelling approaches. Overall, the continued commitment to ESG and climate risk in particular means the UAE is pushing itself as a potential global leader.