Mashreq, which claims to be one of the leading financial institutions in the MENA region, has signed a Memorandum of Understanding (MoU) with the UAE-based fintech firm, Fils, in order to “develop a corporate carbon offsetting offering that helps corporate and institutional clients to integrate carbon offsetting directly from their Mashreq corporate accounts.”
Fils is reportedly an enterprise-grade, digital platform that “provides the underlying infrastructure for financial institutions, banks and other organizations across industries to launch standalone, sustainable focused products such as carbon offsetting.”
This approach to the future of fintech “facilitates the transition to an Environmental, Social, and Corporate Governance (ESG) compliant corporate landscape, enabling companies of all sizes to effortlessly embed sustainable and climate action into their business models and customer journeys, across industries.”
In a bid to eliminate the deceptive practice of misrepresenting environmental responsibility through greenwashing, Fils infrastructure “uses blockchain technology to track all carbon credits used to avoid double counting and provide transparency.”
The MoU was signed at Mashreq’s Global HQ by Nameer Khan, founder of Fils; and Mashreq’s Head of Corporate and Investment Banking Group, Joel D Van Dusen, with the support of the UAE’s Chief Trade Negotiator and Assistant Undersecretary for International Trade Affairs at the Ministry of Economy, Juma Al Kait.
The agreement represents “the first step in Mashreq’s development of specialised carbon-offsetting financial products, which will launch in collaboration with selected UAE-based Mashreq corporate clients.”
With the initial solution expected in the first half of 2024, the announcement “represents a critical milestone for the region’s financial sector, underlining a significant shift towards incorporating environmental responsibility within the region’s financial practices.”
Within the UAE, carbon credits “are an increasingly important part of the decarbonisation strategy.”
The partnership between Mashreq and Fils will “create a solution that solves a number of historic challenges, including the fact that trading markets are not typically accessible directly by corporates.”
The account will also solve the problem of minimum purchase amounts “that typically apply, whereas FILS will provide fractionalized credits. This removes the complexity and accessibility of dealing directly with the carbon credit markets and simplifies the purchasing, auditing, and reporting through Mashreq.”
Joel D Van Dusen, Head of the Corporate and Investment Banking Group at Mashreq, said:
“This initiative will have a broad impact on Mashreq’s corporate clients, offering a solution designed to contribute towards environmental sustainability. It also reinforces the UAE’s position as a pioneer in integrating sustainability into its economic and financial sectors, aligning with the nation’s role in hosting COP28 and its ambition to lead global sustainability efforts. Furthermore, the pioneering initiative signifies Mashreq’s dedication to sustainable practices.”
The MoU with Fils is the newest addition to Mashreq’s series of sustainable finance initiatives, forming “part of the bank’s wider global Environmental, Social, and Governance (ESG) platform, Climb2Change.”
The international initiative integrates “the Bank’s wide ranging ESG milestones with its contribution to shaping a sustainable future and the financial solutions required to combat climate change and achieve an inclusive net zero future.”
The new carbon offsetting corporate “offering from Mashreq is a unique product that reflects the growing use of carbon credits. 41% of global companies plan to use carbon credits to meet their carbon reduction targets, and the carbon credit market is expected to grow at a 30% CAGR over the coming years.”