Mashreq, a leading financial institution in the MENA region, has inked a Memorandum of Understanding (MoU) with UAE-based fintech firm, Fils, to develop a pioneering corporate carbon offsetting offering. The collaboration aims to empower corporate and institutional clients to seamlessly integrate carbon offsetting directly from their Mashreq corporate accounts. Fils, an enterprise-grade digital platform, provides the foundational infrastructure for financial institutions to launch sustainable-focused products like carbon offsetting, facilitating the transition to an ESG-compliant corporate landscape.

The groundbreaking approach by Fils allows companies to effortlessly embed sustainability and climate action into their business models, promoting a more sustainable corporate environment. To combat greenwashing, Fils employs blockchain technology to track carbon credits, ensuring transparency and preventing double counting.

The MoU was formalized at Mashreq’s Global HQ, emphasizing the commitment to environmental responsibility. Joel D Van Dusen, Head of Corporate and Investment Banking Group at Mashreq, highlighted the impact of this initiative on corporate clients and the broader financial sector in the UAE. The strategic move aligns with the UAE’s commitment to sustainability, exemplified by hosting COP28 and striving to lead global sustainability efforts.

The agreement marks Mashreq’s initial step toward developing specialized carbon-offsetting financial products. The first products, expected in the first half of 2024, will launch in collaboration with selected UAE-based Mashreq corporate clients. The move signifies a significant shift in the region’s financial practices towards environmental responsibility.

In the UAE, carbon credits play a crucial role in decarbonization efforts. The partnership between Mashreq and Fils aims to address challenges in accessing trading markets directly by corporates and tackle issues related to minimum purchase amounts. Fils will provide fractionalized credits, simplifying the process for Mashreq’s corporate clients and enhancing accessibility.

Joel D Van Dusen commented on the MoU, stating, “This initiative will contribute towards environmental sustainability, reinforcing the UAE’s position as a pioneer in integrating sustainability into its economic and financial sectors. It signifies Mashreq’s dedication to sustainable practices.”

The collaboration with Fils is part of Mashreq’s broader sustainable finance initiatives under the global ESG platform, Climb2Change. The new carbon offsetting corporate offering reflects the increasing use of carbon credits, with 41% of global companies planning to use them to meet carbon reduction targets. The carbon credit market is anticipated to grow at a 30% CAGR in the coming years.

Nameer Khan, Founder of Fils, emphasized the groundbreaking nature of the partnership, stating, “Fils’ partnership with Mashreq in the development of a ground-breaking carbon offsetting product is a powerful catalyst for the evolution of ESG enforcement across the region’s financial markets.” Fils, led by Nameer Khan, aims to integrate ESG values into companies’ operations.

Mashreq’s announcement aligns with the UAE’s commitment to achieving net-zero emissions by 2050. The financial institution demonstrates a forward-thinking approach in the banking sector toward environmental responsibility, reflecting its commitment to sustainability and social impact in the region’s financial ecosystem.