The Effectiveness of Green Banking in Saudi Arabia

Abstract

Background: Saudi Arabia is one of the countries in the world to launch ESG and Sustainable finance with the aim of not only contributing to global SDGs but also toward the achievement of the Kingdom’s Vision 2030. The need for sustainable financial practices has appeared as green finance and funding renewable energy projects as well as implementing sustainable practices in operations and services. This paper analyses the concept of green banking, its importance, and advantages and disadvantages to achieve sustainability for the financial sector in Saudi Arabia. Methods: The paper utilises legal frames and documents to conduct a legal analysis of green banking as a new concept in Saudi Arabia. The secondary data is also used to support the analysis, and the qualitative approach is employed to discuss the significance and features of green banking. Results and Conclusions: Saudi Arabia continues to face substantial obstacles in adopting green banking. These difficulties include the absence of explicit regulations and recommendations from the regulatory bodies and the high cost of implementing green banking practices in a market that is primarily dependent on oil-based sectors. It is, therefore, important the regulatory bodies shed more focus on green banking and must enact a regulatory framework to encourage financial institutions to support projects that uphold sustainability.