Amman, July 6 (Petra) — Jordan’s banking sector is positioning
itself as a key driver of the Kingdom’s transition to a green
economy, backed by a robust financial system, an evolving regulatory
framework, and growing integration of sustainability principles into
banking operations.

The shift comes amid national efforts to advance sustainable finance
in line with the Economic Modernization Vision and Jordan’s
commitments to addressing climate change, strengthening energy and
water security, and improving resource efficiency.

Association of Banks in Jordan (ABJ) CEO Maher Mahrouq said the
banking sector is well positioned to play a leading role in financing
the transition to a green economy, citing the sector’s resilience,
sound governance, advanced risk management practices, and increasing
adoption of environmental, social and governance (ESG) standards.

In an interview with the Jordan News Agency (Petra), Mahrouq said the
green economy has evolved beyond an environmental objective to become
an economic and investment imperative that enhances sustainable
growth, improves resource efficiency, strengthens competitiveness,
and bolsters the economy’s resilience to global challenges.

He said Jordanian banks have made significant progress in recent
years by embedding sustainability into their business strategies,
strengthening environmental and climate risk management, and
expanding financing products that support environmentally sustainable
projects. He described the Central Bank of Jordan’s Green Finance
Strategy (2023-2028) as a milestone that established a national
framework for mobilizing finance toward green investments.

Mahrouq said banks increasingly recognize that climate change, energy
security, and water challenges are closely linked to financial
stability and asset quality, prompting them to incorporate ESG
considerations into lending and investment decisions as a core
component of prudent risk management.

While green finance continues to expand steadily, he noted that
measuring its overall size remains a work in progress as the sector
develops unified definitions, classifications, disclosure standards,
and reporting mechanisms aligned with international best practices.

He said financing has primarily targeted renewable energy projects,
particularly solar power, alongside energy efficiency initiatives,
water resource management, green buildings, sustainable
transportation, and industrial projects adopting cleaner, more
efficient technologies.

Banks have also broadened their green finance offerings to
individuals by providing financing for residential solar energy
systems and electric vehicles, reflecting wider adoption of
sustainable financing across the economy, he added.

Mahrouq described green finance as both a development tool and a
promising investment opportunity, noting that sustainable projects
improve productivity, lower operating costs, enhance business
competitiveness, stimulate economic growth, and create jobs.

He identified several challenges slowing the expansion of green
finance, including a limited pipeline of bankable green projects, the
relatively high cost of sustainable technologies, and insufficient
environmental and technical data, particularly among small and
medium-sized enterprises (SMEs).

Addressing those challenges, he said, will require establishing a
clear national taxonomy for green projects, developing comprehensive
environmental databases, and strengthening mechanisms for measuring
environmental impact to improve transparency and support more
informed lending decisions.

Mahrouq also stressed the importance of raising awareness among
businesses and individuals about the long-term economic benefits of
green investments, noting that many sustainable projects generate
substantial cost savings while delivering environmental gains.

He called for additional incentives, guarantees, and technical
support programs to reduce investment risks and encourage greater
financing of sustainable projects, particularly in priority sectors.

Mahrouq highlighted close coordination between the Association of
Banks and the Central Bank of Jordan through technical committees,
workshops, capacity-building initiatives, and ongoing dialogue with
banks operating in the Kingdom. He said the association also serves
as a bridge between banks and regulators by conveying industry
feedback that helps shape policies suited to Jordan’s banking sector.

This collaboration, he added, has strengthened banks’ institutional
readiness, improved the integration of climate risks into credit and
risk management frameworks, and supported the development of
sustainable financial products.

Mahrouq underscored the need to expand green financing for SMEs
through more flexible financing solutions and stronger guarantee
mechanisms to help businesses invest in energy- and water-efficient
technologies.

He added that sustainability has become a strategic priority for many
Jordanian banks, extending well beyond corporate social
responsibility initiatives to encompass lending, investment, and risk
management policies.

Looking ahead, Mahrouq projected strong growth in Jordan’s green
finance market, driven by legislative reforms, rising investment in
renewable energy, water, sustainable transportation, and green
infrastructure, as well as growing international interest in
financing low-emission projects.

He said the coming years are expected to see wider use of sustainable
finance instruments, including green bonds and sustainability-linked
financing, alongside stronger partnerships with regional and
international financial institutions to attract quality investments
and support strategic development projects.

Mahrouq concluded that Jordanian banks have already begun shifting
from merely recognizing climate risks to integrating environmental
considerations throughout their financing and risk management
activities. Although methodologies for measuring the carbon footprint
of financing portfolios continue to evolve, he said the sector’s
direction is clear: expanding sustainable finance in line with
international best practices while supporting the Kingdom’s economic
modernization and long-term sustainable development.

//Petra// AJ