The Importance of Green Finance on Climate Risk Management in the Case of Saudi Arabia

This paper explores the role of green finance as a strategic lever for climate risk management in Saudi Arabia, a country undergoing a major economic transformation driven by Vision 2030. Despite its historical dependence on hydrocarbons, the Kingdom now aims to diversify its economy and strengthen its resilience to climate change. Through a review of current dynamics, this paper highlights the gradual development of a green financial ecosystem: green bond and green sukuk issuances, state initiatives such as the Saudi Green Initiative, and the rise of ESG investing. However, these dynamics remain hampered by major challenges: a lack of standardization of ESG criteria, the risk of greenwashing, weak local institutional capacities, and high upfront costs of sustainable projects. Despite these obstacles, green finance offers significant opportunities: attracting foreign capital, fostering the energy transition, developing new financial markets, and strengthening the management of climate-related physical and transition risks.