The Adoption of Sustainability for Sovereign Risk Assessment in UAE: Investigation of Challenges Using MCDM Method

This study focuses on understanding the interrelationship between the major challenges for sustainable sovereign credit assessment in UAE. The growth of sustainable investments with sovereign entities has redefined the credit assessment methods for achieving Sustainable Development Goals. It has become vital for The United Arab Emirates (UAE) to cope with the complicated dynamics of sovereign debt while simultaneously addressing environmental and social concerns. The study aims to prioritize and understand the relationship between these challenges by using a multi-criteria decision-making approach of fuzzy DEMATEL (Decision Making Trial and Evaluation Laboratory) method. This study identifies the sovereign credit challenges encountered in UAE related to environmental, social and governance (ESG) principles and sustainability. Fuzzy set theory is used with DEMATEL to map the uncertainty and subjectivity in the decision-making process in the face of sustainability inclusion in UAE. The results show that Political Instability and lack of Standardization are the most important challenges for sovereign credit assessment in UAE. There is a need for the regulatory authority to redefine its strategies to build a more stabilized political environment and simultaneously develop and implement uniform norms and practices across the region that can streamline cross-border investments and trade, enhancing economic integration.