QCB Sustainable Finance Framework: what external review means

The QCB Sustainable Finance Framework changes what a green label means in Qatar. A bank can no longer call a facility green because the borrower says so. The framework sets one national definition, sets rules for how proceeds are tracked and reported, and puts independent checks at the points where labels most often go wrong.

Many summaries say the framework “requires external review” in general. That is not quite what the text says. The obligations differ by product. This guide sets out what the framework actually says, the types of external review in the market, what a reviewer checks, and a practical checklist for banks and borrowers.

What the framework is

The Qatar Central Bank announced its Sustainable Finance Framework on 20 April 2025, through QCB Circular No. 2025/0001546. Banks were instructed to comply from the date of the circular. It applies to all banks operating in Qatar.

The QCB places the framework inside a wider policy stack. The document lists Qatar National Vision 2030, the Third National Development Strategy 2024 to 2030, the Qatar National Environment and Climate Change Strategy, the Third Financial Sector Strategic Plan and the ESG and Sustainability Strategy for the Financial Sector. It says the last of these envisions an industry-wide sustainable finance framework that supports national objectives. This one is it.

Three design choices matter.

It follows the loan market, not the bond market. The QCB says its definitions are aligned with the Loan Market Association (LMA) principles: the Green Loan Principles, Social Loan Principles and Sustainability-Linked Loan Principles. Bond-market rules from ICMA are close cousins, but the reference text is the LMA.

Bonds and sukuk sit elsewhere. A footnote states that the framework defines all sustainable finance instruments, but bonds and sukuk will be regulated by a separate framework. Do not assume this document is the full rulebook for a green sukuk.

It covers Islamic finance on equal terms. Islamic sustainable finance must comply with QCB rules, carry approval from the bank’s Shariah Supervisory Board, and meet the same definition of sustainable finance.

Two product families

The framework defines two kinds of labelled credit.

Sustainable finance is any type of credit, conventional or Islamic, direct or indirect (such as letters of guarantee or letters of credit), made available exclusively to finance, refinance or guarantee eligible green, social or sustainable projects. The label follows the use of proceeds.

Sustainability-linked finance is credit whose economic terms vary with whether the borrower meets predefined sustainability performance targets (SPTs), measured by key performance indicators (KPIs). The money is not ring-fenced. The label follows performance.

The review rules for the two families are different. Mixing them up is the most common error we see in draft bank frameworks.

The core components for use-of-proceeds credit

The framework sets four core components for sustainable credits.

1. Use of proceeds. Proceeds go to projects with clear environmental or social benefits, assessed and where feasible quantified by the borrower. The QCB lists typical green categories: renewable energy, clean transportation, energy efficiency, sustainable water and wastewater management, pollution prevention and control, climate change adaptation, sustainable management of natural resources and land use, eco-efficient and circular products, production technologies and processes, biodiversity conservation, and green buildings. Typical social categories include affordable housing, employment generation, SME finance and microfinance, food security and socioeconomic empowerment. For refinancing, borrowers are recommended to state the share of financing versus refinancing and the look-back period.
2. Evaluation and selection. The borrower tells the lender the environmental or social objective, the process it uses to decide that a project fits an eligible category, and how it manages environmental and social risks of the project. It is encouraged to reference taxonomies, standards or certifications used.
3. Management of proceeds. Proceeds go to a dedicated account or are tracked in an appropriate way. The QCB adds a hard rule: a facility cannot be labelled “Sustainable” if it includes a non-sustainable tranche. Only the aligned tranches carry the label. Proceeds may be managed credit by credit or on a portfolio basis.
4. Reporting. Borrowers renew use-of-proceeds information annually until the credit is fully drawn, and on material developments. The report lists allocations, project descriptions, objectives, amounts and expected and achieved impact.

What the framework says on external review

This is the part most often misquoted. Read it closely.

For use-of-proceeds credit, pre-signing review is recommended, not mandatory. The framework says that, where appropriate, borrowers are recommended to appoint one or more external review providers to assess alignment with the LMA core components. It accepts that lending is a relationship market. Self-certification may be sufficient if the borrower has demonstrated or developed the internal expertise to confirm alignment, and documents that expertise.

After full allocation, Qatar adds an auditor check. In the Qatar-specific part of the text, the QCB says borrowers and lenders should consult local rules on review and verification. It names two types of review. First, compatibility of granted credits with the guidelines is reviewed through the QCB’s periodic inspection process. Second, after full allocation of proceeds, an external review by a specialised and certified external auditor determines the allocation of proceeds in line with the allocation reporting requirements.

For sustainability-linked credit, verification is mandatory. The framework says borrowers must obtain independent and external verification of progress toward each SPT for each KPI, for every period relevant to the margin adjustment. It calls this a necessary element. The reviewer should be qualified, such as an auditor giving limited or reasonable assurance, an environmental consultant or an independent ratings agency. A pre-signing second party opinion on the KPIs and SPTs is recommended. Where no external input is sought, the borrower should build and document internal expertise to verify its methods.

The practical reading: the QCB will look at your labelled book during inspection, so a label you cannot evidence is a supervisory finding waiting to happen. A bank that relies on borrower self-certification carries that risk on its own balance sheet.

Types of external review

ICMA’s Guidelines for External Reviews describe the main forms of review used in labelled finance. The LMA principles use the same vocabulary. Each has a different job.

Type	What it does	Typical timing
Second party opinion	An independent institution with environmental or social expertise assesses alignment of a framework or transaction with the relevant principles, and the credibility of its categories, KPIs or targets	Before signing or issuance
Verification	Independent check against a defined set of criteria, such as allocation of proceeds, internal tracking, or KPI performance against targets. Often done by auditors as limited or reasonable assurance	After drawdown, annually, or at each SPT test date
Certification	Certification against a recognised external standard or label, with checks on conformity over time	Before issuance, then ongoing
Rating or scoring	Evaluation of the framework, instrument or a key feature such as use of proceeds, using a defined scoring method	Any time

Mapped to the QCB text: a second party opinion fits the recommended pre-signing review for both product families. Verification is what the QCB makes mandatory for sustainability-linked credit, and what the certified external auditor performs on allocation after full drawdown.

ICMA also recommends that external review reports are made public. The QCB framework is softer for loans. It allows information to be shared only with the lenders in the facility, and encourages public reporting where possible.

What reviewers check

Prepare the answers before you appoint anyone. A reviewer will test these areas.

Eligibility. Does each category map to a recognised green or social category? Are thresholds defined? “Energy-efficient buildings” without a defined rating level, such as a GSAS star target, will be challenged.

Exclusions. Which activities are excluded? Is the list consistent with the bank’s credit and environmental policies?

Selection governance. Who approves eligible assets? Is the committee independent of the business line that earns the fee?

Tranche discipline. Does any labelled facility contain a non-sustainable tranche? Under the QCB rule, that facility cannot carry the label.

Tracking and systems. Can the core banking system tag a facility, track drawdowns, and produce an allocation report? A spreadsheet kept by one person will not survive a verification.

Impact metrics. For each category, what metric is reported, by what method and against what baseline? Installed renewable capacity, energy saved, water saved and emissions avoided are common.

KPI quality for linked loans. The QCB says KPIs must be relevant, core and material, measurable on a consistent method, and benchmarkable. SPTs should go beyond business as usual and beyond regulatory requirements. It recommends a minimum of three years of KPI track record where feasible, and an SPT for each year of the term. A reviewer will test each of these.

Borrower evidence. What does the bank require from the borrower, and does it check it?

What borrowers should prepare

If you are a developer, an industrial company or a utility seeking green or sustainability-linked credit from a Qatari bank, the bank’s checks become your documentation burden. Prepare:

• A project description that maps to a named eligible category, with the objective stated.
• Technical evidence, such as design specifications, energy models, GSAS certificates or equipment data sheets.
• An emissions or resource baseline, with the method and factors stated.
• The share of new financing versus refinancing, and the look-back period for refinanced assets.
• A tracking method for drawdowns, and a template for the annual allocation and impact report.
• For a linked loan: KPI definitions, at least three years of history where you have it, a target for each year, and a named verifier.

A borrower that arrives with this pack closes faster. One that does not will meet the bank’s checklist halfway through credit approval.

Sustainability-linked loans in practice

A linked loan does not restrict the use of proceeds. The margin moves with performance. The QCB allows a neutral bracket where no adjustment applies, if there is a strong rationale.

At least once a year, the borrower must give lenders up-to-date KPI information and a sustainability confirmation statement with a verification report attached. That makes data quality the real cost of a linked loan. If emissions intensity is the KPI, you need a verifiable greenhouse gas inventory, not an estimate. Our Scope 1-3 calculator gives a first view, but a covenant needs a verified number.

The disclosure link

The framework does not sit alone. Under the QCB Sustainability Reporting Framework issued on 4 December 2025, banks and insurers regulated by the QCB report under IFRS S1 and S2 for financial years starting on or after 1 January 2026. Sustainable finance volumes and targets will appear in those reports. If a label is wrong, the disclosure is wrong. See our guide to the QCB Sustainability Reporting Framework.

A practical checklist for banks

1. Map the current labelled book against the framework definitions. Remove labels you cannot evidence.
2. Split the book into use-of-proceeds and sustainability-linked facilities. Apply the right review rule to each.
3. Check every labelled facility for non-sustainable tranches.
4. Write or update the bank-level sustainable finance framework, with categories, thresholds and exclusions.
5. Decide where you will rely on borrower self-certification and where you will require a second party opinion. Record the reason.
6. Build tagging and allocation tracking into core systems.
7. Appoint verifiers for every linked loan, and diarise each SPT test date.
8. Plan the post-allocation external auditor review for use-of-proceeds facilities.
9. Prepare for QCB inspection: one file per facility with evidence, approvals and reports.
10. Reconcile labelled volumes with your IFRS S1 and S2 disclosures.

A note on the sovereign

The Ministry of Finance runs its own green financing framework for sovereign issuance and publishes allocation reports. It is separate from the QCB framework for banks. It shows the standard the state sets for itself: a framework, an external review and published allocation. Banks should expect to be held to no less.

Next step

Start with the QCB readiness checklist, then read our regulation summary. If your institution is building or refreshing its framework, our QCB sustainability compliance service covers framework design and preparation for external review and verification.

Sources

1. Qatar Central Bank, Sustainable Finance Framework 2025 (PDF)
2. Qatar News Agency, QCB issues Sustainable Finance Framework (20 April 2025)
3. Sultan Al-Abdulla & Partners, QCB issues Sustainable Finance Framework for banks (Circular No. 2025/0001546)
4. ICMA, Guidelines for External Reviews
5. ICMA, Green Bond Principles (June 2025 edition)
6. IFRS Foundation, Qatar jurisdictional profile on use of ISSB Standards (updated 4 June 2026)
7. Ministry of Finance Qatar, ESG and sovereign green financing

This article is general information, not legal or regulatory advice. Check the current text of each rule with the issuing authority.