Green Capital Transitions in the GCC: A Framework for Sustainable Financial Integration and Climate-Aligned Investment Growth

Green finance has emerged as a critical mechanism for aligning capital markets with climate and sustainability objectives, particularly as economies face mounting pressure to transition away from carbon-intensive growth models. In hydrocarbon-dependent regions such as the Gulf Cooperation Council (GCC), this transition poses distinctive challenges that require integrated institutional, policy, and financial frameworks. The global transition toward sustainable finance has gathered significant momentum, with green capital markets emerging as a central mechanism for channeling investment toward climate and development objectives. Hydrocarbon-dependent economies face a distinctive challenge in this transition, as they must reconcile resource-based growth models with rising pressures for environmental accountability and low-carbon diversification. This study develops an integrated theoretical framework to examine how Gulf Cooperation Council (GCC) financial systems are transitioning toward green capital markets, drawing on institutional theory, environmental policy pathway analysis, and climate-finance alignment models. Using descriptive statistics from regional stock exchanges covering 2015–2024, the study maps key trends in sustainable asset growth, institutional investor preferences, and regulatory evolution across the GCC. Findings indicate progressive alignment with global ESG norms; sustainable asset valuations grew at 23.5% CAGR (UAE) and 18.7% CAGR (Saudi Arabia). A fixed-effects panel regression with panel-corrected standard errors is estimated across all six GCC economies; regulatory framework maturity emerges as the strongest predictor of green bond issuance (β = 0.47, p < 0.01). Cumulative green bond issuances reached USD 52.6 billion (2015–2024), with renewable energy accounting for 58.1% of the sectoral allocation and green transportation recording a 55.9% CAGR (2020–2024). Policy recommendations focus on GCC-wide harmonization of mandatory ESG disclosure, adoption of a unified green bond taxonomy, and expansion of concessional green financing mechanisms. Substantial cross-country heterogeneity is documented, driven by differences in energy policy commitment, financial market maturity, and institutional capacity. The proposed framework offers specific policy guidance to accelerate green financial integration in the GCC, emphasizing regulatory harmonization, institutional capacity-building, and alignment with SDG targets 7 and 13. The study contributes to the limited evidence base on green finance in hydrocarbon-dependent economies and provides a foundation for future empirical research. Given the small panel dimensions (N = 6 cross-sectional units; T = 10 years), this study is positioned as exploratory rather than confirmatory: the panel-regression estimates and the hypothesized institutional-to-policy-to-finance sequence are interpreted as associational patterns consistent with the proposed framework rather than as definitive causal tests, and the reported coefficients are offered as indicative magnitudes to be re-examined as longer GCC green-finance time series become available.