In a region known for oil wells, tankers and sprawling natural-gas plants, green bonds might raise some eyebrows.

But when Saudi Electricity Co and Qatar National Bank sold notes this month designed to fund projects including environmentally friendly buildings, smart meters and infrastructure for distributing renewable power, investors piled in.

“If you have an ESG mandate and are looking for a yield pickup in a name with a phenomenally strong balance sheet, then you would be willing to buy,” said Patrick Esteruelas, head of research at Emso Asset Management in New York. “The combination of public-relations benefits and the opportunity to tap a growing pool of capital means there will be a significant increase in green-bond issuance.”

In the Gulf, the decline in oil prices that was fueled by the coronavirus pandemic served as a reminder of why nations need to diversify their economies away from energy exports. While not everyone is convinced that the environmental, social and governance, or ESG, bonds go much beyond good PR, the global rush for placements means more issuance from the region is a given.

Saudi Electricity’s $1.3 billion of green sukuk was the first such deal in the world’s largest oil-exporting nation, where per-capita energy use is triple the average for Europe.

It helped drive placements in the Middle East to almost $2.5 billion this year, a nearly five-fold increase from 2017, when the region issued its first green debt. Egypt is also in an advanced stage of issuing $500 million of green securities.

“Given their high carbon-dioxide emissions per capita, Gulf economies are good targets for such schemes,” said Thomas Le Guay, a Dubai-based analyst for Moody’s Investors Service. “Green initiatives are also a good way for Gulf countries to balance their generous welfare systems with declining revenues from oil exports.”

Fitch Ratings estimates the Saudi budget deficit will rise to 15 percent of gross domestic product in 2020, one of the highest levels in the Middle East. The government’s revenue fell almost 50% year-on-year in the second quarter.

Not everyone is embracing the deals.

“It’s just a label,” said Paul McNamara, a money manager at GAM Investments in London, who didn’t buy green bonds from the Saudi or Qatari companies. “There are lots of countries doing things that aren’t good for the environment, but Saudi Arabia is probably the worst of all. There is nothing about Saudi Arabia selling a bond with a green label that makes any difference from Saudi Arabia selling any other sort of bond.”

HSBC Global Asset Management this week said it’s challenging companies and governments to ensure they have proper environmental policies with carbon-reduction targets, and aren’t simply issuing green bonds opportunistically.

Still, seven in 10 money managers said environmental, social and governance factors will influence their decisions over the next decade, according to a survey by Vontobel Asset Management.

“It is very important for issuers out of the Gulf Cooperation Council, both sovereigns and corporates, to get broader avenues for funding for the near future,” said Sergey Dergachev, a money manager in Frankfurt at Union Investment Privatfonds GmbH who bought bonds of both Saudi Electricity and QNB.

“The ESG theme is globally on the rise, and Covid-19 in many ways accelerated the importance of the ESG theme. Issuing green debt signals to investors that sovereigns and corporates do take ESG related issues seriously, and that is a positive.”