With the biggest member of the world’s No. 1 oil cartel readying its first-ever green bond, sustainable investors are debating what to make of it.

Saudi Arabia’s plan to enter the market for green bonds marks a watershed moment. Some investors say it represents an encouraging step for the oil-addicted Gulf state to plot a path away from fossil fuels. Others are asking for credible evidence the debt will genuinely be green. The upshot, though, is that the biggest oil exporter on the planet is likely to find plenty of buyers for a bond it says will be climate friendly.

Both the Saudi government itself and the kingdom’s sovereign wealth fund are preparing to sell green bonds in the coming months. The deals may raise billions of dollars each and will help the Public Investment Fund finance projects like a so-called sustainable tourism resort on the Red Sea that will be powered entirely by renewable energy, according to people familiar with the plans.According to Todd Schubert, head of fixed-income research at Bank of Singapore Ltd., it almost makes no difference who an issuer is, given the near insatiable appetite for green assets. “The demand for green and other ESG bonds is so voracious that I would expect Saudi Arabia to have little trouble consummating this deal,” he  said.

Saudi Arabia is trying to recast itself as a viable target for capital in a world increasingly shaped by environmental concerns. Last month, the kingdom pledged to neutralize greenhouse gas emissions within its borders by 2060, and has earmarked billions for carbon-capture technology as part of that goal. 

Such commitments are made “not because it’s cool; they’re doing it because they have to,” said Hawazen Nazieh Nassief, vice president of ESG and external affairs at National Energy Services Reunited Corp., a Houston-based oilfield services company operating in the Middle East and North Africa. “Because if they don’t, and they continue to produce oil the way they are producing it today, people will stop buying it eventually.”But skeptics point out that the first net-zero commitment put forward by the OPEC giant was conspicuously sparse on details. Saudi Arabia has insisted on its right to continue pumping crude oil for decades to come. It’s also rejected an analysis by the International Energy Agency, which calls for an end to new oil and gas exploration if the planet is to avoid catastrophic overheating.

According to the government of Crown Prince Mohammed bin Salman, the de facto Saudi ruler, the main culprits behind this year’s increase in energy prices are climate activists. Meanwhile, no other G-20 country emits as much carbon dioxide per capita as Saudi Arabia.

Among investors on the sidelines is Nordea Asset Management, which oversees about $300 billion for its clients. Sascha Stallberg, a portfolio manager at Nordea, said its participation in a Saudi green bond sale “will depend on the type of projects financed, how they fit the overall green ambition of the country, and if detailed near-term climate targets are published with it.”

But there are plenty of investors who are unlikely to be deterred by the optics of buying a green bond from an oil major, both inside and outside the Gulf. 

Uday Patnaik, a London-based money manager at Legal & General Group Plc, said asset managers will take a sober approach and just “evaluate the underlying investments” that a Saudi green bond would go toward. “There would be interest.”

He also pointed to efforts by the Crown Prince to bring other energy sources into the Saudi mix. That’s amid a realization that the country is more exposed than most to the physical fallout from global warming, with temperatures regularly topping 50 degrees Celsius (122 Fahrenheit) during heat waves in recent years. 

With a reduction in carbon emissions increasingly becoming an act of self-preservation, renewable energy is receiving more attention. Saudi Arabia plans to increase the mix of solar and wind energy in its local grid to 50% by 2030, with natural gas set to make up the rest. The country is also investing heavily in hydrogen, which is seen as crucial to its eventual shift away from oil and gas.Such “mega’’ projects mean the 2060 net-zero commitment “shouldn’t be a challenge,’’ Nassief said. 

“Mohammed bin Salman has been looking to diversify the economy for several years now, so in that sense the credibility is there,” Patnaik said. 

Environmental, social and governance investing also is on its way to becoming a more frequent fixture of financial discussions in the region.

“We’ve been meeting with a number of different issuers in Saudi Arabia over the past few days and this topic of ESG came up in every meeting, and by extension green bonds,” said Francis La Salla, the chief executive of Issuer Services at BNY Mellon. “In the Gulf, and particularly in Saudi Arabia, there is a very keen awareness that in order to tap into global capital markets, you’ve got to think about green bonds.”“While there may be some investors who will refuse to buy the deal based on their green values, I don’t expect that this group would be large enough to impact the deal technicals that much.”Nassief of National Energy Services Reunited says there’s a clear interest in the region to cater more to ESG investors. And there’s  also “pressure from investors mainly from Europe and the U.S. on companies from all over the world to improve ESG performance, which is obviously a positive thing,’’ she said. Investors don’t only look at the ESG metrics, though. “They also want to make money,” Nassief said  “That’s a reality.”

According to Schubert at Bank of Singapore, there’s a good chance Saudi Arabia, like other green bond issuers, would be able to sell at better terms than non-green issuers. 

“I wouldn’t be surprised if the deal comes at a ‘Greenium,’” he said.