Leaders in sustainable finance, including the ICMA, the IsDB, and the LSEG have jointly published new guidance on the issuance of sustainable sukuk.
The collaboration between ICMA, IsDB, and LSEG culminated in the release of comprehensive guidance aimed at providing issuers and other stakeholders with practical information on labelling sukuk as green, social, or sustainability-aligned while adhering to ICMA Principles.
The guidance, unveiled following discussions at COP28 in December 2023, includes real-world examples, case studies, and best practices to facilitate the growth of the sustainable sukuk market.
One of the key findings highlighted in the guidance is the remarkable growth of the sustainable sukuk market, which has witnessed over $47 billion in issuance since 2017. In 2023 alone, $13.4 billion worth of sustainable sukuk was issued, marking a significant 42% increase from the previous year. This growth underscores the rising demand for sustainable investment opportunities globally.
The guidance reaffirms the broad applicability of ICMA Principles across the global sukuk market, ensuring that high standards and integrity are maintained as the market continues to evolve. Bryan Pascoe, Chief Executive of ICMA, emphasised the importance of the guidance in establishing consistent standards in sustainable and Islamic finance segments, aiming to bridge the climate funding gap and support environmental and social objectives.
Reflecting on the significance of the initiative, H.E. Dr. Muhammad Al Jasser, President of IsDB, highlighted its role in demystifying the sukuk asset class, attracting more investors, and directing capital towards Sustainable Development Goals (SDGs).
Julia Hoggett, CEO of the London Stock Exchange, underscored the extensive consultations undertaken with stakeholders in crafting the guidance, ensuring alignment with Shariah principles and various thematic categories for use-of-proceeds bonds.
ICMA, IsDB, and LSEG are committed to engaging with a wider array of stakeholders, including Shariah boards, regulators, and rating agencies, to embed the guidance across diverse markets. Updates to the guidance are expected following these consultations, further enhancing its relevance and impact.
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