Green and Sustainability Sukuk Report 2022 Highlights
According to the Green and Sustainability Sukuk Report 2022, the market for green and sustainability Sukuk holds the potential to secure an additional $30 billion to $50 billion, dedicated to sustainable development by 2025.
Global Momentum and Untapped Markets
A Bloomberg report reveals that global green bond issuance has already exceeded $500 billion in 2023. This emphasizes the substantial potential for exploring untapped markets for green and ESG Sukuk, particularly in Pakistan.
Sukuk as Shariah-Compliant Financial Instruments
Sukuk, Shariah-compliant instruments backed by specific assets or economic activities, are integral in generating liquidity for entities, project financing, and government funding. They operate under a Shariah-compliant mechanism, avoiding interest.
Innovations in Green Finance
Sustainable, ESG, and green Sukuk represent innovations in the realm of green and social financial instruments. The funds raised from Sukuk issuance are channeled into environmentally and socially sustainable projects like renewable energy, infrastructure development, or social welfare.
Global Trends and Issuances
Notable green Sukuk issuances include Tadau Energy Sendirian Berhad in Malaysia, issuing a Sukuk for financing a 50-megawatt solar project. The Indonesian government, the largest issuer of green Sukuk, and Malaysia, with numerous private issuers, lead in green finance initiatives.
Pakistan’s Opportunity and Climate Challenges
With growing awareness of climate change after the 2021 UN Climate Change Conference, Pakistan faces a financial opportunity to address environmental challenges. The country’s susceptibility to climate change, evident in the 2022 floods, emphasizes the urgency for sustainable initiatives.
Policy Measures and Financial Incentives
The Securities and Exchange Commission of Pakistan (SECP) approved guidelines for green bonds and Sukuk in 2021. Policymakers are urged to champion sustainable projects, offering right policies and incentives to attract much-needed investments.
Shariah-Compliant Investments: Lower Costs and Global Attraction
With a high demand for Shariah-compliant investments, the issuance of green and ESG Sukuk can lower financing costs and attract global investors. This aligns with the government’s plan to convert conventional banking into Islamic banking by 2027.
Positive Impact and Economic Boost
Green and ESG Sukuk issuance not only enhances Pakistan’s global image in sustainability but also addresses economic challenges. It serves as a catalyst for generating funds essential for crucial projects, fostering growth in the Islamic finance sector.
Source：tribune.com.pk
