The Islamic Development Bank (ISDB) and the London Stock Exchange Plc (LSE) have both pledged to partner to boost Green Sukuk globally.
The decision to develop the green Sukuk market was part of key resolutions taken when the President of the ISDB, Dr. Bandar Hajjar, met with the CEO of the LSE Plc, Nikhil Rathi, to discuss ways of broadening their collaboration.
In 2018 the Green Sukuk market hit $2.13bn, which translated to 0.53% of the total $401b Green bond size.
The Green Sukuk has recently emerged as a unique example of a Sharia-compliant impact investing instrument with strong growth prospects to fund environment-friendly endeavours.
The green Sukuk comes as the ISDB seeks to strengthen its position in supporting Green financing measures that create cleaner global environments.
ISDB, as an international financial institution, is committed to supporting member countries of the Organization of Islamic Countries to achieve the 2030 Sustainable Development Goals, SDGs.
The Green Sukuk focuses on three major areas, namely;
Facilitating access to finance for renewable energy projects in developing countries and across the world
Providing financial solutions to environmental challenges
Expanding the role of Islamic finance in achieving the Sustainable Development Goals, SDGs.
The LSE is a key global venue for the issuance of Sukuk. To date, over US$50 billion has been raised through 66 issues of these alternative finance investment bonds on the London Stock Exchange.
According to the Climate Bonds Initiative, a total of $117.8 billion in green bonds and Sukuk were issued in the first half of 2019, up 48 percent year-on-year (Y-o-Y).
The Climate Bonds Initiative has also identified the following eligible assets for green Sukuk, to include: solar parks, biogas plants, wind energy projects, renewable transmission and infrastructure projects, and electric vehicles. Equally, they can be used to subsidize a government’s green payments.