25 August 2021 - The IsDB Vice President, Country Programs, Dr. Mansur Muhtar commended the increasing focus on Green, Social and Sustainability Sukuk as innovative instruments for mobilizing resources geared towards post-COVID recovery in IsDB’s Member Countries and beyond. He was delivering the Keynote Address at a webinar titled “Green, Social and Sustainability Sukuk for Shaping Post-COVID Recovery in IsDB Member Countries”, which was jointly organized by IsDB and the International Capital Market Association (ICMA) as part of a series of events leading up to the 2021 Annual Meetings of the IsDB Group.

“The impact of the pandemic has been multi-fold, and this can only be countered with innovative financial instruments such as the Green and Sustainability Sukuk playing an integral role as alternate asset classes along with traditional development finance,” he said.

The Host Country Address was delivered by H.E. Mr. Odilbek Isakov, Deputy Minister of Finance of the Republic of Uzbekistan. He expressed his appreciation for IsDB’s cooperation and assistance towards the establishment of a National Green Sukuk Framework for Uzbekistan. This, he said, “would help to unlock new opportunities for us to mobilize investments into Uzbekistan, as the country has truly opened up for international finance since obtaining its ratings in 2018.” He also stated that “the Framework will deepen Uzbekistan’s inter-connectedness with other global Islamic financial centers and facilitate the diversification of our investor base.”

Dr. Zamir Iqbal, Vice President (Finance) and CFO of IsDB, then delivered a presentation of the journey of IsDB’s debut Green and COVID-19 Sustainability Sukuk issuances in November 2019 and June 2020, respectively. “IsDB is fully committed to the 2030 Agenda and has mainstreamed the Sustainable Development Goals (SDGs) in its policies and operations. On the funding side, this required us to expand our investor base and tap into the Environment, Social, Governance (ESG) and Socially Responsible Investments (SRI) universes,” he added.

He then described the Bank’s Sustainable Finance Framework that serves as the basis for its Labelled Sukuk issuances. Furthermore, he showcased the three (3) Labelled Sukuk issuances of IsDB to date. This was followed by an expert panel discussion that was moderated by Ms. Farnam Bidgoli, the Head of Sustainable Bonds and ESG Solutions, EMEA for HSBC.

Mr. Martin Scheck, Chief Executive, International Capital Market Association (ICMA), shared insights from a global standards-setting perspective for Green, Social and Sustainability Bonds. He reaffirmed the integrity of the pillars on which the Green Bonds Standard based, stating that “they are designed to make the capital markets more transparent, robust and resilient to drive ever more investments towards environmental objectives.” He also shared with the audience the evolution of the Social Bond Standard, Sustainability Bond Guidelines as well as the Transition Bond, which is fast emerging as corporations around the world transform their strategies towards the achievement of the Paris Agreement objectives.

Mr. Abbos Djurabaev, the Deputy Head of the Capital Market Development Department, Ministry of Finance, Uzbekistan, outlined about the steps that they are taking towards issuing Labelled Sukuk/Bonds to attract further investments into the country. “With the issuance of our first SDG-oriented bond earlier this month, we are moving forward to creating a regulatory framework for Sukuk issuances which will provide an enabling environment and the flexibility to issue SDG Sukuk, Green and other labelled Sukuk,” he said.

Mrs. Dwi Irianti, Director of Islamic Financing, Ministry of Finance, Indonesia, shared the experience of issuing a sovereign Green Sukuk, market reactions and future plans of Indonesia in light of the pandemic. She stated that “post-issuance reporting on the Green Sukuk proceeds was one of the main challenges that we addressed by instituting a high-level coordination mechanism between the Ministry of Finance (as Issuer) and the Line Ministries (as Project Owners), in order to fulfill our responsibility to investors with transparent annual reporting of allocations and progress. It was a monumental task with hundreds of projects in the Green Sukuk asset pool, and this was only possible with a high-level commitment from all the relevant stakeholders.” She also shared plans of Indonesia to issue a SDG bond later this year.

Dr. Yasser Gado, IsDB Treasurer, IsDB, shared the groundwork that went into the US$ 1.5 billion COVID-19 Sustainability Sukuk issuance in June 2020 and the subsequent US$ 2.5 billion Sustainability Sukuk issuance in March 2021and also shared how IsDB reoriented its approach for Labelled Sukuk in the near future. He said that “a clear direction and vision of the Management and committed resources towards creating the Sustainable Finance Framework were critical in attaining the flexibility to issue in different formats in order to cater to investors’ appetite and address the challenges of the pandemic at the same time.”

Mr. Xuan Sheng Ou Yong, the Green Bonds & ESG Expert at BNP Paribas Asset Management (Hong Kong), shared the investor perspective on the evolution of the labelled bonds market. As an asset manager on behalf of investors, he commended Green and Sustainability Sukuk issuers such as IsDB and Indonesia on the robust reporting of their labelled Sukuk, which he said “provides extra confidence to investors regarding the positive impact their funds are making towards environment and social objectives. This drives increased investor participation, increasing our Sukuk portfolios.”

The webinar concluded with all the panelists sharing their views on what Member Countries that would like to issue Labelled Sukuk should focus on. The advice ranged from ensuring coherence between the labelled Sukuk and the country’s overall alignment with the SDGs, learning from experienced issuers, investing in raising awareness of Sukuk as an alternative capital market instrument and enhancing the transparency of reporting.