Sharm El Sheikh, Egypt, 9 November 2022 – The Islamic Development Bank (IsDB) Group pavilion at the ongoing COP27 summit in Egypt has played host to a major side event on: “Green #Sukuk for #ClimateAction: Challenges and Prospects”.

The keynote speaker at the event was IsDB Vice President Finance, Dr. Zamir Iqbal, who called on the high-profile participants of the Bank’s commitment to continue promoting Green Sukuk in the capital markets as an alternative financing instrument.

“The Islamic Development Bank is firmly committed to continue leveraging on its top tier AAA rating for Green Sukuk issuance and promoting it in the capital markets as an alternative financing instrument that can drive climate action in its 57 member countries and beyond,” Dr. Zamir Iqbal stated.

“MENA is the most water stressed region in the world. This has implications across different sectors such as industry and transport and also impacts food and agriculture with a further potential for increased fragility and conflicts that tend to deteriorate environmental conditions. Therefore, it is very important to take this opportunity for countries to elaborate on Green Sukuk and by the same extension, a transition sukuk to raise more funding to fill the huge gap in the climate financing needs in this particular region. These funds can be exclusively utilized for green recovery and a just transition towards renewable sources of energy and carbon neutrality,” he elaborated. 

He also remarked, “We have seen around the world that climate change waits for no one. Disaster after disaster has brought Climate Action, and more specifically Climate Finance back to the top of the global agenda. This was further backed by the global call for the recovery from the pandemic to be green, sustainable and resilient.

In this context, IsDB strongly advocates for leveraging on innovative Islamic financial instruments to plug the huge funding gap for countries on their road to achieve the SDGs. Green Sukuk will continue to play an important role to realize this goal and help build a green and sustainable future for all.”

In recent years, IsDB has issued more than US$5 billion of Green and Sustainability Sukuk whose proceeds are exclusively dedicated to climate action and building resilience in IsDB member countries and beyond.   

To actualize the 2030 sustainable development agenda, Paris Agreement, and ultimately drive green and sustained economic growth, a huge amount of financing is required from diverse, unconventional, and innovative sources.

The sustainable debt market continues to play a significant role in this space. In recent years, Green and Sustainability-linked debt market instruments, including Green Sukuk/bond and Sustainability Sukuk/bond, have emerged as bespoke financial instruments to tackle the numerous environmental and social challenges throughout the world and their role towards achieving the SDGs and efforts to transition into a green economy has only expanded.

There is a growing need to scale up and leverage Sustainability-linked finance from non-traditional financing modalities such as Sukuk, including their alignment with institutional, legal, and governance frameworks to boost global efforts and ambitions to transition to a green, robust, and resilient economy.

The main objective of the IsDB Group hosted side event (and co-organized by the UKIFC) was to bring together crucial stakeholders in the Sukuk and bond markets to share experiences and thoughts on how IsDB Member Countries and others can leverage the numerous opportunities offered by Green Sukuk to support and mobilize financing for their transition to become green economies.

It also highlighted the mandate and extensive work of the High-Level Working Group (HLWG) on Green and Sustainability Sukuk, which was launched in November 2021 during the COP26 by founding partners such as the Islamic Finance Council UK (UKIFC), HM Treasury of the British government, Indonesia’s Ministry of Finance, IsDB, London Stock Exchange Group, and the Global Ethical Finance Initiative (GEFI).