The International Capital Market Association (ICMA), the Islamic Development Bank (IsDB) and LSEG (London Stock Exchange Group) have published new guidance on the issuance of green, social and sustainability sukuk (together, sustainable sukuk).
The guidance aims to provide issuers and other key market participants with practical information on how sukuk may be labelled as green, social or sustainability and aligned with the ICMA Principles through examples, case studies and best practices.
Bryan Pascoe, Chief Executive of ICMA said the launch serves as a “critical step” in establishing and maintaining globally consistent standards in the key growth segments of sustainable finance and Islamic finance.
The guidance also includes data from LSEG reflecting the current state of the sustainable sukuk market, which has now seen over $47 billion in issuance since 2017, with $13.4 billion issued in 2023, which is a 42 per cent increase from the previous year.
The guidance confirms the Principles’ wide applicability across the global sukuk market and helps ensure that it continues to develop with high standards and integrity, the parties said.
“We believe the guidance is an important building block for further ‘scaling-up’ of sustainable finance instruments, including sustainable sukuk, to help plug the massive climate funding gap, as well as raise finance for other environmental and social goals,” said Pascoe.
Meanwhile, H.E. Dr Muhammad Al Jasser, President of IsDB, said the industry initiative helps to demystify the Sukuk asset class, define sustainable sukuk and demonstrate their alignment with the ICMA Principles.
Adding: “This is crucial to expand the sukuk market, attract more investors and unleash more capital towards the SDGs.”
Julia Hoggett, CEO of the London Stock Exchange, commented: “This initiative, announced at COP28, was crafted through consultations with key stakeholders in the sustainable bond and sukuk markets, including leading issuers, investors, underwriters, and law firms. The guidance confirms the wide applicability of the ICMA Principles and that all project categories and themes for use-of-proceeds bonds, such as gender, blue and transition, are consistent with Shar’iah investing.”
The three parties shared their intention to engage with a broader set of stakeholders on the guidance in the coming months, including Sha’riah boards, regulators, rating agencies, non-profit organisations and other market participants to ensure that the guidance is embedded across various markets.
