Sustainable Sukuk Market Guidance Launched by ICMA, IsDB, and LSEG

In a landmark collaboration, the International Capital Market Association (ICMA), the Islamic Development Bank (IsDB), and the London Stock Exchange Group (LSEG) have unveiled a groundbreaking set of guidelines. Aimed at enhancing the labeling of Sukuk as green, social, or sustainability-aligned, the Sustainable Sukuk market guidance launched by ICMA, IsDB, and LSEG serves as a beacon for issuers and stakeholders navigating the evolving landscape of Islamic finance.

Debuting post-discussions at COP28 in December 2023, the guidance is a treasure trove of practical insights, real-world examples, and best practices. Its primary goal? To foster the expansion of the sustainable sukuk market, a domain witnessing unprecedented growth.

Key among the findings outlined in the guidance is the staggering surge of the sustainable sukuk market. Since 2017, issuance has soared, surpassing the $47 billion mark. Notably, 2023 alone saw a remarkable $13.4 billion in sustainable sukuk issuance, marking a 42% uptick from the previous year. This surge underscores the global appetite for sustainable investment avenues.

Moreover, the guidance reaffirms the wide-ranging applicability of ICMA Principles across the global sukuk market. By upholding stringent standards and integrity, the principles ensure continued market evolution. Bryan Pascoe, Chief Executive of ICMA, underscores the pivotal role of guidance in setting consistent standards. These standards, he notes, are vital in both sustainable and Islamic finance spheres, aiming to narrow the climate funding gap and advance environmental and social objectives.

Dr. Muhammad Al Jasser, President of IsDB, echoes the sentiment, emphasizing the guidance’s role in demystifying the sukuk asset class. He highlights its potential to attract more investors and channel capital towards Sustainable Development Goals (SDGs), thus driving socio-economic progress.

Julia Hoggett, CEO of the London Stock Exchange, emphasizes the extensive stakeholder consultations that informed the guidance’s crafting. These consultations ensured alignment with Shariah principles and various thematic categories for use-of-proceeds bonds, enhancing its credibility and relevance.

Looking ahead, ICMA, IsDB, and LSEG are committed to broadening engagement with stakeholders. From Shariah boards to regulators and rating agencies, the aim is to embed the Sustainable Sukuk market guidance launched by ICMA, IsDB, and LSEG across diverse markets. Expect updates to the guidance post-consultations, further augmenting its impact and relevance in the ever-evolving world of Islamic finance.