Report Launch: Islamic Finance Can Unlock $50 Billion Funding For Climate Emergency Ahead of COP 26

With less than 6 weeks to go until COP26, a new report entitled 'Innovation in Islamic Finance: Green Sukuk for SDGs' has been published by the UK Islamic Finance Council (UKIFC) and GEFI as part of our Path to COP Faith in the SDGs workstream. As the report rightly outlines, the principles of Islamic finance are underpinned by the objectives of Islamic law and match many of the aims and objectives of the agenda for sustainable development goals adopted by all United Nations Member States in 2015 to provide a shared blueprint for an urgent call for action by all countries to end poverty, improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests.

The report, which will be officially launched at the UKIFC's Islamic Finance and Global SDGs summit on Tuesday September 28th, estimates an additional US$30-50bn can be raised by 2025 through green and sustainability sukuk  to deliver the United Nation’s Sustainable Development Goals. Moreover, sales of new Green sukuk bonds have grown from US$500m in 2017 to US$3.5bn in 2019. The Republic of Indonesia (ROI), in partnership with the UNDP, issued the world’s first Government  green sukuk in March 2018 (raising US$1.25bn) and the world’s first retail green sukuk in November 2019 (raising IDR1.4trn or USD$104.4m).

The report also demonstrates how this unique alignment of the SDGs and Islamic finance provides a clear opportunity for green sukuk bonds to bridge the gap in private sector finance needed to meet countries’ climate targets and  accelerate achieving their wider Sustainable Development Goals. It takes a detailed look at the best practice approach to green sukuk taken in ROI and other Islamic finance regions.


  • Upfront investment is needed to develop a green framework and independent certification to assure investors that green sukuk bonds are not greenwashing.
  • Demand from western global investors for Environmental, Social, and Corporate Governance (ESG) investments gives green sukuk bonds the opportunity to attract  major new investors who otherwise would not have considered sukuk bonds for their portfolios.
  • Green or sustainability sukuk bonds might lower the cost of raising vital climate finance. Malaysia has seen the largest volume of sukuk issuances supported and facilitated by a number of Government initiatives.
  • Indonesia has a very limited corporate sukuk market and has not seen any corporate green sukuk issuances. There is a need to ensure sukuk have a level playing field with no additional burdens in comparison to conventional bonds; in addition, tax incentives could encourage corporate sukuk issuances.
  • The opportunity is there for Shariah scholars to positively influence ESG aspects as part of their Shariah review of sukuk issuances.
  • A challenge within the Islamic finance industry is the general lack of experience and depth of knowledge in relation to ESG matters. It is recommended organisations such as the Accounting and Auditing Organization for Islamic Financial Institutions take a lead and develop guidance for Shariah scholars.

The full report can be accessed here.

There is still time to register for the UKIFC's Islamic Finance and Global SDGs summit via their Eventbrite Page. You can find out more about our Faith in the SDGs workstream and activities at Cop26 on our dedicated Path to Cop Page.