Bond Sustainability Linked Sukuk Islamic KPI Targets 2026
The global sukuk market is witnessing significant growth, driven by increasing demand for sustainable financing solutions. As of 2022, the global sukuk issuance reached approximately $200 billion, with sustainability-linked sukuk making up a growing share of this market. The shift towards sustainable investment is being propelled by ESG (Environmental, Social, and Governance) principles, with many countries aiming to align their financial instruments with climate goals. By 2026, the market for sustainability-linked sukuk is expected to expand further, as countries and corporations integrate sustainability into their financial frameworks.
1. Malaysia
Malaysia is a leader in the sukuk market, accounting for more than 50% of global sukuk issuance. In 2021, Malaysia issued $58 billion in sukuk, with a notable portion dedicated to sustainable projects. The country aims to enhance its green financing initiatives to support its commitment to the Paris Agreement.
2. Saudi Arabia
Saudi Arabia’s sukuk market has grown significantly, with a total issuance of $20 billion in 2022. The government is focusing on sustainability-linked sukuk to finance projects aligned with Vision 2030, which aims to diversify the economy and promote environmental sustainability.
3. Indonesia
Indonesia issued approximately $11 billion in sukuk in 2021, focusing on infrastructure and renewable energy projects. The country is looking to increase its sustainable financing efforts as part of its commitment to reducing greenhouse gas emissions by 29% by 2030.
4. UAE
The UAE is home to a robust sukuk market, with total issuances reaching $25 billion in 2022. The government is increasing its focus on sustainability-linked sukuk to finance its National Climate Change Plan, aiming to reduce greenhouse gas emissions by 30% by 2030.
5. Qatar
Qatar’s sukuk market saw issuances of $9 billion in 2021, with a growing emphasis on sustainable financing. The country is utilizing sukuk to fund its National Vision 2030, which includes significant environmental initiatives.
6. Turkey
Turkey’s sukuk market has expanded, with around $5 billion issued in 2022. The Turkish government is promoting sustainable investments through sukuk to support its transition to a low-carbon economy.
7. Bahrain
Bahrain’s sukuk issuance reached $2 billion in 2021, with a focus on sustainable projects. The Central Bank of Bahrain is encouraging the development of green sukuk as part of its financial sector strategy.
8. Oman
Oman issued $1.5 billion in sukuk in 2022, with an increasing focus on sustainability-linked instruments. The government plans to utilize sukuk for funding renewable energy projects as part of its economic diversification efforts.
9. Egypt
Egypt’s sukuk market is emerging, with the government planning its first green sukuk issuance in 2023. The country aims to attract international investors to support sustainable development projects.
10. Pakistan
Pakistan’s sukuk issuance stood at $1 billion in 2022. The government is exploring sustainability-linked sukuk to finance various development projects, including renewable energy and infrastructure.
11. Kuwait
Kuwait’s sukuk market has seen issuances of $3 billion in 2021, with a growing emphasis on sustainable projects. The government is working towards integrating ESG principles into its financial regulations.
12. Jordan
Jordan has issued approximately $500 million in sukuk in recent years, focusing on financing infrastructure projects. The government is considering sustainability-linked sukuk to enhance its investment appeal.
13. Morocco
Morocco’s sukuk market is developing, with the government planning to issue its first green sukuk in upcoming years. The focus will be on renewable energy projects aligning with the country’s sustainability goals.
14. South Africa
South Africa issued approximately $1 billion in sukuk in 2022, with a growing interest in sustainable finance. The government is looking to attract investments through green sukuk for various infrastructure projects.
15. Nigeria
Nigeria’s sukuk market has gained traction, with issuances reaching $500 million in 2021. The government is exploring sustainable sukuk to finance projects that support its climate commitments.
16. Bangladesh
Bangladesh’s sukuk market is nascent, with plans for its first sukuk issuance in the near future. The government aims to include sustainability-linked metrics in its financial instruments.
17. Azerbaijan
Azerbaijan has issued approximately $200 million in sukuk, focusing on infrastructure development. The government is analyzing the potential for green sukuk to attract international funding.
18. Tunisia
Tunisia’s sukuk market is emerging, with intentions for future issuances focusing on sustainable projects. The government is exploring innovative financing solutions, including sustainability-linked sukuk.
19. Lebanon
Lebanon is considering sukuk as a means to finance its recovery efforts, targeting potential sustainability-linked features. The government aims to attract investment through innovative financing strategies.
20. Afghanistan
Afghanistan’s sukuk market is at an early stage, but there are discussions about future issuances that could incorporate sustainability into financing efforts. The focus will be on attracting international support for development projects.
Insights
The trend towards sustainability-linked sukuk is gaining momentum as countries prioritize ESG compliance and climate change mitigation. By 2026, the global sukuk market is projected to reach $250 billion, with sustainability-linked issuances comprising a significant portion. According to the Global Sustainable Investment Alliance, sustainable investments reached $35.3 trillion in 2020, highlighting the growing preference among investors for green financial instruments. As countries and corporations continue to align their financial strategies with sustainability targets, the sukuk market is expected to play a crucial role in facilitating responsible investments and financing sustainable development goals.
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