Green Sukuk growth could follow the trajectory of green bonds

Sovereign, multilateral and corporate issuers have shown the broad applicability of green Sukuk to address climate changeThe range of projects financed by green Sukuk remains limited mostly to renewable energy and green buildings but will expand as the market maturesThe governance characteristics built into Sukuk structures, combined with a sustainability focus, could create a new type of ESG instrument

The green Sukuk market may still be new, but it has evolved far enough to be able to assess where it is in terms of its development, which the World Bank has done in a recent report. The report found some liquidity challenges associated with the smaller project-based issuers that confound a clearer understanding of the cost of financing green versus vanilla Sukuk. However, as th...