Global ESG bond issuance broke through the $1 trillion mark in 2021, having grown 70% on average since 2019 as sustainability bond issues surged, fuelled by Covid recovery measures. Meanwhile, green and sustainability sukuk hit record issuance of $6.1 billion, representing only 1% of ESG bond issuance and 4% of total sukuk issuance.
The Green and Sustainability Sukuk Report 2022 provides an overview of the primary market for green and sustainability sukuk, highlighting the impact of the pandemic and national development plans on supply and demand in domestic and international markets. The report also looks at the broader ecosystem for green and sustainability sukuk, focusing on governance and industry development efforts.
The report also features the findings of the Refinitiv’s 2022 Sukuk Survey, shedding light on investors’ approach to ESG investing and green and sustainability sukuk. Over 50% of respondents have integrated ESG criteria in their Shariah-compliant portfolios, suggesting there is already a strong base for demand for Shariah-compliant ESG investments. Meanwhile, 42% of respondents said their primary motivation for investing in green and sustainability sukuk is to fulfil ESG mandates, indicating higher demand for these sukuk is driven by non-traditional sukuk investors who are not restricted by Shariah-compliance mandates.
The report features a roadmap outlining key recommendations - based on best practices and success stories – for governments, regulators and industry development bodies to facilitate the development of the green and sustainability sukuk ecosystem, expansion of the market, and broadening the investor base.
- Up-to-date statistics on the global green and sustainability sukuk market
- Recent developments and emerging trends in the ESG sukuk market
- Overview of ESG sukuk ecosystem and key stakeholders
- Roadmap for green and sustainability sukuk
Sustainability sukuk at the forefront
Sustainability and sustainability-linked sukuk made up 74% of the value of ESG sukuk issued in 2021, up from 9% in 2019, as issuances surged following the Covid-19 outbreak in 2020.
The report noted that, on average, 82% of annual green and sustainability sukuk have been issued in international markets since 2018, reflecting strong demand from overseas investors.
On average, green and sustainability sukuk have attracted orders worth 4.4 times their offering values, compared with 3.3 times for comparably sampled traditional sukuk.
“As we approach COP27, it is our aim this report will inform and encourage more countries to adopt green and sustainability sukuk as an innovative approach for financing their SDGs and sustainable development plans,”
Head of Islamic Finance, London Stock Exchange Group