Green Sukuk Initiative


The scale of funding and technical support required to achieve the ambitious 2030 Agenda for Sustainable Development are far beyond the scope of individual governments and multilateral funding agencies. Private sector funding, capabilities, and know-how need to be mobilized within the global partnership for sustainable development to fill this funding gap and to operationalize the policies and actions outlined in the Addis Ababa Action Agenda.

Islamic finance can be a strong and non-traditional source of financing for the SDGs beside conventional finance. Its major principles of financial stability, financial inclusion and shared prosperity are aligned with the SDGs. Another important source of funding for the SDGs is impact investing. The term defines investments that generate a measurable and beneficial social or environmental impact alongside a financial return on investment. Similarities between the two industries create a promising avenue to support the implementation of the Agenda 2030 and effectively respond to the growing challenges related to development financing and inclusive economic growth.

Green Sukuk has recently emerged as a unique example of a Sharia compliant impact investing instrument with strong growth prospects to fund environment-friendly endeavors. Green sukuk are asset-based financial instruments structured to provide funding for renewable energy and environmental projects, among others. Southeast Asia already takes the lead in financing renewable energy projects via Green Sukuk. Six pioneer transactions have been observed in Malaysia and Indonesia with great success. Tadau Energy in Malaysia issued a $64 million Green Sukuk in 2017 to finance a 50 MW solar project. The Indonesian government issued a $1.25 billion sovereign Green Sukuk to fund environment friendly projects in the country. All of the issuances received multi-fold oversubscription by the investors. Given that 30% of the investors in the Indonesian Green Sukuk were green investors, the trends in green project and Green Sukuk as a financing model represent a new avenue for SDG implementation generating creating economic value.

As part of its strategy and workplan, the Green Sukuk Initiative launched aiming at three goals:

  • Facilitating access to finance for renewable energy projects in developing countries and across the world
  • Providing financial solutions to environmental challenges
  • Expanding the role of Islamic finance in achieving the SDGs

Convening stakeholders from both public and private sector, the initiative focuses on raising awareness and helping stakeholders build capacity for utilizing Green Sukuk in renewable energy projects as an alternative financing instrument. Green Sukuk Initiative was piloted in Istanbul in 2018 with a workshop participated by representatives from public and private sector. The workshop aimed at:

  • creating an enabling environment for mobilizing private capital for financing renewable and sustainable energy projects
  • building a greater understanding of recent developments and current framework available in Turkey for green initiatives

The workshop offered a unique opportunity for stakeholders from the public and private sectors to discuss challenges and opportunities regarding the Green Sukuk market in Turkey and to identify potential solutions.


To expand the initiative and replicate in other countries, UNDP IICPSD and Islamic Research and Training Institute (IRTI) collaborated with the Securities Commission Malaysia (SC), and Islamic Corporation for the Development of the Private Sector (ICD) of Islamic Development Bank (IsDB). Pakistan has been selected as one of the prioritized countries.

UNDP – IICSPD:  UNDP’s Istanbul International Center for Private Sector in Development (IICPSD), supports the private sector and foundations to become transformative partners in development through research, advocacy for inclusive business, facilitation of public-private dialogue and multi stakeholder-partnerships.

UNDP is already scaling up efforts to engage countries on Islamic finance in innovative ways. With presence in over 170 countries and over 50 years of experience, UNDP supports Islamic Finance organizations to align with the SDGs, monitor, report and communicate development impact, as we are already doing in Indonesia and other countries. In Indonesia, UNDP is working with the Indonesian Ministry of Finance to support their first $1.25bn sovereign green sukuk (bond). This sukuk, which is oversubscribed, shows the vital potential to leverage Islamic Finance partnerships for green investments.

Islamic Financial Sector Development Department (IFSD) of Islamic Development Bank (IsDB): The Islamic Development Bank works to improve the lives of those we serve by promoting social and economic development in Muslim countries and communities worldwide, delivering impact at scale. The bank provides the infrastructure to enable people to lead better lives and achieve their full potential. IsDB aims to equip people to drive their own economic and social progress at scale, putting the infrastructure in place to enable them to fulfil their potential and build collaborative partnerships between communities and nations, across the public and private sectors.

Securities Commission Malaysia (SC): SC is a self-funded statutory body entrusted with the responsibility to regulate and develop the Malaysian capital market, where the first Green Sukuk was issued in 2017. The SC has direct responsibility for rule-making, enforcing regulations pertaining to the capital market, ensuring sustainable market growth and development, supervising capital market activities, and regulating all entities and persons.

Islamic Corporation for the Development of the Private Sector (ICD): ICD is a multilateral development financial institution and is part of the Islamic Development Bank (IsDB) Group. ICD was established to support the economic development of its member countries through the provision of finance for private sector projects, promoting competition and entrepreneurship, providing advisory services to the governments and private companies and encouraging cross border investments. ICD’s Sukuk & Capital Markets Program has been launched to respond to the increasing demand from Member Countries that are planning to fund their infrastructure through Debt Capital Markets.  In 2014, ICD successfully advised the Republic of Senegal on its debut Islamic bond, which was a landmark transaction, being the first African Sovereign Sukuk. This was followed by the Ivory Coast Sovereign Sukuk debut in 2015. Both transactions have won IFN Africa’s Deal of the year in 2014 and 2015 respectively.  Subsequently, ICD successfully advised the Republic of Togo on its debut Sukuk in 2016, and both Senegal and Ivory Coast for their second Islamic Bond issuances in that year.  ICD also advised the government of Mali on its debut Sukuk. Overall, ICD played a significant role in assisting the development of the legal framework in the West African Economic and Monetary Union (WAEMU), which made these transactions possible. Furthermore, in 2016, ICD advised the Hashemite Kingdom of Jordan for issuing a successful debut domestic medium-term Sukuk for liquidity management of the local Islamic banks, which was the first of its kind in the Kingdom. This transaction won the IFN Sovereign Deal of the year 2016, as well as JICA’s President Award.

Objectives of the Assignment

Green Sukuk Initiative will conduct a pre-feasibility study for a Green Sukuk issuance in Pakistan, at the federal government level focusing on the Punjab Provincial Government identifying the stakeholders from public and private sector and analyzing the potential opportunities and challenges. The feasibility study will be validated with local and national stakeholders in Pakistan through a validation workshop where concrete next steps will also be identified.