ICMA, IsDB and LSEG publish guidance on sustainable sukuk

On 29 April 2024, the International Capital Market Association (ICMA), together with the Islamic Development Bank (IsDB) and London Stock Exchange Group (LSEG) published guidance on the issuance of green, social and sustainability sukuk (“sustainable sukuk”). The guidance has been drafted in order to provide market practitioners with practical information on how sustainable sukuk may be issued in line with the ICMA Principles. The guidance provides an overview of sukuk (including sukuk structures and a snapshot of the sustainable sukuk market) and the ICMA Principles and also provides sustainable sukuk case studies and best practice in order to help develop the sustainable sukuk market. Noting the strong synergies between Islamic finance and sustainable finance, the guidance, which focusses on use of proceeds sukuk, confirms that all green and social project categories in the ICMA Green and Social Bond Principles would be eligible for green and social sukuk. 

ICMA, IsDB and LSEG plan to engage with key stakeholders, including Sha’riah boards, regulators, rating agencies, non-profit organisations and other market participants, in the coming months to embed this guidance in the sustainable sukuk market, noting that further updates may be made to the guidance once those stakeholder discussions are complete.