At KLIFF 2023, a panel discussion titled “Sukuk for a Sustainable Future: Catalyzing Positive Impact” brought together leading experts in the field of Islamic finance to explore the dynamic relationship between Sukuk and sustainability. Sukuk, Islamic financial instruments resembling bonds, have emerged as a vital tool for mobilizing capital towards sustainable infrastructure projects and aligning with Environmental, Social, and Governance (ESG) principles. The panel, moderated by Assoc. Prof. Dr. Ahcene Lahsasna, CEO of SALIHIN Shariah Advisory, delved into various aspects of this intersection.
Linking Sukuk and Sustainability Goals
Dr. Ayaz Ismail, Director of Wholesale Banking at CIMB Islamic, highlighted the importance of linking Sukuk to sustainability goals. Sukuk issuance can be structured to directly fund projects that address environmental concerns, social well-being, and governance standards. This integration offers a clear pathway for Islamic finance to contribute to the achievement of Sustainable Development Goals (SDGs).
Emphasizing Alignment with Islamic Principles and ESG
Professor Dr. Aznan Hasan, a member of the Shariah Board of AAIOFI, underscored the alignment of Islamic principles with ESG considerations. Shariah-compliant finance inherently promotes ethical and socially responsible investing, making Sukuk an ideal conduit for funds that adhere to these principles. This alignment enhances transparency and trust in Sukuk offerings.
Potential of Sukuk in Mobilizing Capital for Sustainable Infrastructure Projects
Dwi Irianti, Director of Islamic Financing at the Ministry of Finance of Indonesia, discussed how Sukuk can mobilize substantial capital for sustainable infrastructure projects. The asset-backed nature of Sukuk instruments ensures that investments are directed toward tangible and sustainable ventures, such as renewable energy projects, green transportation, and affordable housing initiatives.
Regulatory and Policy Support for Green and Sustainable Sukuk Frameworks
Dr. Umar Oseni, CEO of The International Islamic Liquidity Management Corporation (IILM), emphasized the importance of regulatory and policy support in fostering the growth of green and sustainable Sukuk frameworks. Governments and financial authorities play a crucial role in creating an enabling environment that encourages the issuance of Sukuk aligned with sustainability objectives.
Market Trends and Growth of Sustainable Sukuk
Dr. Mohamad Damak, Global Head of Islamic Finance at Standard & Poor’s Global Ratings in Dubai, UAE, provided insights into market trends and the accelerating growth of sustainable Sukuk. Investors increasingly seek ethical and sustainable investment opportunities, making sustainable Sukuk a promising choice that can diversify portfolios while promoting sustainability.
The panel discussion on “Sukuk for a Sustainable Future: Catalyzing Positive Impact” at KLIFF 2023 demonstrated how Sukuk, rooted in Islamic finance principles, can be a driving force behind positive social and environmental change. By linking Sukuk to sustainability goals, aligning with ESG principles, mobilizing capital for sustainable projects, gaining regulatory support, and tapping into market trends, Islamic finance is poised to contribute significantly to a more sustainable and inclusive future. Sukuk has the potential to serve as a catalyst for transformative change, addressing critical global challenges while adhering to ethical and responsible financial principles.
