This report underscores the potential of Green Sukuk in bridging the gap between Islamic finance moral aspirations and the global sustainability imperatives. It explores the emergence, market dynamics, and regulatory frameworks and offers a comprehensive guide to leveraging this instrument as a pillar of sustainable finance. It demonstrates the potential of Green Sukuk as a catalyzing mechanism for mobilizing capital toward projects that promote climate resilience, a sustainable economy, and social equity.

The focus of this report was to explore successful Green Sukuk frameworks and best practices from leading jurisdictions. It aimed to identify opportunities and challenges within the Green Sukuk market, including regulatory barriers, lack of standardization, high costs, and market incentives. The report also sought to provide actionable recommendations, focusing on regulatory alignment, capacity building, and investor engagement. The report adopted a multidimensional methodology based on several key components. First, a Framework Analysis evaluates existing principles, regulatory standards, and frameworks, such as the ICMA Green Bond Principles, ASEAN GSS Bond Standards and Sustainability-linked Bond Standards, and domestic regulations, to identify existing gaps and potential areas of alignment. Next, an Ecosystem Analysis identifies critical barriers that hinder the mainstream adoption of Green Sukuk, such as the lack of standardized taxonomies, greenwashing risks, and limited market incentives.

The report also includes Data Collection and Gap Analysis, analyzing global trends in sustainable sukuk issuances across regions using market data and survey insights to provide an evidence-based understanding of market dynamics and future orientations. Finally, Case Studies examine successful implementations.