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What do you perceive to be the main challenges to the development of the ESG Sukuk market?

There are current inherent challenges within the sukuk market, applicable to ESG and non-ESG sukuk, relating to the current AAOIFI legislation being a significant issue. In particular, AAOIFI standard 59 prohibits certain types of sukuk from being issued and this has impacted the market. Two specific challenges we see in relation to the development of the ESG Sukuk market are:

  • Awareness, understanding and technical knowledge: to issue a green or sustainability sukuk, issuers must develop a framework, using global best practice approaches (such as the Green Bond Principles). This will enable issuers to measure, report and authenticate issuance. The skill sets and processes required to do this are new to sukuk issuers and are additional to the existing Shariah compliance requirements.
  • Strategic will: if all other factors (cost, etc.) remain neutral, do issuers genuinely want to do this? Structuring sukuk is more resource-intensive than structuring conventional bonds, so going a step further to structure a green or sustainability sukuk is perhaps, for many, a step too far. Governments and regulators therefore have an important role to stimulate the market and engage stakeholders.

How do you evaluate the current state of market awareness of ESG sukuk?

At present there is limited understanding of ESG sukuk in the market. The work being led by the UKIFC, such as the Global Islamic Finance & SDGs Taskforce, is playing an important role in mobilising stakeholders to raise awareness and inspire practical action. The HLWG launched by the Taskforce at COP26 and showcased during the UN General Assembly has shone an important light on the role ESG sukuk can play in helping countries meet their Nationally Determined Contributions by attracting a wider investor base as the demand for environmentally conscious investments grow. For the first time, this is giving Islamic finance a formal and consistent voice at the global COP platform.

Market pioneers such as IsDB, the Indonesian government and Majid Al Futtaim are playing an important role by issuing benchmark-size, global green and sustainable sukuk. Such issuances offer best-practical examples, at scale, that can help to promote green and sustainability sukuk as viable options for other issuers. In Malaysia, the SC has been issuing useful SRI market frameworks, and from the GCC, CIBAFI have been actively promoting SDG-alignment and sustainability amongst member Islamic banks.

How are you facilitating the policy development and standardisation of streamlining ESG sukuk globally?

In 2021, UNDP Indonesia commissioned the UKIFC to put together a report showcasing Indonesia’s pioneering sovereign green sukuk. The report acts as a toolkit for helping others globally who are considering the issuance of an ESG sukuk.

After COP26, the HLWG, chaired by London Stock Exchange, is facilitating policy development and the standardisation and streamlining of ESG sukuk issuance globally. The working group is bringing together key stakeholders to identify challenges for ESG sukuk and to present practical solutions.

In addition, the Taskforce has already issued a guidance note to assist Islamic banks in reporting under the UN Principles for Responsible Banking, presented ESG sukuk at multiple global events, conducted a global retail survey exploring consumer awareness and appetite for sustainable products, issued a Pakistan country-level sustainability report, and designed a comprehensive structured ESG capacity building programme.

In which markets do you see expansion and growth opportunities for ESG sukuk? Which sectors do you expect will drive issuance growth?

Based on our aforementioned work, the UKIFC estimate an additional $30 billion to $50 billion of capital towards the SDGs can be raised by 2025 through green and sustainability sukuk. There is considerable opportunity for ESG sukuk across the OIC countries, as well as the UK. Indonesia, Pakistan and Malaysia will continue to be important markets and Central Asian markets could become more active in coming years.

Additionally, with COP27 taking place in Egypt this year and COP28 hosted in the UAE in 2023, it is likely some of the large GCC energy, construction and aviation companies will tap into the ESG sukuk market, which can help facilitate their transition to Net Zero and their development work within the clean green energy space.

Omar Shaikh

Advisory Board Member & Director
Islamic Finance Council UK (UKIFC)

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What separates ESG bonds from also becoming Shariah-compliant?

ESG principles are largely aligned with Shariah principles. The general principles of Shariah related to fairness, transparency, equal rights and other related principles are also the guiding principles for ESG bonds. However not all ESG bonds can also be considered Shariah-compliant. For example, ESG bonds that use their proceeds to finance projects involving interest-bearing activities do not qualify as Shariah-compliant. This would also apply to the institutions involved in facilitating the bond transactions. In addition, the contract used to issue the bond must also be Shariah-compliant. Generally speaking, ESG bonds are Shariah-compliant in term of the purpose of the bonds and will be easier to be issued to comply with the Shariah requirements.

What are the current Shariah standards that are applicable to green and sustainability sukuk? Are
they sufficient?

Currently there are no specific Shariah standards applicable to green and sustainability sukuk. However, the existing Shariah standards for sukuk would still apply to ensure the Shariah compliance of a green or sustainability bond, even though general ESG principles overlap with Shariah standards. Having said that, some scholars have developed the Maqasid matrix for the purpose of ensuring that financial products are in line with the general purpose and objectives of Shariah or Maqasid al-Shariah. This matrix can be used for guiding principles in the issuance of ESG sukuk because it covers a broader range of values or principles, including ESG, SRI, VBI and other principles. Still, the challenge here is to
ensure that all the values are validated to ensure they comply with the general and specific principles of Maqasid al-Shariah.

Are there any plans to develop more specific standards for green and sustainability sukuk?

It is important to develop more specific standards for green and sustainability sukuk. At the moment, we at the International Shari’ah Research Academy for Islamic Finance (ISRA) and the International Centre for Education in Islamic Finance (INCEIF) are working on a number of initiatives with industry players related to ESG principles. We are also open to further collaborations to develop more specific standards for green and sustainability sukuk.

In addition, we are also working on a framework to integrate aspects of Maqasid al-Shariah that overlap with ESG, SRI and VBI principles into fatwa issued by Shariah scholars. This will add an ESG perspective to the fatwa, in addition to the Fiqh (Islamic legal) point of view, taking into consideration the social and environmental impacts of the sukuk or Islamic product as well.

Dr. Mohamad Akram Laldin

Executive Director
Islamic Shari’ah Research Academy (ISRA)

Islamic Development Bank | Expert Insights | The Knowledge Portal

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Tell us about your experience as an issuer developing a sustainability sukuk framework, and what are the areas for development?

Our Sustainable Finance Framework (SFF) was developed specifically to enable IsDB to issue Green, Social and Sustainability (GSS) sukuk and was crafted by a cross-complex team of finance and operations. This included treasury, infrastructure, energy, transport, climate change, project portfolio, among others.

The discussions mostly centred on the potential eligible project categories that can be included in the GSS sukuk asset pool. This required a balancing act between securing the strongest Second Party Opinion (SPO) from an external provider and the immediate needs of our member countries, who are still dealing with mitigation, adaptation and transition at varied levels.

Placing our member countries’ needs at the forefront was indeed important, so as not to exclude them from the potential funding that would be raised by issuing GSS sukuk.

Ultimately, we obtained a strong Medium Green Shading, which was in line with other peer multilateral development banks such as the International Finance Corporation (IFC), Kreditanstalt für Wiederaufbau KfW3 and African Development Bank (AfDB), who had similar considerations. IsDB also secured a very strong (low) ESG-risk rating of 11.5 out of 100, which demonstrated strong internal governance and mainstreaming of climate change policy and its considerations in our operations.

Another important highlight of this exercise was the reaffirmation of the strong alignment of IsDB’s operations as well as sector policies with global industry standards set out by the ICMA. As IsDB operates under Islamic finance principles and has best-in-class governance structures, the Framework exercise only reaffirmed the fact that IsDB already had climate change action and sustainability at its heart, which gave us a good head-start for our member countries.

In addition, the comprehensive data-capturing process by our operations teams was critical in ensuring that reliable and detailed project-level information was easily accessible for us to prepare annual impact reports for the use-of-proceeds of each of our GSS sukuk, which are available on our website for investors and other stakeholders. These reports are validated by external reviewers, whose validation reports are also published on our website.

With respect to areas for development, regional standards and taxonomies are very much needed in order to support a ‘just transition’, which IsDB supports for its member countries who are seeking to transition towards low-carbon energy solutions. This requires improved and customized standards that would facilitate, rather than restrict, this progress, so that no-one is left behind.

What was the basis for determining your preference between green and sustainability-linked sukuk?

Sukuk issuance, in general, requires an underlying asset pool whose collective worth is equivalent to the issuance amount. Therefore, a green sukuk issuance requires that a sufficient number amount of greenor climate-related projects are available to be securitized for the issuance. Sustainability sukuk, on the other hand, cover a much broader range and require a mix of green- and climate-related and social sector-related projects.

We undertook a comprehensive project data assessment to identify the quantum of green and social projects available, in line with the eligibility criteria set out in the ICMA Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines.

Determining whether to issue a green or a sustainability sukuk depends on the availability of eligible projects as well as the potential pipeline of similarly eligible projects. The potential pipeline is shaped by IsDB’s overall operations plan, which is informed by high-level objectives from its climate change policy, climate action plan, energy policy, health policy, etc.

What benefit did you gain from issuing the first ESG sukuk in your jurisdiction?

With its debut green sukuk issuance of €1 billion in November 2019, IsDB was able to secure the confidence of environmentally conscious investors from previously untapped markets such as Europe and Japan. Their participation was especially notable given that they invested in an IsDB sukuk issuance for the first time, demonstrating their comfort with the sukuk format when it is labelled ‘green’ or ‘sustainability’. Not only did this help in expanding our investor base, it also opened up new avenues of investor engagement, especially with those focused on ESG and SRI investments.

The proceeds of the green sukuk were fully allocated to 11 green projects across our member countries, in alignment with the Climate Change Mitigation and Climate Change Adaptation objectives. These included projects in renewable energy, clean transportation, energy efficiency, pollution prevention and control, environmentally sustainable management of natural living resources, and land use and sustainable water and wastewater management.

Detailed impact reporting of the proceeds and external validation was critical in providing additional comfort to the sukuk investors.

Dr Zamir Iqbal

Vice President (Finance) and CFO
Islamic Development Bank

Saudi National Bank | Technical Case Study | The Knowledge Portal

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Saudi National Bank

Issues debut sustainable sukuk

Issuance Details

  • Company: audi National Bank
  • Rating (Fitch): A1 / A- / A
  • Sector: Financial
  • Market: ISM

Transaction Details

  • Issue Date: 19 January 2022
  • Issue Size: $750 million
  • Coupon: 2.34 %
  • Maturity: 5 years

Saudi National Bank completes issuance of $750 million sukuk

  • Saudi National Bank (SNB) is the largest financial institution in Saudi Arabia. It plays a vital role in supporting the economic renewal of Saudi Arabia through transformation of the banking sector and facilitating the delivery of Saudi Arabia’s Vision 2030
  • In January 2022, SNB sold $750 million of its debut sustainable sukuk, with demand topping $3.2 billion
  • The five-year Islamic bond was issued on London’s International Securities Market (ISM) at an annual yield of 2.34%.
  • Proceeds from the sale will be used for projects eligible under the bank’s Sustainable Finance Framework such as funding renewable energy facilities, including loans to develop such projects and loans related to tree-planting
  • HSBC was the sole ESG structuring agent on SNB’s sukuk sale and was joined on the deal by Citi, Emirates NBD Capital, Goldman Sachs, Mizuho
  • Securities and SNB Capital

Source: London Stock Exchange, Refinitiv, May 2022

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Riyad Bank

Sells world’s first sustainability-linked AT1 Islamic bond

Issuance Details

  • Company: Riyad Bank
  • Rating (Fitch): N/A
  • Sector: Financial
  • Market: ISM

Transaction Details

  • Issue Date: 17 January 2022
  • Issue Size: $750 million
  • Coupon: 0.00 %
  • Maturity: –

Riyad Bank sells $750 million in perpetual sustainability sukuk

  • Riyad Bank is one of the largest financial institutions in Saudi Arabia and the Middle East
  • In January 2022, Riyad Bank sold $750 million in Additional Tier 1 (AT1) Islamic bonds linked to sustainability on London’s International Securities Market (ISM)
  • The world’s first sustainability-linked AT1 Islamic bond will be non-callable for five-and-a-half years and is marked as the world’s first sustainability linked AT1 Islamic bond.
  • Its yield was tightened from initial price guidance of around 4.375% after demand exceeded $3 billion
  • The deal was arranged by BofA Securities, HSBC, Riyad Capital and Standard Chartered

Source: London Stock Exchange, Refinitiv, May 2022

AIMS Education UK - Sukuk (Islamic Bonds) Mechanism, Structuring, Types & Applications | Video | The Knowledge Portal

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Sukuk, also known as Islamic bonds, is a financial instrument that adheres to Islamic law or Shariah principles. Unlike traditional bonds, Sukuk represents ownership in an underlying asset or project, rather than debt. This means that investors are buying a share in the ownership of the asset or project, which generates a return based on the profits generated by the asset. Sukuk is becoming increasingly popular globally due to its unique structure and adherence to Shariah principles. It has been estimated that the global Sukuk market is worth over $1.3 trillion. With the growing interest in ethical and socially responsible investing, Sukuk is a viable option for investors looking to diversify their portfolios while adhering to Islamic principles.

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Do you view the development of a dedicated regulatory framework as integral to the growth and success of the ESG sukuk market in your jurisdiction?

A dedicated regulatory framework is a key building block for the growth and success of Islamic green finance as well as the ESG sukuk market. The framework would also be a key driver in bridging Islamic finance and the green industry.

Developing a regulatory framework would be beneficial as it would improve standardisation in both the issuance and reporting processes. This would ensure consistency across issuances, proper standards being met, and ease of comparability for investors as well as other stakeholders in the transaction. A green bond/sukuk framework emphasizes the use and management of proceeds, reporting processes, and external party review, which are among the processes that support the transparency and accountability of ESG sukuk issuance. For investors, disclosure is among the areas of major concern, and may include investment screening and reporting.

At the regulatory level, it is important to encourage more green and sustainability sukuk issuances by means of incentives. In Indonesia, for example, the OJK released its Board of Commissioners Decree in 2018, which provided a 25% discount for first-time issuers who registered their green bond transactions in the capital market. Similarly, the Indonesia Stock Exchange’s (IDX) Board of Directors Decree of 2020 provided a 50% discount on the listing fee for green bonds.

What is your approach to streamlining the issuance process and standardization of the taxonomy for ESG sukuk?

The OJK, as a regulator, has released the Indonesia Green Taxonomy, which can be used as a reference for not only onshore capital markets but also wider stakeholders.

Intensive consultation and discussion with the OJK and green advisers would be necessary for corporates issuing green bonds/sukuk to ensure that the whole process complies with the standard. The Ministry of Finance is also open for discussion with corporates who would like to hear the experience and knowledge of how the government sets the green framework and issues green instruments.

What types of incentives would make issuing ESG sukuk more conducive for issuers?

The OJK has several initiatives on incentives for issuers of green financial instruments as per Regulation No. 60/POJK.04/2017. This regulation states that incentive types may include capacity-building, sustainable finance awards, and other incentives.

Technical assistance and/or financial incentives in preparing green or ESG instruments would further promote green or ESG issuance, such as the 25% discount offered to first-time issuers who registered their green bond transactions in the capital market under the OJK’s Board of Commissioners Decree of 2018.

Nana Riana

Deputy Director Regulation and Legal Analysis of Islamic Finance, Directorate of Islamic Finance
DG of Budget Financing and Risk Management
Indonesia Ministry of Finance

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How would you describe investor appetite for ESG sukuk? What types of investors are driving this

Within the realm of the global sukuk market, we have seen a rapid rise in ESG sukuk issuance, with a widely reported $4.4 billion issued in H1 2022, bringing total outstanding ESG sukuk to $21.3 billion, according to Refinitiv data. Demand for ESG sukuk is growing substantially as more investors begin to integrate sustainability and impact investing criteria into their investment decision-making processes. This growth also stems from a strong push by the investor community to promote sustainability-related investments through collaborative, investor-led organisations such as the UN-supported PRI or Net Zero Asset Managers initiative.

It is also interesting to note that we are seeing investors pushing boundaries by investing across multiple tenors. As an example, the Indonesian government issued the world’s first sovereign green sukuk in 2018, with a 5-year tenor. It then extended the maturity curve with a 30-year green sukuk in 2021 and a 10-year tranche in June 2022.

The green sukuk tranche has consistently provided investor profile diversification for the Indonesian government, with 35.6% of the green tranche for the 2022 sukuk issuance allocated to green or SRI investors.

In the case of the Malaysian government’s sustainability sukuk issuance in 2021 – the world’s first sovereign sustainability sukuk – the transaction was able to attract a new set of investors (i.e. investors with ESG mandates) to participate in the 10-year tranche.

Against the backdrop of robust demand coming from high-quality, real-money accounts with ESG mandates, we see not only sovereign issuers capturing these pockets of demand, but corporate issuers are also seizing this opportunity. Saudi National Bank’s ‘sustainability’ sukuk issued in January 2022 saw around 19% of the final issue size allocated to accounts with an ESG mandate.

In terms of the type of investors driving demand for ESG sukuk, traditional Islamic investors still play a key role with anchor orders, although a large portion of these investors may not currently have an ESG investment mandate. Their interest has been more focused on the Shariah compliance of the instrument, rather than focusing on the sukuk’s ESG credentials. Having said that, the sukuk market has witnessed a new pool of liquidity driven by investors with dedicated ESG desks, based largely out of Europe, who may not have previously showed interest in traditional sukuk issuances.

However, with the increased awareness of ESG, we can expect investors to be more informed on the importance of ESG-linked investments and the impact they will have in moving towards a better economy.

How does the structuring process for ESG sukuk differ from traditional sukuk? What are the areas for improvement in this process?

There are four broad categories of ESG sukuk in the market: green, social, sustainability (a combination of green and social objectives), and sustainability-linked. Across all categories, the structuring process would entail an additional layer of workstreams involving the issuer’s commitment to sustainable finance. The first step is to develop a sustainability sukuk framework that is aligned with international standards such as the ICMA Green Bond Principles.

In establishing the framework, it is important to ensure alignment with the following four core components:

  • Utilisation of proceeds: sukuk proceeds must be used exclusively to finance or refinance expenditures related to eligible green or sustainability projects
  • Project evaluation and selection: a clear tagging process to identify expenditures related to eligible green projects
  • Management of proceeds: identify whether there are any designated accounts to capture such proceeds and the processes for allocation of the proceeds
  • Reporting: publish an annual report on the progress of the identified eligible projects, the amount of proceeds allocated and an impact analysis where an independent third party would be appointed to provide assurance

Issuers would then be encouraged to appoint an SPO provider for an independent assessment of the accuracy and integrity of the sustainability framework, which adds credibility.

For sustainability-linked instruments, profit payments are linked to an issuer’s performance against company-wide ESG KPIs. There is a need to identify the relevant ESG metrics as KPIs, which should be relevant, core and material to the issuer’s overall business, measurable or quantifiable on a consistent methodological basis, and externally verifiable.

As an example, Yinson Holdings issued the world’s first sustainability-linked sukuk with a profit stepup in 2021. This was an innovative structure with a tiered profit step-up against three sustainability performance targets.

Market players must work together on encouraging greater transparency in order to address concerns around greenwashing. All sukuk transactions must be asset-based to be Shariah-compliant. In the current ESG sukuk market, issuers tend to have two separate sets of assets: underlying assets to be used under the sukuk structure; and ESG assets identified as eligible projects.

Although the underlying assets under the sukuk structure are not limited to ESG assets, issuers may want to work towards utilising the ESG assets as the underlying assets for the sukuk structure for efficiency purposes.

In reality, it can be challenging to find assets that meet both criteria. However, the Malaysian government’s sustainability sukuk in 2021 successfully identified such assets by employing vouchers under public infrastructure projects as its tangible assets under the sukuk structure, and it utilised the same public infrastructure projects as the ESG government assets identified under eligible projects as per the framework.

With sustainability-linked sukuk, the biggest challenge lies in defining an ambitious KPI (e.g., emissions reduction targets). A one-size-fits-all approach does not work, in our view. We need to recognise that each sector’s pathway to Net Zero will be different, depending on technological constraints and the starting carbon footprint. Hence, a sector-specific approach is needed, where companies ought to be assessed against a sector-specific benchmark.

Is the pricing of ESG sukuk in the primary market more favourable compared to traditional sukuk?
Could we observe ‘greeniums’ for these sukuk?

The greenium measures the spread of ESG-labelled sukuk to non-ESG-labelled sukuk from the same issuer of the same seniority and maturity.

In 2020, Cagamas, the National Mortgage Corporation of Malaysia, priced a 3-year ASEAN sustainability SRI sukuk (SRI sukuk) and a plain-vanilla Islamic Medium-Term Note (IMTN) in the local market on the same day. There was a lower yield recorded (2 basis points) on the SRI Sukuk compared to the IMTN. However, it is worth highlighting that ESG sukuk transactions may be able to garner a larger order book, driven by the wider pool of ESG-focused investors.

As such, issuers can achieve a higher price compression during the book-building process, subject to market conditions. Although the pricing advantage is uncertain at this juncture due to the limited comparables in the sukuk market, we can view greeniums as the ‘price’ of cutting financed emissions.

Raja Amir Shah Raja Azwa

Chief Executive Officer
HSBC Amanah Malaysia Berhad

London Stock Exchange | Expert Insights | The Knowledge Portal

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What is the added benefit of listing on a dedicated exchange or market such as London Stock Exchange’s Sustainable Bond Market, compared to listing on the Main Market or International Securities Market?

London Stock Exchange’s dedicated Sustainable Bond Market (SBM) champions innovative issuers in sustainable finance and improves access, flexibility and transparency for investors. Sustainable finance debt instruments are an ideal way for business to tap into a $100 trillion pool of private capital managed by global institutional fixed-income investors.

Issuing a sustainable finance bond or sukuk provides a signal that the issuer has a meaningful sustainability strategy and has identified material environmental risks and opportunities that the business faces and is investing to deliver on them.

The additional disclosure required to issue a sustainable bond or sukuk creates greater levels of dialogue between issuers and investors.

Sukuk issuers can also display their issuance alongside high-profile international issuances on SBM from supranationals, local governments and municipalities, as well as corporates. Many bonds on SBM have been world firsts in terms of currency, geography and structure, including the first certified green bonds out of China, India, the Middle East and North Africa, and the first sovereign bonds from Asia Pacific and the Americas.

What are the different classifications of securities available for listing on the SBM?

Distinct segments further enable investors to distinguish between different types of sustainable bonds, based on independently verified frameworks and use of proceeds.

There are three main categories: use of proceeds certified (green, social or sustainability); issuer-level classified (green revenues or sustainability-linked instruments); and transition.

Green bond proceeds are used exclusively to finance green projects, or projects with clear environmental benefits, whilst social bond proceeds are used exclusively to finance eligible social projects as defined by the relevant international standards used. Sustainability bonds, however, are a blend of the two, with proceeds used exclusively to finance any combination of eligible green and social projects as defined by the relevant international standards used.

As more issuers choose to make sustainability central to their operations, we have seen an increase in companies deciding to issue all funding products within a single green or sustainable format. To reflect this, issuers can utilise a new issuer-level classified segment for bonds by issuers whose core business activity is aligned with the green economy or where the sustainable nature of the instrument is not based on distinct and predefined use of proceeds.

The two sub-segments are for issuers demonstrating they have greater than or equal to 90% of revenues derived from green revenues, and sustainability-linked bonds, which are forward-looking, performance-based bond instruments where the issuer is committing to future improvements in sustainability outcomes within a predefined timeline.

Transition bonds are a subset of sustainability bonds, whereby the issuer is raising funds in debt markets for climate and/or just transition-related purposes. These bonds are a financing tool available to issuers that are crucial if the ambitious global carbon-emission-reduction targets are to be realised, as activities in higher-emitting sectors require significant financing in order to move towards less carbon-intensive operating models. The concept of climate transition focuses principally on the credibility of an issuer’s climate change-related commitments and practices.

What is the screening or verification process that issuers must undergo to access the Sustainable
Bond Market? What is the significance of third-party review or opinion in this process?

To list on the SBM, issuers must list or be admitted on one of the fixed income primary markets operated by London Stock Exchange and must submit a completed SBM Declaration and Application Form. The form will ask issuers the classification of the securities (green, social, sustainable, etc.), for acknowledgement and commitment to post-issuance reporting obligations, and for the disclosure of mandatory sustainability-related documents as applicable, such as an Independent External Review.

The Exchange requires issuers to provide proof of an external review of the securities from an independent third-party reviewer at the time of application before any green, social or sustainable securities can be admitted to SBM.

The external review increases the confidence of investors in the robustness of market standards and provides additional visibility for those issuers admitting securities on SBM.

Sam Dodd

Manager, Fixed Income, Primary Capital Markets
London Stock Exchange

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Islamic finance has witnessed a rapid growth in recent years. In 2019, the value of Islamic banking assets was estimated to be around USD 1.99 trillion. Within this area of finance is growing interest in environmentally themed products. “Green Sukuk” are Shari’ah compliant investments in renewable energy and other environmental assets. Proceeds are used to finance construction, to refinance construction debt, or to finance the payment of a government-granted green subsidy. They may involve securitizing future income cash flows from ring-fenced projects or assets with specific criteria attached.