Global ESG Sukuk Market could Surpass a Whopping US$50 Billion in 2025 ESG sukuk supports sectors such as clean energy, education, healthcare, and affordable housing.
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The global ESG sukuk is all set to cross US$50 billion outstanding in 2025, as per Fitch Ratings' special report titled Global ESG Sukuk Outlook Dashboard: 2025.
The report also noted that the sector is expected to be one of the key US Dollar funding tools among some Islamic finance markets including Saudi Arabia, the UAE, Indonesia and Malaysia.
Furthermore, in emerging markets, sukuk is likely to remain a key ESG funding tool, with around 20% of all emerging market ESG dollar debt issued in 2024 (excluding China), with the rest bonds. ESG sukuk supports sectors such as clean energy, education, healthcare, and affordable housing.
Some of the market's main growth drivers include issuers' funding diversification goals, enabling ESG regulations, sustainability and net zero strategies by a number of sovereigns, banks, corporates, supranationals, and GREs.
Fitch Ratings expects ESG sukuk to cross 15% of global dollar sukuk issuance in the medium term (2024: 12.3%). Risks include sharia-compliance complexities, such as linked to AAOIFI Sharia Standard No. 62, weakening sustainability drives, geopolitical risks, and oil volatilities.
Related: Why Islamic Finance And Impact Investing Should Join Forces
