The Role of Sukuk in Islamic Capital Markets
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2.7 NEW FRONTIERS FOR THE DEVELOPMENT OF SUKUK IN THE ICM
As mentioned earlier, the growth of the sukuk market has been stimulated by a number of new
entrants as well as innovative structures. A specific area that is gaining increasing interest
relates to SRI and green sukuk.
2.7.1 CONVERGENCE OF SUKUK WITH SRI
There is an inevitable overlap of the rationale behind SRI and Islamic finance; both are trying
to achieve a balance between ESG issues. Both sectors are now worth millions of dollars, with
the SRI industry being at least 10 times larger than its Islamic counterpart. The SRI industry
boasted USD21 trillion of assets under management as of 2016 (Responsible Finance Summit,
2016).1
The growing importance of ESG issues, particularly environmental concerns, has led to more
concerted efforts in the Islamic finance industry to come up with more sustainable and greener
initiatives. One such development is the issuance of SRI sukuk, which mobilises funds for
sustainable development objectives. Malaysia, in particular, is a leader in this sphere; the
framework for SRI sukuk was introduced by the SC in August 2014, to facilitate the financing of
SRI initiatives. This framework has been integrated with the LOLA framework (June 2015).
Figure 2.11 provides details on prominent SRI sukuk issued in the market up to November
2017.
Figure 2.11: SRI Sukuk Issued in the Islamic Finance Industry
Source: ISRA
1 Responsible Finance Summit - Unlocking Finance, Expanding Impact (2016), RFS Concept Note, 30-31 March 2016, Kuala
Lumpur: Bank Negara Malaysia.