Dr Bandar Hajjar speaks as bank raises $2.5bn with sustainability sukuk.
The Islamic Development Bank (IsDB) has issued its largest ever sustainability sukuk (a sharia compliant bond) and its president has called on the whole Islamic finance sector to take note.
Dr Bandar Hajjar said: “I, once again, call upon all stakeholders in the Islamic finance industry to promote both green and sustainability sukuk markets as innovative solutions to address the global challenges we face today, for a better future.”
While only 10% of the fund will be directed to financing or refinancing dedicated green projects, the 90% allocated to social development projects will only be allocated to projects passing strict sustainability criteria. Drawn up in line with the International Capital Market Association’s green bond standards, the IsDB has created its own sustainable finance framework that every project seeking funding through the sukuk must meet.
The final allocations will see almost two thirds of the money focused on projects in the Middle East and North Africa, almost a quarter will be distributed in Asia and 13% will be for European projects. The remaining 2% will be invested in specific developments such as US offshore energy.
Maud Le Moine, the head of SSA debt capital markets at Goldman Sachs International, commented on the scale of the investment: “A truly remarkable transaction executed by IsDB today, achieving their largest ever benchmark size at $2.5bn, and largest sustainability sukuk to date, thus securing invaluable resources to support its member countries.”
Dr Bandar Hajjar emphasised the remarkable commitment this represented at such a difficult time: “This is our second sustainability sukuk and also our largest issuance ever, once again reaffirming the demand for financing promoting sustainability in a world stricken with climate emergency as well as a raging pandemic.”