Indonesia, Malaysia and Saudi Arabia are the three largest countries in this market, accounting for 67 percent of the total global value. Throughout 2024, ESG sukuk issuance reached $15.2 billion or around Rp248.94 trillion, growing 14.5 percent over the previous year. Despite the slower growth, this is still a record eight consecutive years of issuance since the ESG sukuk market started in 2017. Of all ESG bond issuance, ESG sukuk accounted for 1.8 percent, and contributed 6.2 percent of total sukuk issuance. The increase in ESG sukuk issuance in 2024 is mainly driven by the financial sector. According to the LSEG report, financial institutions accounted for 55 percent of total issuance, with 93 percent coming from banks in the GCC (Gulf Cooperation Council) region.
One of the biggest developments was the rise in sustainable sukuk issuance, including sustainability-related sukuk and social sukuk. The share rose to 69 percent of total ESG sukuk issuance, compared to 42 percent in 2023. ESG sukuk issuance from GCC countries is a major factor in market growth, contributing 58 percent of total global issuance by 2024. Expansion into new markets, such as Qatar and Kuwait, further strengthens this trend, especially after COP28 encouraged more GCC companies to engage in ESG sukuk.
“We expect an acceleration of ESG sukuk issuance if there is an acceleration of climate transition by GCC issuers as well as renewable energy targets, plus incentives from regulators for a sustainable issuance path,” said S&P Global Ratings Head of Islamic Finance Mohamed Damak as quoted from Zawya via republika.co.id, Saturday (15/2).
Several countries in the GCC region have prepared frameworks for green and sustainable financing. In 2024, Oman, Qatar and Saudi Arabia released sustainable financing guidelines to ensure funds from ESG sukuk are used on projects that benefit social and environmental benefits, thus attracting global investors.
In the list of the 10 largest ESG sukuk issuers in 2024, the Government of Indonesia ranks first with an issuance of 3.526 billion US dollars or around Rp 57.5 trillion. In the next position, Al Rajhi Bank from Saudi Arabia issued 2.260 billion US dollars (Rp 36.9 trillion), followed by Dubai Islamic Bank and Qatar International Islamic Bank which each issued 1 billion US dollars (Rp 16.3 trillion).
