Paris, France, 25 May 2023 – Islamic Development Bank President and Group Chairman, H.E. Dr. Muhammad Al Jasser reaffirmed the role of Sukuk as a sustainable financing instrument that can boost flows from the capital markets, especially through Green Sukuk and Sustainability Sukuk. Dr. Al Jasser was speaking at the 2023 Annual General Meeting of the International Capital Market Association (ICMA) in Paris, France.
In a Fireside Chat with the Chair of ICMA’s Board, Mandy DeFilippo, he shared the IsDB successful experience of scaling up sustainable financing through the issuance of Green Sukuk and Sustainability Sukuk, the proceeds of which are deployed towards climate friendly as well as social development projects across IsDB’s 57 Member Countries.
Dr. Al Jasser emphasized that the IsDB Group is fully committed to helping its member countries attain the Sustainable Development Goals (SDGs), especially following the devastating effects of the COVID-19 pandemic that evolved into an economic crisis and put the brakes on the progress towards the SDGs. He said the yearly gap for financing the SDGs is expected to increase by US$ 400 billion annually, and at least 50 million people have fallen into poverty only in IsDB member countries.
"In this regard, IsDB plays a critical role in plugging the huge financing gap through our resources, bringing in co-financiers from around the world, and leveraging upon IsDB’s AAA-rating to tap the capital markets through Sukuk issuances," the IsDB Chairman explained.
He highlighted the IsDB mission of alleviating poverty, promoting human development, and building sustainable, resilient, and green infrastructure in its member countries through project financing in various sectors, including agriculture, infrastructure, health, education, and water and sanitation.
Explaining the significant role of IsDB Group in the capital markets, President Al Jasser said the Bank;s funding model evolved from initially relying on members' equity to finance its interventions to playing a more active role in mobilizing market resources by issuing AAA-rated Sukuk. He highlighted that Sukuk is the main capital market instrument in Islamic finance and is the equivalent of conventional bonds. As a frequent issuer of Sukuk, IsDB has issued more than US$ 42 billion since 2005.
According to the IsDB Chief, the investor response in both the Green Sukuk and Sustainability Sukuk transactions was highly encouraging as new investors, especially from Europe and Japan. He said the label of Green and Sustainability encouraged many global investors to go through their approval processes and invest in the Bank's Sukuk. "We were very pleased to see institutional investors from France, Germany, Japan, and the U.K. participate for the first time. Our Sustainable Finance Framework was assigned a very strong Second Party Opinion, and we also have a solid ESG risk rating," President Al Jasser highlighted.
He concluded by reiterating that the IsDB Group is firmly pursuing its mission to alleviate poverty, promote human development, and build sustainable, resilient, and green infrastructure in its member countries through project financing in various sectors, including agriculture, infrastructure, health, education, and water and sanitation. In addition, IsDB will continue to advocate for leveraging on innovative Islamic financial instruments to strengthen the capacity of Member Countries on their road to the SDGs.