RIYADH: The global market for environmental, social and governance sukuk is on track to exceed $70 billion in outstanding value by the end of 2026, supported by refinancing needs, funding diversification and sustainability mandates, according to Fitch Ratings.
Momentum in ESG sukuk issuance is expected to continue as net-zero targets, the prospect of lower interest rates and oil prices, and expanding regulatory frameworks encourage issuers across emerging markets, the ratings agency said in a report published this month.
ESG sukuk are structured to finance environmentally and socially sustainable projects, including renewable energy, clean transportation and climate-resilient infrastructure.
Earlier this month, a separate report by S&P Global set out similar views, noting that ESG sukuk issuance is set to accelerate as Gulf Cooperation Council countries step up climate transition efforts and roll out incentives for sustainable practices.
Commenting on the Fitch report, Bashar Al-Natoor, global head of Islamic finance at the agency, said: “We expect ESG sukuk to maintain its solid momentum into 2026, supported by sustainability mandates, net-zero targets, new frameworks, robust demand, along with the upcoming Turkiye-hosted COP31.”
