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Truthfulness, honesty, virtue and decency, the ethics that stand behind Islamic Finance. A system rooted in principles of fairness, justice, harm-avoidance and equal opportunity. The ethical and sustainable investment foundation providing a pathway to aligning economic and social development growth with environmental stewardship.

Syed Husain Quadri
Islamic Development Bank

“The role of Islamic Finance and Climate Finance and Development Finance, these three are not, contradicting with each other. They all are working towards the same goal. We want to be able to protect our progeny and sustain our environment and ensure that it happens in the developmental manner at the customized base and expectations of our member countries. “

Syed Husain Quadri
Islamic Development Bank

“These are not opposites. We are all working for the same institution, for the same goal, for the same purpose. And that’s where we need to align our forces, our ideas. We can certainly have different views on how to sort of go about it. That would enrich the debate and discussion, but we need to be very clear about the destination that we want to reach.”

The Islamic Development Bank is committing 35% of its total annual financing to climate adaptation and mitigation initiatives by 2025, of which 33% has already been achieved and its financial instruments have been designed to support green investment like the Green Sukuk, an Islamic bond that raises funds exclusively for environmentally-friendly projects.

Mohammed Sharaf
Islamic Development Bank

“Islamic Development Bank is a pioneer in the area of Green Sukuk. We have issued the first AAA-rated Green Sukuk back in 2019 with an amount over €1 billion. The proceeds of the Sukuk will use for both climate action, mitigation and adaptation. Among the example of the sector that the funds were deployed in include renewable energy, clean water and clean transportation.”

Mohammed Sharaf
Islamic Development Bank

“What I can note about the market is that the green debt capital market is increasing. For example, the global green bond issuances reached 2 trillion US dollars last year. The same applies for the Green Sukuk market, where it reached around 15 billion US dollars. And we expect this trend to continue.”

The Islamic Development Bank has invested in projects like the Senegal Regional Express Train, an eco-friendly fast hybrid train, playing a major role in reducing greenhouse gas emissions by decreasing road traffic between Dakar and Diam-niadio. It is the first express train service in sub-Saharan Africa. The IsDB is committed to supporting the second phase of the project. And Turkiye’s first hydro-solar hybrid power plant, the world’s second largest, delivering 590 megawatts of combined renewable energy to the national grid.

The project produces clean, environmentally friendly energy for more than half a million people. To reduce global warming, the future is all about collaboration., when governments, financial institutions and international organizations come together united in the cause.

Syed Husain Quadri
Islamic Development Bank

“The Arab region actually in particular, is the most water-stressed region in the world. It is expected to be able to tackle the challenges it faces. It needs $37 trillion of financing and right now we’re getting a fraction of those items. So I think the region and the leadership of the region understands that and that’s exactly why you have huge initiatives, oil sustainability program initiatives, Middle East Green Initiative, environmental funds and so on and so forth, the Saudi Green Initiative.”

Syed Husain Quadri
Islamic Development Bank

“These are all initiatives to sort of tackle the issue of climate change in an environmental inclusive, just manner. It’s something that we are really witnessing the region taking the lead in. That’s also happening in Jordan. That’s also happening a lot in Egypt with the NWFE program and I can only remain optimistic that it’ll keep on continuing and we should be able to get a scale up on these things better and more.”

An increasingly important player in addressing the global climate crisis, Islamic finance is gaining traction. Since its inception in the 1970s, the Islamic Finance industry has grown to almost $4 trillion globally, and it is expected to exceed $6 trillion by 2026. This capital will be a critical contributor to the almost $200 trillion estimated global cost to reach net zero carbon emissions by 2030.

Mohammed Sharaf
Islamic Development Bank

“Innovation is becoming more and more important into the green debt capital market. Actually, I think the innovation is critical to be able to mobilize more funds and investment from the global capital markets toward the climate action agenda. Example of the innovations include transition sukuk, blue sukuk, where we see them as scalable instruments that can be used to mobilize more capital into the climate action measured.”

Mohammed Sharaf
Islamic Development Bank

“The second area of innovation, where we can see is on the standards for green financing, discovers the standards related to eligibility standards for green reporting standards and reserve measurement standards. What we can see is that the investors are also requiring those kinds of innovations, mainly the socially responsible investors and the ESG investors, where they are able to invest not only for returns, but also for development and impact.”

The underlying principles of Islamic Finance offer a path towards a more equitable and environmentally conscious global economy. In harnessing those, we can find a path towards sustainability and a way to preserve our planet.