Sharia Funding Potential for Climate Change Reaches US$50 Billion
The latest report from the United Nations Development Program (UNDP) and The Islamic Finance Council UK (UKIFC) mentioned potentials for new funding totaling US$50 billion or Rp 71.5 trillion from green Sukuk to fulfill commitments to sustainable development goals (SDGs) and climate change. Green Sukuk is the main instrument of Islamic funding.
The report was launched less than six weeks before COP26 takes place in Scotland. The summit will bring together world leaders to finalize an agreement to reduce greenhouse gases and adapt to the impacts of climate change. The report entitled 'Innovation in Islamic Finance: Green Sukuk for SDGs' shows how green Sukuk can contribute significantly to the total US$100 billion in climate funding needed by developing countries.
"New funding of US$30 billion to US$50 billion from green Sukuk and the environment can be prepared by 2025," UKIFC Managing Director Omar Shaikh said in front of 500 senior financial leaders at Islamic Finance and the Sustainable Development Goals Virtual Global Summit, Thursday (9/30).
Green Sukuk sales increased from US$500 million in 2017 to US$3.5 billion in 2019. Indonesia partnered with UNDP and issued the world's first sovereign green Sukuk in March 2018, worth US$1.25 billion. Indonesia also issued the world's first retail green Sukuk in November 2019, worth US$104.4 million. Currently, Indonesia's green Sukuk issuance has exceeded US$3.9 billion for climate change mitigation and adaptation efforts.