Skip to content Skip to Search
Skip navigation

Strong upsurge in UAE green sukuk ahead of Cop28

Investors at the Abu Dhabi Securities Exchange. Reuters
Investors at the Abu Dhabi Securities Exchange. The exchange has launched a benchmark to rate companies on their ESG performance
  • Green sukuk up 41% in Q3
  • Worth $6.4bn in UAE
  • Global value $33.3bn

The UAE has witnessed a strong push for sukuk to finance green projects, according to data released by Fitch Ratings.

Sukuk are sharia-compliant bonds that were developed as an alternative to conventional bonds, which are not considered permissible by many Muslims as they pay interest, and also may finance businesses involved in activities not allowed under Sharia law.

The ratings agency said the pipeline for green sukuk – or environmental, social and governance (ESG) sukuk – in the UAE grew by 41 percent compared with the previous quarter to reach $6.4 billion at the end of September.

Fitch’s findings were announced ahead of the Gulf state hosting the Cop28 climate summit, which begins on Thursday.

This growth across all currencies – more than 90 percent in US dollars and 5.5 percent in UAE dirham – was driven by banks and corporates. 

During the quarter, First Abu Dhabi Bank issued the first UAE dirham green sukuk, valued at $500 million, while Abu Dhabi Islamic Bank and DP World also issued green sukuk worth $500 million and $1.5 billion respectively.

ESG or green sukuk proceeds are used to finance environmentally and socially sustainable projects such as renewable energy.

Global outstanding ESG sukuk reached $33.3 billion in the third quarter, up 66 percent year on year.

About 81 percent of ESG sukuk issuance across all countries came from the UAE ($1.8 billion), up 85 percent compared with the previous quarter. 

Fitch said it expects outstanding ESG sukuk in the UAE to reach up to 20 percent of total sukuk issuance in the medium term as the government seeks to achieve net zero emissions by 2050.

“ESG sukuk in the UAE has increased over the past few years, making up over 12 percent of total outstanding sukuk in Q3, marking a period of prominent growth,” said Bashar Al-Natoor, global head of Islamic finance at Fitch. 

“Sizeable funding is needed to meet the UAE’s energy transition targets, part of which can be met through ESG sukuk, and sovereign ESG sukuk could give an additional boost.”

He added: “Although ESG sukuk issuance is still nascent in the UAE, Cop28 has put ESG sukuk and Islamic finance under the spotlight, which could support industry growth and development.”

Growing regional shares

The UAE holds 19.2 percent of the global pipeline of ESG sukuk, up from less than 15 percent three months ago. It has the largest share in the GCC at 52 percent, followed by Saudi Arabia (40.6 percent). 

Islamic banking in the UAE has a 28 percent market share. Such institutions are key issuers, arrangers and investors of sukuk. While there are no sovereign ESG sukuk, this could change, added Al-Natoor.

ESG sukuk issuances are concentrated in six of the 57 Organisation of Islamic Cooperation countries. Its absence in the remaining Muslim-majority countries stems from the developing nature of debt capital markets and gaps in ESG regulations, said Fitch.

Separately, Abu Dhabi Securities Exchange announced on Tuesday the launch of its ESG benchmark index. 

The FTSE ADX ESG Screened index is designed to provide investors with a transparent and tradable green benchmark that ranks a company based on its ESG scores.

It will initially include 24 companies that are measured across themes including emissions, environmental product innovation and human rights.

Latest articles


Dubai launches one-stop hub to streamline government services

People in Dubai can now obtain an Emirates ID, register a company, open a bank account and more under one roof following the opening of the Emirates Government Services Hub (EGSH). Owned by Sheikh Mohammed Bin Maktoum Bin Juma Al Maktoum, a member of the Dubai Royal family, EGSH allows clients to access all essential […]

In association with
Thailand's consul general Kitinai Nutakul visits the Saudi Ministry of Foreign Affairs in Jeddah

Thailand opens investment office in Saudi Arabia

Thailand’s Board of Investment (BOI) is opening its first Middle East office in Saudi Arabia, signaling a deepening of economic ties between the nations after a longstanding diplomatic spat. The office will focus on attracting Saudi investment into Thailand’s targeted industries and supporting Thai entrepreneurs looking to invest in the region, the BOI said in […]

hajj saudi arabia

Saudia reports big rise in international passengers

Saudi Arabia’s national carrier Saudia reported a 24 percent increase in international passengers to 9.1 million in the first half of 2024. There was also a 13 percent rise in the number of flights. The Hajj pilgrimage in June played a large part in the growth.  The number of passengers flying on domestic routes rose […]

renewables target dam

World is off track to meet Cop28 renewables goal

The world is far from reaching its 2030 renewables target, the International Renewable Energy Agency (Irena) said on Thursday. Countries committed at the Cop28 summit in Dubai last year to treble renewables capacity in order to limit global warming to 1.5C. To stay on course global capacity growth needs to accelerate to a minimum rate […]