Green sukuk - financing the fight against carbon emissions
The momentum for climate action is a unique opportunity to unlock massive financial flows and generate economic and social benefits while protecting people and the planet. As governments and development partners cannot alone achieve the SDGs - or provide the resources needed to meet the 2030 goal post - the creativity and knowhow from all of society is needed. In Indonesia, innovative approaches are underway to boost social finance and private sector investments for a more inclusive and sustainable growth model.
UNDP supported Indonesia to establish a platform for innovative green financing – connecting investors, entrepreneurs, government, Islamic finance institutions, philanthropists and youth – which helped the country become the first to issue a US dollar denominated sovereign green Islamic bond (sukuk) that leverages private finance for climate change mitigation, adaptation and biodiversity preservation. Following six issuances from 2018 to 2021, with the total proceeds amounting to 3.9 billion USD, UNDP continues to provide support in pre- and post issuance, including the impact reporting process.
UNDP also supported the issuance of the world’s first green sukuk for the domestic retail market, introduced through an online platform with a low minimum amount (equivalent of 74 USD) to encourage investments among young people. Following the success of the green sukuk, the Government developed an SDGs Government Securities Framework and successfully issued its first SDGs Bond in September 2021 with a total amount of EUR 500 million.