New ICMA Guidance Creates Ambiguity About How its Principles Apply to Green & Social Sukuk

Changes to the International Capital Market Association's (ICMA) green, social and sustainability (GSS) bonds framework could inhibit issuance of GSS Sukuk and the development of green capital market assets in Islamic markets. Developments from within Sukuk markets provide a way for sustainability-linked sukuk to help fill the gap.

ICMA releases new guidance to ensure green assets are not double-counted, but in doing so hits upon a point of ambiguity relating to green SukukDepending on how the guidance is applied, it could substantially increase the review process for labelled Sukuk compared to similar labelled bondsFor green, asset-light issuers, sustainability-linked instruments can complement labelled GSS bonds to create additional green assets and benef...