Kuala Lumpur: Muslim countries and affinity customers should tap into the green sukuk market as it is in line with the Shariah-compliant standards, said CIMB Islamic Bank Bhd Chief Executive Officer Rafe Haneef.
He said there was growing demand for green sukuk, capitalizing on projects related to environmental sustainability and green environment infrastructure projects.
"Last year, the Environmental, Social and Governance (ESG) risks investment globally amounted to around $23 trillion and compared with the Islamic finance industry, the total size is about $2 trillion, it was 12 times higher."
"And look at the actual demand for the ESG-compliant assets which is $45 trillion, the demand is almost double of what we have regarding supply", he said , Bernama News reported.
"So, there is certainly a good reason why we should tap into green sukuk," he said during the second-panel discussion on Green Financing/Green Sukuk at the third Annual Symposium 2017 on Islamic Finance in Kuala Lumpur on Tuesday.
Sukuk - Islamic bonds, is structured in such a way as to generate returns to investors without infringing Islamic law which prohibits riba or interest. Sukuk represents undivided shares in the ownership of tangible assets relating to particular projects or special investment activity.
Bonds are securities in the form of a debt that will be paid back before a certain date, termed the date of maturity, in addition to interest [on this debt]. In short, a bond is a debt security in which borrowed money is repaid along with interest at a fixed rate.
Sukuk are financial fixed income certificates that are permissible within the provisions of Islamic Sharia law as they are raised on trading in, or construction of, specific and identifiable assets rather than being interest based like bonds.
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