The COP28 marked another milestone in the global effort to combat climate change where countries had committed a climate finance goal of $100 billion annually until 2025. As the finance world continues to focus on sustainability, Islamic finance is emerging as an untapped pool of capital that aligns faith-based finance with environmental, social, and governance (ESG) principles.

The industry which adheres to Islamic law is projected to reach USD6.7 trillion by 2027.  Islamic finance prohibits the receipt and payment of “riba” (interest), “gharar” (excessive uncertainty), “maysir” (gambling), short sales, or financing9 

2 activities considered harmful to society. As such, Islamic financial institutions are uniquely placed to finance the transition to net zero.  

The backdrop to COP28 was a world fighting a climate and nature crisis with a financial system that was not delivering for people and the planet. It has therefore set a pace for the growth of Islamic sustainable finance to fill the gaps in fighting climate and nature crises. 

Islamic Sustainable Finance at COP28 and beyond 

COP28 saw a greater focus on Islamic finance than previous COPs. As part of the Path to COP28 campaign (the first, and largest finance-focused campaign for the Dubai Climate Summit), DIFC hosted the main (and largest!) event focused on Islamic finance attracting over 200 leaders and practitioners. This was UKIFC’s “Unlocking Islamic Finance at COP28”. It was at the Summit that the Global Islamic Finance & SDGs Taskforce also announced the publication of its Key Outputs Report. It also created a platform to introduce Islamic sustainable investing to the world with the UKIFC launching the Secretariat for Tayyib Inspired. 

The Secretariat will manage the Islamic Sustainable Investing Platform (the Platform) which is ‘a listing of independently assessed, validated and showcased Islamic investment products that are directly aligned to sustainability goals’. The concept of “Tayyib” (pure, wholesome, and impactful) in Islam serves as the inspiration and framework for the Platform. It enhances the “halal” paradigm that was effectively established by the early pioneers of Islamic finance and promotes the growth of the Islamic asset management industry. Fundamentally, it aims to represent Shariah compliance in conjunction with a heightened emphasis on active, sustainable—also known as ESG/Responsible—investing within the framework of Islamic principles. 

Another notable initiative at COP28 was the Central Bank of the United Arab Emirates, and the Higher Shari’ah Authority, issuing the guiding principles on sustainable Islamic finance. These guidelines aim to incentivise and encourage Islamic financial institutions (IFIs) in the UAE to bolster sustainability within their practices and processes, aligning with a vision that considers both environmental and social dimensions.  

To support this process, the UKIFC held the first Unlocking Islamic Sustainable Finance Roundtable in the UAE on 23 May 2024. The event which was hosted by PwC Middle East brought key stakeholders together to discuss how to build an enabling environment in the UAE for Islamic sustainable finance (ISF). Financial institutions shared steps they were thinking to adhere to the guidelines and where support was needed. 

Growth of Green Sukuk 

At COP28, the UKIFC and London Stock Exchange Group published the “Financing a Sustainable Future – Green & Sustainability Sukuk Update 2023,” a key outcome of the High-Level Working Group on Green and Sustainability Sukuk (HLWG). The report highlighted that green and sustainability sukuk issuances reached $9.4 billion in 2022 and exceeded the $10 billion mark by the third quarter of 2023.  

A notable development at COP28 was the collaboration between the Islamic Development Bank (IsDB), London Stock Exchange Group (LSEG), and International Capital Markets Association (ICMA) to publish a green sukuk practitioners’ guide aligned with the Green Bond Principles and Sustainability Bond Guidelines. The Guidance on Green, Social and Sustainability Sukuk was launched in Saudi Arabia during the 50th Golden Jubilee anniversary of IsDB on 29th April, 2024. It is an output of the HLWG which would support the growth of green and sustainable finance within the sukuk market by providing issuers and market participants with guidance on labeling sukuk as green or sustainable, including examples, case studies, and best practices. It also aims to improve investors’ awareness of sukuk as an asset class in the global fixed-income markets and thereby increasing the market. 

2024 saw an increase in sustainable and green Sukuk, with a total issuance of nearly US$ 4.0 billion in Q1 2024, a 17% increase from Q1 2023 which according to LSEG was ‘mostly driven by sustainability Sukuk from GCC banks’. Meanwhile, issuances are expected to be between $160 billion and $170 billion, according to Fitch Rating, which has also forecast that the global Sukuk market will surpass $1 trillion in 2024. 

Sustainable Banking Practices 

Islamic banks are increasingly incorporating sustainability criteria into their operations and investment decisions, leveraging the principles of risk-sharing, ethical investment, and asset-backed financing to align with environmentally conscious practices. The UKIFC’s 2023 survey of 2,000 banking customers from four continents revealed that 90% of respondents deemed it essential for their bank’s products to be aligned with the Sustainable Development Goals (SDGs). 

Leveraging its almost 20 years of experience in Islamic finance and its sister entity Global Ethical Finance Initiative’s expertise in sustainable finance, to accelerate climate action across the global financial services sector. UKIFC is keen to support financial institutions in their journey towards net zero through is advisory services. 


As the world transitions towards a cleaner energy future, Islamic finance has an immense opportunity to enable investment consistent with both climate goals and faith-based values. COP28 commitments serve as a launchpad for the Islamic finance industry to scale up sustainable financing and develop innovative solutions for a low-carbon society, taking a substance-over-form approach. With COP29 and COP30 on the horizon, the industry is poised to build on this momentum, further refining and implementing strategies that align Shariah principles with global sustainability targets. The innate wisdom within the concept of sufficiency and principles of stewardship are key contributions the collective faith voice can, and must, make at these forthcoming COPs, helping to shape long-term climate action plans and reinforcing the role of ethical finance in addressing global challenges. This ongoing engagement across successive climate conferences will be crucial in solidifying Islamic finance’s position as a driving force in sustainable development. 


This guest blog was written for the GEFI Insights Series by Oyin Bamgbose, Islamic Finance Council UK.