05/25 Pakistan Initiates Green Finance with PKR 30 billion Domestic Green Sukuk Launch

Greeningdotlive News - June 25, 2025

Pakistan has taken an impressive step by introducing environmentally responsible investment, as it has launched its first Sovereign Domestic Green Sukuk, a Shariah-compliant bond valued at PKR 30 billion, on the Pakistan Stock Exchange (PSX). This milestone marks a pivotal shift in the country's financial strategy, aligning capital markets with climate-conscious infrastructure development.

Structured under the Ijarah model, a form of Islamic finance where the issuer (in this case, the government of Pakistan) leases an asset to the investor for a fixed period and price, the three-year Sukuk will finance major green projects, notably the construction of three new dams aimed at improving water security and climate resilience. The proceeds are strictly earmarked for eligible green projects under Pakistan's Sustainable Investment Sukuk Framework, reinforcing the government's commitment to integrating sustainability into national infrastructure planning.

The Green Sukuk offers a variable rental rate and is accessible to a wide range of investors, including institutions, retail investors, overseas Pakistanis, Roshan Digital Account holders, and international participants. This approach is designed to enhance financial inclusion and attract diversified capital. Investors in the Green Sukuk not only contribute to sustainable development but also stand to benefit from competitive returns and the security of a government-backed investment.

Pakistan's efforts in green Islamic finance arrive at a critical moment for the region, where water stress and climate volatility pose serious risks to economic stability. The Green Sukuk, with its fiscally responsible response, not only offers a solution but also aligns with global calls for climate-smart infrastructure investment. This reassures the audience about its economic impact and the responsible use of their investment.

As the world increasingly pivots toward environmentally linked finance, Pakistan's Green Sukuk initiative is a global message of intent, resilience, and reform. It signals a shift in the financial landscape, a commitment to sustainability, and a step towards a more climate-resilient future. It's part of a larger, impactful movement that everyone can participate in.