BAKU, Azerbaijan, January 11. The Islamic finance principles support climate action and sustainable development through risk-sharing, where financial transactions involve the shared risk between lender and borrower; ethical investments, which mandate investments in halal activities that do not pose any harm to individuals or society; and social justice, which promotes social welfare and economic justice aiming to reduce poverty and inequality, Chairman of the Islamic Development Bank (IsDB) Group Dr. Muhammad Sulaiman Al Jasser said in an exclusive interview with Trend.
"It is important to highlight how the IsDB Group leverages Islamic Finance resources to effectively combat climate change and promote sustainable development. The core activities of the IsDB Group revolve around Financing Sustainable Infrastructure, positioning the Group as a leader in investments that drive sustainable development. These efforts include funding energy-efficient buildings, enhancing public transportation systems, and improving water management solutions. We continue to leverage our resources to fund these projects, ensuring that they are designed and implemented according to sustainable principles. These interventions are mainly made possible through:
1. Green Sukuk, or Islamic bonds , are a crucial tool in Islamic finance used by IsDB to fund projects that promote renewable energy, clean transportation, and other environmentally friendly initiatives. By leveraging this innovative financing tool, the IsDB supports its 57 member countries in achieving their climate action and sustainable development goals. These issuances have generated significant capital for projects with positive environmental impacts.
Through Green Sukuk, the IsDB mobilizes funds for substantial investments in renewable energy, sustainable agriculture, and other climate-friendly initiatives. In the last five years, through tour sustainable finance framework, we have issued over US$ 8 billion, comprising green and sustainable Sukuk investments to support our member countries. Some of the projects financed under this modality include Senegal’s US$ 337 million Dakar to Blaise Diagne International Airport (AIBD) Regional Express Train project; the 600-Megawatt Clean Electricity Asagi Kalekoy Dam in Turkiye, as well as the country’s numerous solar power plants made up of 200,000 large-scale solar panels.
2. Public-Private Partnerships (PPP): Through our PPP funding modality and advisory services, we facilitate private sector investment in large-scale climate related projects, such as solar and hydropower initiatives, including the large-scale Ben Ban Solar Project in the Aswan Governorate in The Arab Republic of Egypt.
3. Capacity Building for Member Countries though Technical Assistance : At IsDB we offer technical assistance and training support to our member countries and financial intermediaries to enhance the knowledge and skills of stakeholders promoting the development of climate-resilient projects and the broader development of products that foster sustainable development objectives. For instance, climate smart and resilient agriculture programs in the Sahel Region covering six countries in West Africa include significant components that support capacity enhancement of drought-resistant crops and other water-efficient solutions.
4. Islamic finance and Climate Justice: Islamic banking's focus on social justice and community welfare promotes initiatives aligned with sustainable development goals (SDGs) such as poverty eradication, education, and health which are crucial for a fair and just transition in the climate discussion. The IsDB Group actively explores ways to support its member countries fairly and justly, ensuring the facilitation of their economic growth and development prospects while protecting the planet," he explained.
Follow the author on X: @Lyaman_Zeyn