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Sustainable and responsible investment (SRI) sukuk: state of play and lessons from Khazanah's Sukuk Ihsan

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Date
2022
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Abstract
SRI sukuk with its outcome-based emphasis has been touted as a possible instrument that can help bring the Islamic finance industry closer to its original ideals and help mitigate the form over substance criticisms that have dogged its growth. In Malaysia, although the pioneering SRI sukuk issuance, Sukuk Ihsan, was a social sukuk, most of the recent SRI sukuk issuances have been green sukuk or sustainable sukuk. This paper assesses the current state of the SRI sukuk market in Malaysia to identify the factors driving the development and issuance of green sukuk over other types of SRI sukuk and determine if there are any issues in the structure of Sukuk Ihsan that may have caused subsequent SRI sukuk issuers to shy away from social sukuk. The methodology used in this study are a critical review of literature, interview sessions with experts and stakeholders who are familiar with SRI sukuk and Sukuk Ihsan, and a case study analysis of Sukuk Ihsan. The popularity of green sukuk reflects the growing global environmental consciousness. The main factors driving the popularity of green sukuk are the maturity of the market and the existence of a strong supporting infrastructure for green issuances while the positive profiling benefits and availability of incentives for green issuances also contribute to a lesser extent. To promote social sukuk, regulators should focus on building up a similar supporting infrastructure for social sukuk. In addition, issuers of social sukuk may want to reconsider the inclusion of Key Performance Indicators ( KPI ) into the structure of future social sukuk issuance.
Keywords
SRI sukuk , Khazanah Sukuk Ihsan , Green sukuk , Sustainable sukuk , Malaysia , Project paper (MSc)
Citation
Mahbot, A. (2022). Sustainable and responsible investment (SRI) sukuk: state of play and lessons from Khazanah's Sukuk Ihsan (Master dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/4005
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INCEIF

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