Global ESG sukuk poised to top US$60bil by 2026
The rating agency said the growth reflects its expanding role in funding sustainability initiatives, attracting a diverse investor base, and benefiting from ongoing regulatory reforms.
It noted that just over 40 per cent of all emerging-market ESG US dollar debt issued in the first half of 2025 (1H25), excluding China, was in sukuk format, with the rest in bonds.
However, Fitch Ratings expects ESG sukuk issuance to moderate in the third quarter of 2025 (3Q25) due to seasonal summer trends in key markets, mirroring broader sukuk market patterns, before rebounding in 4Q25.
Its global head of Islamic Finance, Bashar Al Natoor, said Fitch-rated ESG sukuk has been resilient to the Middle East geopolitical conflict.
"All issuers have Stable Outlooks, and almost all are investment-grade. There were no defaults.
"ESG sukuk are now increasingly tapped by both Islamic and ESG-focused investors, supporting funding diversification and helping issuers meet their sustainability targets," he added.
According to Fitch Ratings, over 10 per cent of global dollar sukuk outstanding are ESG-linked.
Global ESG sukuk increased by just over 12 per cent year-on-year (YoY) in 1H25 to about US$50 billion equivalent outstanding.
The Gulf Cooperation Council (GCC) accounted for over half of this, led by Saudi Arabia and the UAE, while Malaysia and Indonesia together represented 40 per cent.
Fitch Ratings covers about three-quarters of the global US dollar ESG sukuk market, the vast majority of which is senior unsecured, with around one per cent being subordinated.
Key listing venues for dollar-denominated ESG sukuk include the stock exchanges in Frankfurt, London, Stuttgart, and Nasdaq Dubai.
Issuer diversity increased notably in the second quarter of 2025, with examples such as UAE-based Omniyat Holdings Ltd's debut green sukuk, rated 'BB-', and Pakistan's first rupee-denominated sovereign green sukuk, which was unrated.
Meanwhile, Saudi Arabia's Capital Market Authority introduced new guidelines for green, social, sustainability, and sustainability-linked debt instruments.
However, it said geopolitical risks, evolving Shariah interpretations, oil price volatility, and greenwashing concerns may weigh on future ESG sukuk issuance.
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