The realization of the SDGs calls for new alternatives to traditional development financing and the shortage of funds for sustainable development has led to the introduction of new, greener and more sustainable financial instruments and products. One such financial mechanism for funding the SDGs, which has started to attract attention in many countries, is green sukuk. Over the past few years, green sukuk has come to be perceived as one of the promising instruments available, bringing Islamic finance and impact investing together as a bridge to achieve the SDGs.
Green sukuk represents a type of sukuk that is used to finance environmentally sustainable projects, and as such has great potential for financing projects and initiatives in the areas of renewable energy production, the introduction of energy efficient and resource-saving technologies, solid waste management and others. Since it was first introduced to capital markets, green sukuk has played an increasingly important role in financing private and public green initiatives, and more and more countries are now introducing it to their capital markets as a vehicle for financing their current and future sustainable development efforts.
“Pre-Feasibility Study for Green Sukuk Issuance in the Republic of Uzbekistan” which has been published online, aims to explore the opportunities and challenges as well as to perform a pre-feasibility analysis for the introduction of green sukuk in Uzbekistan. The study was conducted by the United Nations Development Program (UNDP) in Uzbekistan and the Capital Market Development Agency of the Republic of Uzbekistan, in cooperation with the Islamic Development Bank and the UNDP Istanbul International Center for Private Sector Development (IICPSD).
UNDP has been assisting the Government of Uzbekistan in exploring the possibility of implementing green sukuk as a means of mobilizing additional funds for the Sustainable Development Goals (SDGs) and national development targets in Uzbekistan as part of a collaborative initiative with the Capital Market Development Agency. The IICPSD conducted a pre-feasibility study for the issuance of green sukuk in the country as part of this initiative.
The findings of this study were also presented in a Green Sukuk workshop on November 25, 2020 conducted by the collaborating partners. In addition to an overview of the capital markets in Uzbekistan and international best practice examples of green sukuk, the workshop included a discussion on potential opportunities and challenges to green sukuk introduction in the country.
Given the country's funding deficit for achieving the SDGs, the study demonstrates that green sukuk may be a viable financial instrument for promoting sustainable development in the country, as well as a promising potential mechanism for Uzbekistan's efforts to solve climate change and move to a green economy.