Qudsia Bano

The innovative Islamic financial instrument announced by the government aims to channel investments into environmentally friendly projects while simultaneously supporting economic growth and financial market development.

The Green Sukuk, with an expected issuance size between Rs20 billion and Rs30 billion, will be issued through an auction mechanism and listed on the Pakistan Stock Exchange (PSX). The move is part of a broader strategy to align the country’s financial ecosystem with international green finance standards and to tap into the growing pool of Environmental, Social and Governance-conscious investors.

Structured with the support of a consortium of financial advisers, including Meezan Bank, Bank Alfalah, Dubai Islamic Bank Pakistan, and Bank Islami, the Sukuk forms a cornerstone of the newly-approved Sustainable Investment Sukuk Framework. This framework underpins Pakistan’s commitment to Vision 2028, particularly its transition to an interest-free economy and a low-carbon future.

Experts called the launch a potential game-changer for sustainable finance in Pakistan. Dr Ahsan Mehboob, a financial adviser on green instruments at National Bank of Pakistan, said the Green Sukuk could unlock a new class of investors who are increasingly seeking Shariah-compliant and impact-driven opportunities.

According to him, the instrument not only supports green development but also boosts financial inclusion by integrating Islamic finance with sustainability goals. The initiative is also expected to strengthen the country’s foreign exchange reserves by attracting global green investors and tapping international capital markets.

Analysts noted that if effectively implemented, the Green Sukuk could serve as a template for future issuances tied to climate and sustainability objectives, including renewable energy, green transportation, and waste management.

Muhammad Amin, a senior executive at Alfalah Bank, remarked that the success of the inaugural issuance could elevate Pakistan’s position in the global Islamic finance market. He emphasised that transparency in project selection and post-issuance reporting would be critical to building investor confidence.

While the Green Sukuk is a promising step, experts cautioned that it must be supported by regulatory clarity, institutional capacity, and robust monitoring to ensure its long-term credibility and impact. Nonetheless, the move signals a significant shift in Pakistan’s financial policy landscape, embedding sustainability into the country’s economic architecture.

Credit: INP-WealthPk