KUALA LUMPUR, Global environmental, social, and governance (ESG) sukuk are projected to surpass US$60 billion in outstanding value by the end of 2026, according to Fitch Ratings.
Global environmental, social, and governance (ESG) sukuk is likely to surpass US$60 billion in outstanding value by the end of 2026, according to Fitch Ratings.
The rating agency said the growth reflects ESG sukuk’s increasing role in financing sustainability projects, appealing to a wider investor base, and benefiting from regulatory reforms.
In the first half of 2025 (1H25), ESG sukuk accounted for just over 40% of all emerging-market US dollar ESG debt (excluding China), with the remainder issued in bond format.
Fitch expects ESG sukuk issuance to slow in the third quarter of 2025 (3Q25) due to seasonal summer lulls in major markets, but anticipates a strong rebound in the final quarter of the year.
“Fitch-rated ESG sukuk have shown resilience despite ongoing geopolitical tensions in the Middle East,” said Bashar Al Natoor, Fitch’s Global Head of Islamic Finance. “All issuers maintain Stable Outlooks, almost all are investment-grade, and there have been no defaults. ESG sukuk are increasingly popular with both Islamic and ESG-focused investors, diversifying funding sources and helping issuers meet sustainability goals.”
Fitch noted that over 10% of global US dollar sukuk outstanding are ESG-linked, with the total market rising by 12% year-on-year in 1H25 to about US$50 billion.
The Gulf Cooperation Council (GCC) countries, led by Saudi Arabia and the UAE, accounted for over half of the market, while Malaysia and Indonesia together contributed around 40%. 
Fitch currently covers about three-quarters of the global US dollar ESG sukuk market, the majority of which is senior unsecured. Listing venues for these sukuk include the stock exchanges in Frankfurt, London, Stuttgart, and Nasdaq Dubai.
Issuer diversity has also grown, with notable entries in 2Q25 such as UAE-based Omniyat Holdings’ debut green sukuk (rated ‘BB-‘) and Pakistan’s first rupee-denominated sovereign green sukuk.
Fitch added that recent regulatory initiatives, such as Saudi Arabia’s new guidelines for green, social, sustainability, and sustainability-linked debt, will further support market growth.
However, the agency cautioned that geopolitical tensions, shifting Shariah interpretations, oil price volatility, and greenwashing concerns could affect future ESG sukuk issuance.
