Top 10 sustainability-linked Islamic finance transactions in 2025

There has been a marked increase in sustainability-linked Islamic finance in 2025, mobilizing real capital and channeling funds into climate change mitigation and major sustainable development projects. 

Unlike green financing that is exclusively used to finance or refinance new and/or existing green projects, sustainability-linked Islamic financing is designed to incentivize the borrower's achievement of ESG (environmental, social, or governance) targets through pricing incentives.

A borrower’s performance is measured using sustainability performance goals, benefitting on achieving targets or facing financial repercussions otherwise. This adds an additional layer of accountability that values impact than intent.

Here’s a list of ten sustainability-linked Islamic financing transactions in 2025, ranked on the following four factors:

1. Transaction size 
2. The application of proceeds for climate change mitigation and/or adaptation, social infrastructure or sustainable development
3. Adherence to the principles of the International Capital Market Association, listed exchanges or third-party verification
4. Transactions that were issued, listed, or substantially enhanced in 2025 

2025: Ten sustainability-linked Islamic financing transactions

1. Indonesia Sovereign Green Sukuk Wakala ($1.1 billion)
The green sukuk, issued by Indonesian government, is being used to fund sustainable infrastructure projects and climate initiatives. It is set to be listed concurrently on the Singapore Exchange and Nasdaq Dubai.

2. Dubai Islamic Bank – Sustainability-linked financing sukuk ($1 billion)
Dubai Islamic Bank completed the pricing of its first sustainability-linked sukuk. Its first issuance raised a value of $1 billion for a maturity period of five years. This is pegged to the accomplishment of specific sustainability goals, such as supporting the UAE’s Net-Zero 2050 Initiative.

3. Oman Electricity Transmission Company sukuk ($750 million)
Funds from Oman's first US dollar green sukuk will be directed toward its electricity transmission infrastructure that aligns with climate transition goals. 

4. Sobha Realty sukuk ($750 million)
Lxury real estate developer, Sobha Realty's first green sukuk is funding energy-efficient real estate projects. This highlights how sustainability frameworks are being assimilated into the real estate industry.

5. Tabreed's inaugural sukuk ($700 million)
UAE-based district cooling company Tabreed has issued a $700 million sukuk that will be applicable for the construction of low carbon district cooling systems, illustrating the key influence of the energy efficiency factor. The company owns and operates 91 plants, including 76 in the UAE, five in Saudi Arabia, seven in Oman and one each in Bahrain, Egypt, and India.

6. Aldar Investment Properties – sukuk ($500 million)
The sukuk is a refinancing of real estate assets that have been certified for sustainability. Issued by an Abu Dhabi-based real estate investment management platform and subsidiary of Aldar Properties, the sukuk signals a growing compatibility between Islamic finance and green property investment.

7. Emirates Islamic – Sustainability-linked financing sukuk ($500 million)
This transaction marked a significant step regarding expansion of sustainability-linked structures used in Islamic banking, with an emphasis on strengthening Emirates Islamic’s commitment to achieving the UAE’s Net Zero 2050 ambitions. 

8. OMNIYAT sukuk ($500 million)
The green sukuk issued by Dubai-based real estate developer OMNIYAT proved instrumental in enabling sustainable real estate projects, as well as marking a major foray for a private sector developer in the green Islamic capital markets sector.

9. Binghatti Holding's sukuk ($500 million)
Dubai-headquartered Emirati real estate development company, Binghatti Holding, issued its first green sukuk, increasing the pool of issuers in sustainable Islamic finance and helping fund projects that support environmental objectives.

10. Islamic Development Bank's sukuk (EUR 500 million)
The issuance of funds in the new sustainable finance framework of multilateral development bank IsDB aims to channel funds to eligible green development projects.
 

What do these transactions reveal?
What is evident is the ever-growing size of sustainability-linked sukuk in the Islamic finance sector.

Several of these issues have surpassed the half billion-dollar mark, suggesting that institutional investors have begun to view the sustainability-linked sukuk campaign not as a pilot project, but as mainstream issuances. 

Another new trend is accountability. Rather than project-specific funding, sustainability-linked instruments bind the funding terms to the level of sustainability goals and their achievements.
The Gulf region continues to lead, in particular the UAE and Oman. Transactions in Southeast Asia also reveal momentum building in and around that region.

What does this means for investors?
For an investor, these transactions imply several significant messages, such as Islamic sustainability-linked financing is becoming more investment-worthy. Additionally, the range of industries diversifying is growing, lowering concentration risk. And finally, alignment with global sustainable finance standards makes incorporating these instruments into comprehensive ESG initiatives relatively easy.