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 ties the financing cost to issuer's targets, incentivising the borrower to achieve pre-determined sustainability objectives.

A borrower’s performance is measured using sustainability performance targets. The issuer benefits upon achieving its targets, or risks facing financial repercussions. This adds an aspect of accountability that values impact rather than simply good intentions.

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 to verify their use for climate change mitigation, climate change adaptation, social infrastructure or sustainable development.
3. Adherence to the principles of the International Capital Market Association, listed exchanges or third-party verification for credibility
4. Transactions that were issued, listed, or substantially enhanced in 2025 

1. Indonesia Sovereign Green Sukuk Wakala ($1.1 billion)
This green sukuk, issued by the Republic of Indonesia, 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 for 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 – green 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 green sukuk ($750 million)
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 – Inaugural green sukuk ($700 million)
This loan will be applicable for the construction of low carbon district cooling systems and indicates the key influence of the energy efficiency factor.

6. Aldar Investment Properties – green sukuk ($500 million)
This sukuk is a refinancing of real estate assets that have been certified for sustainability. This is significant because of the growing compatibility between Islamic finance and green property investment.

7. Emirates Islamic – Sustainability-linked financing sukuk ($500 million)
This transaction marked a signifccant 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 – green sukuk ($500 million)
The green sukuk issued by 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 – green sukuk ($500 million)
This first green sukuk increased the pool of issuers in sustainable Islamic finance and helped fund projects that support environmental objectives.

10. Islamic Development Bank – green sukuk (EUR 500 million)
The issuance of funds in the new sustainable finance framework of 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 see the sustainability-linked sukuk campaign not as a pilot project, but as traditional 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.

First, Islamic sustainability-linked financing is becoming more investment-worthy. Additionally, the range of industries diversifying is growing, lowering concentration risk. 

Finally, their alignment with global sustainable finance standards makes incorporating these instruments into comprehensive ESG initiatives relatively easy.