Historic Launch: Pakistan’s Bold Step with Sovereign Domestic Green Sukuk for Climate Resilience

Sovereign Domestic Green Sukuk has officially entered Pakistan’s financial ecosystem with a powerful message of hope, innovation, and economic transformation. Announced on May 16, 2025, by Finance Minister Senator Muhammad Aurangzeb, this bold new initiative is set to fund vital water-related infrastructure and push Pakistan forward in its battle against climate change—one of the most pressing threats it faces today.

Why Pakistan Needs Green Financing Now

Pakistan ranks among the top 10 countries most vulnerable to climate change, facing extreme weather events, floods, droughts, and water scarcity. The need for sustainable infrastructure and environmentally focused funding models has never been more urgent.

The Sovereign Domestic Green Sukuk is a pivotal component of Pakistan’s long-term vision for climate resilience and economic reform. It demonstrates a firm commitment to green investment through Sharia-compliant financial instruments—an approach that aligns with both ethical finance and environmental stewardship.

Launch of Sovereign Domestic Green Sukuk

Speaking at the virtual Gong Ceremony hosted at the Pakistan Stock Exchange (PSX), the Finance Minister confirmed the launch of a Rs. 30 billion Green Sukuk. The issuance will be conducted via auction and listed on PSX for public trading.

“This listing is a milestone for Pakistan’s economic and environmental future,” noted Aurangzeb. “The recent record high in the PSX 100 index reflects our growing investor confidence, and this Sukuk aligns with our vision for long-term growth.”

This launch marks the first domestic Sharia-compliant green Sukuk, a significant move that integrates Islamic finance with climate-focused development.

Government’s Climate and Economic Agenda

The launch of the Sovereign Domestic Green Sukuk comes as part of Pakistan’s broader homegrown economic reform agenda.

• The IMF recently disbursed $1.3 billion under the Resilience and Sustainability Facility (RSF).
• Pakistan is also engaged in a 10-year strategic partnership with the World Bank.
• The Asian Development Bank (ADB) is expected to provide further financing by the end of December.

These resources are aimed at re-adaptation, sustainability, and structural economic reforms. The Finance Minister emphasized the need for judicious utilization of funds, urging both the government and the private sector to step up.

Private Sector and Global Investors’ Role

Advisor to Finance Minister Khurram Schehzad, speaking at the ceremony, identified climate change and population growth as the two major threats facing Pakistan today.

He highlighted Pakistan’s improved fiscal indicators:

• Tax-to-GDP ratio
• Revenue-to-debt servicing ratio
• Debt-to-GDP ratio

“The Sovereign Domestic Green Sukuk is a market-oriented, Shariah-compliant tool that will position Pakistan prominently on the global green finance map,” Schehzad said.

He also revealed plans to launch Panda Bonds targeting the Chinese market in the next quarter, emphasizing the need for Islamic banks and private investors to actively participate in green finance.

Future of Green Sukuk and Panda Bonds

With the successful launch of the Green Sukuk, Pakistan is already looking ahead. According to Farrukh Sabzwari, CEO of the PSX, private sector players are expected to issue their own green Sukuk soon, highlighting the high demand for green financial products globally.

The upcoming Panda Bonds will further expand Pakistan’s international investor base, particularly within China’s fast-growing green investment community.

PSX’s Role and Financial Sector Response

Chairperson of PSX, Shamshad Akhtar, hailed the initiative as a historic milestone. She stressed its importance in enabling:

• Green and sustainable infrastructure
• Renewable energy
• Green transportation
• Sustainable agriculture

Akhtar also called for immediate work on the Living Indus Project, urging provincial governments to join this essential climate effort.

Meezan Bank CEO, Irfan Siddiqui, expressed optimism about Islamic banks’ participation. “There’s a huge demand. We expect this issue to be oversubscribed,” he stated. The availability of more Sukuk is essential for the further growth of Islamic finance in Pakistan, he added.

Conclusion

The Sovereign Domestic Green Sukuk is more than a financial instrument—it is a declaration of Pakistan’s commitment to climate action and sustainable growth. From funding water infrastructure to attracting ethical investors, this launch reflects strategic foresight, responsible governance, and inclusive progress.

As Pakistan continues to strengthen ties with international partners and develop a greener economy, the Sovereign Domestic Green Sukuk stands out as a powerful step forward.

With Islamic finance at its core and sustainability as its goal, this Sukuk will not only bridge the financial gap for climate infrastructure but also serve as a beacon for emerging economies grappling with similar environmental challenges.

External Links

• Pakistan Stock Exchange – PSX
• International Monetary Fund – RSF Program
• World Bank – Country Partnership Framework for Pakistan

Internal Links

• Understanding Islamic Finance in Pakistan
• Green Bonds vs Green Sukuk: Key Differences
• Pakistan’s Climate Action Strategy 2025