Responsible Finance Sukuk — Can They Bring Societal Value to a Value-Neutral Market?

Abstract

Conventional responsible finance provides investors with an opportunity to combine financial returns with broader societal impact in their investment activity. This emphasis on financial and extra-financial considerations has led to suggestions that there are innate similarities between responsible finance and Islamic finance, as financial activity guided by religious principles. It has not been until recently, however, that the sukuk market has sought to establish its place within the wider responsible finance market. This has led to debut issuances of green, social and sustainability sukuk, and the piecemeal development of precedents for future issuances. This article explores legal aspects of the nascent responsible finance sukuk market. In doing so, it provides an in-depth discussion of the legal structure of responsible finance sukuk issuances and reflects on claims that Islamic finance and responsible finance are naturally compatible.