Pakistan auctioned its inaugural sovereign Green Sukuk on 16 May 2025, raising PKR 31.99 billion — equivalent to approximately USD 114 million — through an auction conducted via the Pakistan Stock Exchange under the country's newly established Sustainable Investment Sukuk Framework. The issuance marks the first time Pakistan has offered a Shariah-compliant sovereign instrument specifically designated for environmental purposes.
The instrument is structured on an Ijarah, or lease-based, basis. Under the Ijarah model, the issuer transfers specified assets to investors for the duration of the Sukuk's term, with investors receiving periodic payments representing the economic equivalent of rental income rather than interest, thereby complying with the Shariah prohibition on riba. Proceeds from the issuance are designated for renewable energy and green infrastructure projects aligned with Pakistan's National Climate Change Policy and its nationally determined contributions under the Paris Agreement.
FRAMEWORK ENCOMPASSES GREEN, SOCIAL, AND SUSTAINABILITY INSTRUMENTS
The May 2025 Green Sukuk is described by the government as the first component of a wider Sustainable Investment Sukuk programme that will ultimately encompass Green, Social, and Sustainability Sukuk.
CLIMATE POLICY
Pakistan's National Climate Change Policy sets out a framework for transitioning to renewable energy, improving climate resilience, and reducing greenhouse gas emissions.