S&P Global has projected that sustainable bond issuance across the Middle East and North Africa will reach between USD 20 billion and USD 25 billion in 2026, building on a year in which the region delivered one of the few bright spots in an otherwise difficult global market for labelled sustainable debt. The forecast, contained in a report published in February 2026, reflects sustained and structural momentum in green and sustainability-linked financing from the Gulf Cooperation Council, anchored predominantly by Saudi Arabia and the United Arab Emirates.
MENA sustainable bond issuance grew by 3% in 2025, a positive performance that stands in sharp contrast to a 21% decline recorded across the global sustainable bond market over the same period. Saudi Arabia and the UAE together accounted for 80% of the region's sustainable bond supply in 2025, consolidating their positions as the twin engines of both Islamic and conventional sustainable finance in the Gulf. The resilience of MENA issuance in a difficult global environment underscores the structural nature of the regional sustainability financing drive, which is directly connected to the national economic diversification agendas of the GCC's two largest economies.
GREEN SUKUK REACHES NEW HEIGHTS
Total green sukuk issuance across the MENA region reached USD 11.4 billion in 2025, a significant increase from USD 7.9 billion in 2024, reflecting rapid and accelerating growth in the Islamic sustainable finance segment. Sustainable sukuk now accounts for more than 45% of the region's total sustainable bond activity, a share that underscores the degree to which Islamic finance structures have become the preferred vehicle for channelling environmental and social investment across the Gulf and beyond. The structural alignment between Islamic finance principles — particularly the prohibition on financing harmful activities — and ESG objectives has made green sukuk a natural product innovation for the region.
Outstanding ESG sukuk crossed USD 44.5 billion by early 2025, representing year-on-year growth of 23%. The expansion of the market reflects supply-side enthusiasm from sovereigns, quasi-sovereigns, and corporate issuers seeking to attract a broader international investor base, alongside demand from asset managers who have made sustainability commitments requiring them to allocate capital to labelled instruments. The combination of investor demand and issuer incentive has created a self-reinforcing dynamic that S&P expects to drive further market deepening in 2026.
SAUDI ARABIA AND UAE LEAD REGIONAL DRIVE
The dominance of Saudi Arabia and the UAE in MENA sustainable issuance reflects the ambitious sustainability agendas both governments have articulated and are actively pursuing. Saudi Arabia's Vision 2030 programme includes substantial renewable energy capacity targets that require significant long-term financing, while the UAE's hosting of COP28 in November and December 2023 reinforced its commitment to positioning itself as a global centre for climate finance and investment. Both countries have developed regulatory frameworks and issuance incentives designed to channel capital towards sustainability-labelled instruments in both domestic and international capital markets.
S&P's projection of USD 20 billion to USD 25 billion for the full year 2026 implies continued strong growth from 2025 levels and would represent a new record for the MENA sustainable bond market. The ratings agency noted that the trajectory is underpinned by a robust pipeline of sovereign and quasi-sovereign issuers across the GCC that are expected to access the sustainable bond market during the year, providing a durable foundation for the projected issuance total and suggesting that the regional market is now approaching a maturity that is less dependent on one or two headline transactions to hit its targets.