Drivers and challenges: green sukuk issuance in Malaysia / Mohammad Syafiq Abdullah

Abdullah, Mohammad Syafiq (2020) Drivers and challenges: green sukuk issuance in Malaysia / Mohammad Syafiq Abdullah. Masters thesis, Universiti Teknologi MARA.


International stakeholders are striving and competing to shift the current business settings to a greener landscape. In general, shaping a sustainable future industry requires a huge amount of funding, whereby an estimated amount up to USD 5.7 trillion is needed annually. Green bonds have been developed to support the environmental agenda and yet such target remains unreachable. Therefore, to bridge the gap between green financing agenda and Shariah-compliant stakeholders, the United Nations and Malaysian government have collaborated to push for industry player participation in the newly-introduced concept of green sukuk. Green sukuk is a Shariah-compliant fixed income investment that integrates financial concerns with Environmental, Social and Governance (ESG) issues. Despite the extensive efforts exerted, the number of green sukuk players has yet to achieve the expected amount and still lags in accelerating the green investment required. This study was conducted to explore the drivers that influence and the challenges that faced by firms to issue green sukuk in Malaysia, consequently developing an integrated framework to promote green sukuk issuance. The data required were obtained by adopting a qualitative case study methodology in which interviews with key participants in green sukuk issuance in Malaysia were undertaken and the results were triangulated with documented resources. The results illustrated three main drivers that influenced the current green sukuk issuers, namely competitiveness, legitimation and ecological responsibility. The first two drivers revealed a strong influence towards green sukuk issuance in Malaysia, while ecological responsibility provided minimal impact on the financing structure. However, the study indicated further that ecological responsibility could be enhanced through the involvement of religion in the environmental agenda, thereby shaping the current social behaviour. The study also discovered several challenges in green sukuk financing, green project construction and the response from investors. These challenges found to give green sukuk issuers a hard time to obtain the financing and completing the project. To conclude, green sukuk have a good prospect in accelerating green investment in Malaysia. However, the market is still nascent and several measurement need to be taken into consideration to develop the green sukuk market in near future including consistent marketing of green sukuk, facilitating conducive green sukuk environment, providing favourable policies to industry and integrating religion into green agenda to influence the population.


Item Type: Thesis (Masters)
Email / ID Num.
Abdullah, Mohammad Syafiq
Email / ID Num.
Thesis advisor
Jit Singh, Keshminder Singh (Dr.)
Subjects: H Social Sciences > HJ Public Finance > Finance, Islamic
Divisions: Universiti Teknologi MARA, Shah Alam > Faculty of Business and Management
Programme: Master of Science (Business Management)-BA750
Keywords: Sustainable finance; green finance; Islamic finance; green sukuk; Stakeholder Theory; Institutional Theory
Date: September 2020
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