Sukuk’s rise as a mainstream financing tool

Discover how Sukuk is moving mainstream – helping issuers access global capital, align with ESG goals, and unlock new growth opportunities.

30 September 2025

4 mins

Corporate & investment bankingSustainable and transition finance

This article has been adapted from the digital banker, featuring Standard Chartered. The full article can be viewed here.

Islamic finance is entering a new phase – one defined not just by growth, but by innovation, integration, and global relevance. At the heart of this transformation is the Sukuk market, which is rapidly evolving from a specialist financing instrument into a mainstream capital markets tool. As investors seek purpose-aligned opportunities and issuers explore more flexible, Shariah-compliant structures, Sukuk is becoming a strategic enabler across sectors and geographies.

Islamic finance is evolving – and so are the markets that power it

Global Islamic finance assets have surpassed USD 5.5 trillion in 2024 – a 12 per cent rise from the previous year and a 43 per cent increase since 2020. This growth is increasingly driven not just by traditional Islamic banking, but by capital markets innovation, particularly in Sukuk issuance.

With Sukuk now accounting for 18 per cent of global Islamic financial assets, and expected to reach USD 1.5 trillion by 2028, the sector is moving beyond conventional use cases. Governments, corporates, and financial institutions are tapping Sukuk to meet Shariah compliance while also attracting a global investor base and aligning with sustainability goals.

From niche to mainstream: The Sukuk transformation

Sukuk is now recognised as a primary financing tool, not a niche alternative. Its asset-backed structure, ethical principles, and transparency make it a compelling choice in today’s risk-conscious and impact-driven capital markets.

This evolution has reshaped client expectations. Issuers now seek partners who can advise across jurisdictions, asset classes, and regulatory frameworks, while connecting them to diverse pools of capital.

ESG and Islamic finance: A shared ethos

Islamic finance and ESG share foundational values: transparency, responsible stewardship, and ethical conduct. This convergence is driving a sharp increase in sustainability-linked Sukuk issuance, which reached USD 15.2 billion in 2024, more than doubling since 2020, and now accounts for over 6 per cent of the global Sukuk market.

Investors are recognising Sukuk’s role in enabling long-term impact without compromising on compliance or performance. Meanwhile, issuers are increasingly integrating sustainability goals into their capital strategies – anchored in frameworks that align Maqasid al Shariah with global benchmarks such as the UN Sustainable Development Goals (SDGs).

We support this evolution by advising clients on Sukuk structures that reflect both Shariah principles and ESG objectives, helping them access purpose-driven capital at scale.