Pakistan formally launches first sovereign Green Sukuk to fund climate projects

Pakistan has formally launched its first sovereign Green Sukuk, raising PKR 31.98 billion in a landmark step toward sustainable and Shariah-compliant public financing. The three-year Ijarah-based instrument was oversubscribed by more than five times within two hours of opening, according to a statement issued on Thursday.

Originally set at PKR 30 billion, the issue attracted bids totaling PKR 161 billion, prompting the government to raise the final issuance amount. The auction was conducted via the Pakistan Stock Exchange and executed by the Pakistan Domestic Sukuk Company Limited (PDSCL), a wholly owned entity of the Ministry of Finance.

The Sukuk is fully tradable on the exchange and qualifies for the Statutory Liquidity Requirement (SLR), offering semi-annual rental returns. With a minimum investment requirement of just PKR 5,000, the instrument was structured to attract a wide investor base, including retail investors, institutions, and Roshan Digital Account (RDA) holders.

Proceeds from the Sukuk will fund selected green infrastructure projects including the Garuk Storage Dam in Kharan, Naigaj Dam in Sindh’s Dadu district, and the 26 megawatts Shagarthang Hydropower Project in Skardu. These projects aim to bolster water resource management, increase renewable energy capacity, and enhance climate resilience in underserved areas.

At a launch event held at the Pakistan Stock Exchange in Karachi, Finance Minister Muhammad Aurangzeb and PSX Chairperson Dr. Shamshad Akhtar underscored the significance of the initiative for both fiscal innovation and environmental sustainability.

The Green Sukuk issuance is guided by the Sustainable Investment Sukuk Framework, approved by the federal cabinet in April 2025. The framework aligns with international standards and integrates both the United Nations Sustainable Development Goals (SDGs) and the Maqasid-e-Shariah.