HSBC Malaysia has issued the first SDG ‘sukuk,’ an Islamic bond, which will finance eligible projects and businesses in line with HSBC’s SDG Bond Framework.
The Framework supports projects that contribute to the Global Goals on: good health and well-being; quality education; clean water and sanitation; affordable and clean energy; industry, innovation and infrastructure; sustainable cities and communities; and climate action.
3 October 2018: HSBC Amanah Malaysia Berhad has launched the world’s first SDG sukuk, an Islamic bond. The sukuk aims to finance projects that benefit the environment and communities, and is the first sukuk issuance by a financial institution that references the SDGs as the beneficiary of the proceeds.
Proceeds from the sukuk will be used as working capital in HSBC’s Amanah’s Islamic banking business to finance eligible projects and businesses in line with HSBC’s SDG Bond Framework. The Framework supports projects contributing to SDG 3 (good health and well-being), SDG 4 (quality education), SDG 6 (clean water and sanitation), SDG 7 (affordable and clean energy), SDG 9 (industry, innovation and infrastructure), SDG 11 (sustainable cities and communities) and SDG 13 (climate action).
HSBC Bank Malaysia Berhad Chief Executive Officer, Stuart Milne, explained that the sukuk demonstrates Malaysia’s role as an Islamic finance hub and HSBC’s “leadership in sustainable financing.” UN Development Programme (UNDP) Administrator Achim Steiner welcomed HSBC’s commitment to using funds raised in the capital market to invest in the SDGs. He observed that “HSBC’s pioneering ‘SDG sukuk’ is a prime example of how to create innovative financing for the Goals,” and represents a milestone in aligning the SDGs and Islamic finance.
The SDG sukuk follows the HSBC Group’s 2017 US$1 billion SDG bond in 2017. This SDG financing is in line with the Group’s commitment to provide US$100 billion in sustainable investment and financing by 2025.
The sukuk issuance is in line with the ‘Value-based Intermediation’ initiative by Bank Negara Malaysia, which aims to shift the Islamic finance industry to integrate environmental and social considerations into banking activities. [UNDP Press Release] [Sukuk factsheet]