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Green Islamic Bonds

Similar to green bonds, proceeds of green sukuk can be used to fund environment-friendly projects, but unlike green bond, green sukuk is a Shariah-compliant financial instrument. Green sukuk has two labels: “Islamic” and “Green”. The “Islamic” label means that sukuk, an interest-free bond that generates returns to investors, is based on Sharia (Islamic law) principles. Instead of interest, investors receive an agreed share of the profits generated by the pool of underlying assets, which are partially owned by investors (World Bank 2020).[…]