Incorporating Sustainability Agenda in Ṣukūk: Evidence from Bangladesh

Purpose — As of December 2025, Bangladesh has issued six government ṣukūk and two corporate ṣukūk. All of these, except for the second corporate ṣukūk, have integrated a sustainability agenda for the use of proceeds. This paper aims to analyse the evidence on how these ṣukūk incorporate sustainability agendas; and to assess their impact on the ṣukūk issuance process and post-issuance reporting practices. Design/Methodology/Approach — A descriptive research design, utilising both primary and secondary sources, was employed. Existing literature was reviewed to identify the drivers and challenges influencing the issuance of sustainability-based instruments globally. Additionally, the prospectuses and information memorandums for ṣukūk issued in Bangladesh were examined to identify sustainability-related disclosures. The regulations governing both government and corporate ṣukūk were also reviewed. Semi-structured interviews were conducted to validate the findings from the secondary data and to gain deeper insights into experiences related to incorporating sustainability agendas in ṣukūk. Findings — The research finds that, although regulatory bodies have introduced initiatives to promote sustainability, additional steps are necessary. Additionally, third-party verification and impact reporting for sustainability-based issuances are inadequate. Although issuers generally demonstrate awareness of sustainability issues, there is a significant lack of investor demand, primarily due to insufficient awareness and incentives. Originality/Value — To the best of the researchers’ knowledge, this is the first study to systematically examine how sustainability is operationalised in ṣukūk issuance in Bangladesh, addressing a significant research gap, as the existing literature predominantly focuses on theoretical frameworks and empirical analyses of causal impacts. Research Limitations — This study examines ṣukūk in Bangladesh’s nascent market, which has seen only a few issuances. This may constrain the generalisability of the findings to more mature markets. The limited disclosure practices also restrict the ability to assess the causal impacts of the findings. Practical Implications — The research findings provide valuable insights into the challenges an emerging market such as Bangladesh faces when incorporating a sustainability agenda in ṣukūk. These insights will aid in developing effective sustainability policies for Bangladesh and similar markets, standard setters, and multilateral organisations.