ESG adjustment in country risk premium in sovereign sukuk

Shaikh, Salman Ahmed (2025) ESG adjustment in country risk premium in sovereign sukuk. In: Islamic Finance and the Pursuit of Sustainable Prosperity. Edward Publishing, London, pp. 134-160. ISBN 978103534967 8

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Abstract

ESG principles are in congruence with Maqasid al-Shariah. ESG focused activities and strategies can help in achieving Maqasid al-Shariah as well as SDGs. Much of the Sukuk market is dominated by Sovereign Sukuk and such Sukuk also need to be priced in line with ESG rating of the issuer. This chapter uses data of 53 OIC countries on 12 indicators to derive ESG Index. Then, it uses the ESG Index values to develop ESG adjusted country risk premiums. The results on ESG index show that Southeast Asian and some Central Asian countries have higher ESG performance. Nonetheless, some African countries also show exceptional performance. Countries immersed in conflicts and poverty trap lag behind on social, governance and environmental indicators. Among the Arab countries, Bahrain, Oman and Qatar rank above Saudi Arabia, UAE and Kuwait. Yemen and Syria are only two countries which get C+ rating. 28 countries get B+ rating while 9 countries get B+ rating. As many as 13 countries get A rating. Only Brunei gets A+ rating.

Item Type:	Book Chapter
Uncontrolled Keywords:	ESG, sovereign Sukuk, ESG risk ratings, Maqasid al-Shariah, environmental sustainability
Subjects:	BPH Islamic Economics > BPH437 Sukuk - Islamic Bond H Social Sciences > HG Finance > HG3691 Credit H Social Sciences > HG Finance > HG4501 Stocks, investment, speculation
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Economics Kulliyyah of Economics and Management Sciences
Depositing User:	Dr. Salman Ahmed Shaikh
Date Deposited:	22 Dec 2025 02:04
Last Modified:	22 Dec 2025 02:04
Queue Number:	2025-12-Q1187
URI:	http://irep.iium.edu.my/id/eprint/126250

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