The Islamic finance pillar of Jordan's Green Finance Strategy: the planned Sharia-compliant sustainable finance framework, green sukuk, and CIBAFI principles.
Introduction
Jordan’s approach to green finance has a distinct Islamic-finance dimension, and it is more than a footnote. The Green Finance Strategy gives sustainable Islamic finance its own chapter, and it points to green sukuk as a significant opportunity. For a country with a substantial Islamic banking sector, how the green transition and Sharia-compliant finance fit together is a real strategic question. This article explains the Islamic-finance pillar of Jordan’s strategy, the road ahead for green sukuk, and what already binds Islamic institutions today.
The Islamic-finance pillar
Sustainable Islamic finance is a dedicated chapter of the Green Finance Strategy, not an afterthought. The Central Bank commits to lead development of a national Framework for Sharia-Compliant Sustainable Finance, co-led with the Jordan Securities Commission, covering banks, takaful operators, microfinance institutions and Islamic capital markets. The framework is intended to define Sharia-compliant green concepts and products, standardise fatwas to reduce divergence between institutions, and set supervisory guidance for Islamic financial institutions.
This work is best described as in progress. The intent and the roadmap are set out clearly in the strategy, but the framework itself is not yet issued, so Islamic-specific green-product rules are still forthcoming.
Green sukuk and what they need
Green sukuk are the Islamic-finance counterpart to green bonds. They are Sharia-compliant certificates whose proceeds fund environmentally beneficial projects. The strategy flags them as high potential, and it is candid about the enabling factors required to make them work.
| Enabling factor | Why it matters |
|---|---|
| Securities-regulator guidelines | JSC-issued green-sukuk guidelines and eligibility criteria |
| Eligible green assets | Identified green infrastructure to underpin the sukuk |
| Sharia approvals | Fatwas from the relevant Sharia supervisory commission |
| Standardised structures | Common sukuk structures to reduce cost and complexity |
The point is that green sukuk are not simply a matter of will. They require a supporting architecture of regulation, eligible assets and Sharia standardisation, and Jordan’s strategy sets out to build it. Our broader explainer on green sukuk and Islamic sustainable finance covers the instrument in more detail.
The conceptual fit
There is a natural alignment between Islamic finance and sustainability that the strategy draws on. The concept of maqasid al-shariah, the objectives of Sharia, and maslahah, public interest, map onto the two pillars of opportunity, meaning benefit, and risk, meaning the avoidance of harm. Where conventional sustainable finance often relies on negative screening, Islamic finance is well suited to positive screening toward beneficial activity. The strategy also points to the CIBAFI Sustainability Guide of 2022 and its five principles as the Islamic-finance analogue to the Basel Committee’s climate-risk principles.
Islamic finance does not have to be retrofitted for sustainability. Its own objectives, benefit and the avoidance of harm, already point the same way. The task is building the standards, not the philosophy.
The road ahead
For an Islamic institution in Jordan, the path has two lanes. The first is the here and now: meet the binding climate-risk-management rules that already apply, and prepare for the IFRS S2 disclosure that applies to listed ASE20 institutions. The second is the emerging opportunity: position for green sukuk and Sharia-compliant green products as the national framework, JSC guidelines and standardised structures take shape. Institutions that build climate capability now will be ready to move on the opportunity when the architecture is in place.
How ESGweise helps
ESGweise helps Islamic financial institutions on both lanes. We support the climate-risk framework and greenhouse gas measurement that the binding rules require, and we help institutions prepare for green-finance and green-sukuk opportunities as Jordan’s Sharia-compliant sustainable-finance framework develops. See our strategy and carbon accounting services and our work with banking and financial services.
Conclusion
Sustainable Islamic finance is a genuine pillar of Jordan’s green-finance agenda, with green sukuk as its headline opportunity and a national Sharia-compliant framework on the way. The philosophy fits, through the objectives of Sharia and the emphasis on public benefit, and the binding climate-risk rules already apply to Islamic institutions today. The road ahead is about building the standards, the eligible assets and the Sharia approvals that let green sukuk scale, and Islamic institutions that build climate capability now will be ready to travel it.
Frequently asked questions
What does Jordan's Green Finance Strategy say about Islamic finance?
The strategy dedicates a full chapter to sustainable Islamic finance. It commits the Central Bank to lead development of a national Framework for Sharia-Compliant Sustainable Finance, co-led with the Jordan Securities Commission, covering banks, takaful operators, microfinance institutions and Islamic capital markets. The framework will define Sharia-compliant green concepts and products, standardise fatwas to reduce divergence, and set supervisory guidance for Islamic financial institutions. Implementation is in progress rather than complete.
What is green sukuk?
Green sukuk are Sharia-compliant financial certificates, the Islamic-finance equivalent of green bonds, whose proceeds fund environmentally beneficial projects. Because sukuk are asset-backed, they need eligible green infrastructure assets to underpin them. Jordan's Green Finance Strategy flags green sukuk as high potential and identifies the enabling factors needed, including securities-regulator guidelines, standardised structures and Sharia approvals.
Do the climate-risk rules apply to Islamic banks in Jordan?
Yes. The strategy is explicit that climate principles on governance, risk management and disclosure apply across the board to both conventional and Islamic financial institutions. So the binding CBJ Climate Risk Management Regulations No. 2 of 2025 apply to Islamic banking operations as well. What is still developing is the Islamic-specific green-product guidance, such as green sukuk standards and Sharia-compliant green definitions.
What is the CIBAFI Sustainability Guide?
The CIBAFI Sustainability Guide for Islamic Financial Institutions, published in 2022, sets out five principles for sustainability in Islamic finance: integration, governance, environmental and social risk management, monitoring and reporting, and coordination. Jordan's strategy treats it as the Islamic-finance analogue to the Basel Committee's climate-risk principles, providing a values-aligned reference for Islamic institutions building their sustainability approach.