Proposed Bonds and Sukuk regulation supports financing of green projects

Green-financing: Draft regulation includes innovative financing instruments with their proceeds intended exclusively for financing investment projects related to protection of the environment and natural resources, encouraging alternative and renewable energy resources, and reducing the emission of greenhouse gases

The Capital Market Authority (CMA) has affirmed that the Draft Bonds and Sukuk Regulation includes clauses advocating, for the first time, sustainable and responsible investments (SRI). Also known as innovative financing instruments, SRIs include, but are not limited to, the issuance of sustainable bonds and Sukuk for green, blue and social projects including Waqf Sukuk.

“CMA is mindful of developing the regulatory infrastructure of the financial sector to cope with the requirements of the current stage through diversification of investment and financing instruments as the regulation of such financing products converges with the objects of Oman Vision 2040 in which CMA share with the financial sector institutions meeting their objectives. The key strategic objectives are the creation of flexible and easy financing arrangements in line with the global developments,” the Authority said in a press statement.

The draft regulation includes a chapter on SRIs which are innovative financing instruments with their proceeds intended exclusively for financing investment projects related to the maintenance and protection of the environment and natural resources, wise use of energy and encouraging alternative and renewable energy resources or reducing the emission of greenhouse gases or addressing or mitigating social issues related to specific categories of the population.

Chapter 6 of the Regulation deals with the regulation of such type of bonds and Sukuk for specifically targeted population by the green, blue and social projects.

“The importance of such types of bonds and Sukuk is derived from the principles of the financial sector which is to channel the financial resources to human projects and activities especially the sustainable commercial activities that strikes a balance between the economic, environmental and social objectives and sustainable development,” the Authority added.