Sustainability and Accountability in Debt Finance: A Comparative Analysis of Green Bonds and Sukuk

Abstract

This dissertation examines how ICMA Green Bonds and Sukuk address similar sustainability and accountability concerns in debt finance through different institutional and governance mechanisms. It compares the governance architecture of both instruments, assesses how these mechanisms operate in practice, and considers what lessons each framework can offer the other to improve governance outcomes. The analysis demonstrates that Sukuk embed sustainability and accountability through asset-backing, Shariah compliance and supervisory oversight, while ICMA Green Bonds rely primarily on use-of-proceeds requirements, disclosure, reporting and market discipline. In practice, ICMA Green Bonds benefit from scalability, market standardisation and significant capital mobilisation, but face challenges including greenwashing, information asymmetry and limited binding enforcement. Sukuk provide stronger pre-issuance oversight and a closer connection between financing and real economic activity, but their effectiveness is weakened by fragmentation across jurisdictions, differing interpretations of Shariah principles and uncertainty regarding consistent post-issuance monitoring. The dissertation therefore concludes that neither framework provides a universally superior model of sustainable debt finance. Instead, each offers distinct strengths that can inform improvements to the other. ICMA Green Bonds could benefit from stronger oversight, asset-backing and legally enforceable disclosure, while Sukuk could benefit from greater standardisation and consistency across jurisdictions. Both frameworks would also benefit from stronger post-issuance monitoring to ensure that governance commitments remain effective throughout the life cycle of the instruments.