Utilising Participation Finance Instruments for Green Infrastructure

As society has developed, so has the significance of solid waste as a challenge for providing environmental and social sustainability. Waste used to be composed of basic materials such as vegetables, bone and ceramics. This evolved into a more complex form with the introduction of plastics, metals and hazardous substances. The complexity introduced by the various forms of waste has triggered a worldwide increase in the levels of generated waste, with expectations of growth up to 3.40 billion tons by 2050. The generation of plastic waste is just one example of the severity of the different types of waste. Currently, 63 million tons of plastic waste are dumped in landfills, 51 million tons discharge into nature, and around 13 million tons leak into the ocean. However, a surge in solid waste generated correlates with the global issues over sustainably managing these quantities of waste. At least 33% of 2.01 billion tons 

of solid waste produced annually is not disposed of in an environmentally safe approach.

The inability to address such problems leads to uncon- trolled waste disposal, in which 90% of waste is discarded in unregulated dumps or openly burned. This is a hazardous activity that contributes to environmental issues, including global warming, and marine and soil pollution, and as a chain reaction, further leads to detrimental consequences on human health such as air contamination and vectors of diseases resulting from polluted water.

Thus, in response to the need to utilise financing instruments to overcome the challenges, green sukuk as a participation financing instrument has been coming forward as one of the innovative financial instruments recently, tapping the participation finance market of USD 3.374 trillion. At this point, green sukuk is coming forward as a participation finance instrument that complies with the purpose of financing environmental projects while simultaneously providing a financial return to the investor. Green Sukuk can be utilised to provide resources to public and private actors to attract investments in green infrastructure projects, particularly waste management. Utilising Green Sukuk to finance sustainable waste management would not only provide environmental benefits for combating environmental challenges but also enable to create more job opportunities in the countries. Considering the environmental and social benefits, all the relevant stakeholders must work together to unlock the potential of green sukuk to improve waste management.

UNDP IICPSD Analyst Aslıhan Albostan