The Capital Market Authority's (CMA's) Board has approved the Guidelines for Issuing Green, Social, Sustainable, and Sustainability-Linked Debt Instruments, which will come into effect starting from 27/05/2025.
The CMA's approval of the Guidelines is based on its role in implementing the Sustainability Strategy established by the Ministerial Committee for Corporate Sustainability Strategy, in collaboration with various relevant public and private sector entities. This is in line with the CMA's strategic objectives in its 2024-2026 plan, which relates to developing the sukuk and debt instruments market. The Guideline is one of the key deliverables of the initiative titled “Establish the Regulatory Framework for sustainable debt instrument" which is among the main initiatives within the CMA's plan. It aims to encourage local issuances and deepen the debt market, thereby positively contributing to financing the national economy and supporting the achievement of the Financial Sector Development Program's targets under Saudi Vision 2030.
The CMA reaffirmed that issuers of debt instruments remain subject to all applicable rules governing the offering of securities and ongoing obligations under the Capital Market Law and its Implementing Regulations. While the provisions of this Guideline are of a guiding nature, issuers of green, social, sustainable, or sustainability-linked debt instruments denominated in Saudi Riyals and offered through private or public placement in the Kingdom must disclose any instances of non-compliance with its provisions. Such disclosure must be included in the debt instruments issuance framework document or the Offering documents. Moreover, the Guideline does not entail any changes to the regulatory rules and procedures currently in place in the capital market.
The CMA also clarified that the debt instruments covered by the Guideline include those whose offering proceeds are used to finance or refinance projects that contribute to achieving a positive environmental impact, generate social benefits, or combine both environmental and social advantages. The Guideline outlines definitions for four categories of debt instruments: green debt instruments, social debt instruments, sustainable debt instruments, and sustainability-linked debt instruments.
Green, social, and sustainable debt instruments, along with sustainability-linked debt instruments, are all considered types of debt instruments. However, the first three types are characterized by the specific and exclusive allocation of their offering proceeds to projects that generate a positive impact on the environment and society. In contrast, the proceeds from sustainability-linked debt instruments are used for the issuer's general purposes, and the use of proceeds is not a determining factor in their classification.
Globally, sustainability linked assets have experienced significant growth, reaching a value of USD 3.52 trillion by the end of last year, an increase of approximately 92.7% compared to 2020. Meanwhile, the volume of green bonds surpassed USD 580 billion by the end of 2023, reflecting the growing global interest in and adoption of sustainable investing, as well as the increasing focus on financing projects that generate a positive environmental impact.
In the Saudi capital market, the number of companies disclosing their sustainability practices rose to 94 in 2024, up from 81 the previous year, driven by the broader adoption of sustainable disclosure among listed companies.
Among the top 100 companies listed on the Saudi Main Market, the sustainability disclosure rate increased to 65% in 2024, compared to 58% in 2023—demonstrating a growing commitment to transparency and sustainability principles.
The Guideline also offers investors the opportunity to invest in this type of debt instrument, allowing them to contribute to sustainable development while earning returns on their investments.
The CMA aims to help build a more sustainable future and address environmental and social challenges by enabling diverse issuances that encourage local offerings and deepen the debt market. This is achieved by reinforcing the principle of transparency, enhancing disclosure standards, and expanding financing channels through the capital market, aligning with global practices and keeping pace with rapid developments in the field.
The Guidelines can be accessed through the following link:
Guidelines for Issuing Green, Social, Sustainability, and Sustainability-Linked Debt Instruments
