Islamic finance leaders weigh climate role at Baku roundtable

Senior leaders from climate finance, development and Islamic finance met in Baku during the IsDB Annual Meetings 2026 to examine how Islamic finance can help fund climate resilience and the energy transition. The roundtable also floated a proposed Global Islamic Climate Finance Alliance to improve coordination, project pipelines and implementation.

Why it matters: - Islamic finance has scale, principles and structures that could support climate resilience and energy transition funding. - The roundtable focused on a gap between available capital and the project pipelines and implementation partners needed to deploy it. - Participants said better coordination could help Islamic finance play a larger role in climate and transition finance.

What happened: - Senior leaders met in Baku, Azerbaijan, during the Islamic Development Bank Annual Meetings 2026. - IFAAS Group (UK) convened the strategic roundtable. - The discussion brought together multilateral development banks, international organizations, government institutions, standard-setting bodies, investors, philanthropic organizations, climate finance actors and Islamic finance institutions. - The event included H.E. Dr Mahmoud Mohieldin, United Nations Special Envoy on Financing the 2030 Agenda; H.E. Nigar Arpadarai, Member of the Parliament of Azerbaijan and former UN Climate Change High-Level Champion for COP29; Dr Tarık Akın, Head of Finance Department at the Investment and Finance Office of the Presidency of the Republic of Türkiye; and Dr. Farrukh Raza, Chariman of the Governance & Ethics Committee at AAOIFI. - Türkiye's expected COP31 Presidency added a geopolitical backdrop to the talks.

The details: - Participants included representatives from the IsDB Group, Eurasian Development Bank, Organization of Islamic Cooperation, FSD Ethiopia, Pooled Fund on International Energy, Carboun Institute, INCEIF, ISRA, the Netherlands Commission for Environmental Assessment, Islamic banking groups and other ecosystem stakeholders. - Dr Anouar Gadhoum and Dr Moutaz Abojeib presented findings on ways to connect Islamic finance, sovereign and strategic capital, and climate finance ecosystems. - The work was developed within the TeraMED initiative, but the findings were presented as relevant to climate resilience, sustainable development and energy transition financing more broadly. - The group discussed a proposed Global Islamic Climate Finance Alliance, or GICFA, as a multi-stakeholder platform for collaboration between Islamic finance and climate finance actors. - The proposed alliance would focus on partnership development, knowledge exchange and ecosystem connectivity. - The proposed alliance is intended to help bridge gaps between capital providers, project developers and implementation actors. - Participants said the platform should complement regulators, standard-setting bodies, development finance institutions, financial institutions and climate finance organizations rather than duplicate their mandates. - The roundtable ended with interest in continued stakeholder consultation on the proposed alliance and related collaboration opportunities.

Between the lines: - The conversation suggests Islamic finance is being reframed from a parallel funding system into a potential channel for climate capital. - The emphasis on coordination points to a practical bottleneck: climate projects need structures that can connect Sharia-compliant capital with bankable deals and execution partners. - The discussion of COP31 visibility signals an effort to place Islamic finance inside the mainstream global climate agenda, not just within niche finance circles.

What's next: - Stakeholders will continue consultations on the proposed alliance and other collaboration opportunities. - The Baku Roundtable Communiqué will serve as a foundation for further engagement on Islamic finance in climate resilience, sustainable development and the energy transition. - The COP31 process could create another opening for Islamic finance to gain visibility in climate implementation discussions.

The bottom line: - Baku framed Islamic finance as a potentially underused climate finance tool, but the message was clear: impact will depend on coordination, partnerships and better project pipelines.

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