Purpose SRI Sukuk, with its outcome-based emphasis, aims to align the Islamic finance industry with its original ideals and address criticisms related to form over substance. In Malaysia, while the pioneering Sukuk Ihsan was a social sukuk, recent SRI Sukuk issuances have predominantly been green or sustainable sukuk. This paper aims to evaluate the Malaysian SRI Sukuk market, identifying factors favouring green sukuk. It also examines whether structural issues in Sukuk Ihsan deterred subsequent issuers from social sukuk. The emergence of SRI Sukuk responds to sustainable development goals and the shift towards a low-carbon economy. Sukuk Ihsan, as the first Shariah-compliant pay-for-success structure, poses complexity and risk management challenges to meet performance criteria. Design/methodology/approach The study used a qualitative method in the form of a critical review of literature, interview sessions with experts and stakeholders who are familiar with SRI Sukuk and Sukuk Ihsan and a case study analysis of Sukuk Ihsan. Findings The popularity of green sukuk reflects the growing global environmental consciousness. The main factors driving the popularity of green sukuk are the maturity of the market and the existence of a strong supporting infrastructure for green issuances while the positive profiling benefits and availability of incentives for green issuances also contribute to a lesser extent. The recommendations include the promotion of social sukuk by regulators through a focus on establishing a similar supporting infrastructure for social sukuk as there are for SRI and standard Sukuk. In addition, issuers of social sukuk may want to reconsider the inclusion of key performance indicators (KPI) into the structure of future social sukuk issuances. Research limitations/implications Although all respondents considered Sukuk Ihsan to be a success, some potential areas of improvement were also noted. These include the structuring of future social sukuk issuances with a bigger discount to compensate for the additional risk being assumed by the investor; the need to be more careful in the KPI selection process; and one respondent even went so far as to suggest the possibility of totally removing the step-down feature of Sukuk Ihsan. Practical implications Industry implications of Sukuk Ihsan study include findings that require balancing disclosure and economics by providing additional disclosure requirements for SRI Sukuk that may pose risks without corresponding benefits for issuers. KPI selection and investor confidence should also be properly identified, as KPIs are essential for the pay-for-success model to work successfully. For sukuk holders, findings indicate that any approval for waivers during issuance can impact investor confidence negatively. Investor literacy and impact understanding should also be improved for social Sukuk success. Investors should understand the different risk exposures and evolving impact requirements vital for sustainable growth. Social implications The findings provide significant implications for social impact Sukuk issuance. They include providing a substantial case study for future social impact issuances, based on the pioneering impact of Sukuk Ihsan. Furthermore, Sukuk Ihsan's unqualified success validates the feasibility of socially responsible sukuk. Despite its early introduction, both tranches being fully subscribed reflects robust investor interest. Stakeholders were also proud of their involvement in such an initiative, viewing it as a significant achievement in creating societal impact. Originality/value Although there have been several prior studies done on Sukuk Ihsan, the focus of those studies was on its structure and the novelty of its step down returns structure where investors would receive lower returns if certain key performance indicators (KPIs) are met by Yayasan AMIR in the execution of its Trust School Programme. Bearing in mind that the first Sukuk Ihsan has a June 2022 maturity date, and the results of its KPIs were announced in December 2021, to the best of the authors' knowledge, this is the only documented case study that comprehensively reviews Sukuk Ihsan and identifies lessons learned and/or opportunities for improvement for the benefit of potential SRI Sukuk issuers in the future.

SRI sukuk with its outcome-based emphasis has been touted as a possible instrument that can help bring the Islamic finance industry closer to its original ideals and help mitigate the form over substance criticisms that have dogged its growth. In Malaysia, although the pioneering SRI sukuk issuance, Sukuk Ihsan, was a social sukuk, most of the recent SRI sukuk issuances have been green sukuk or sustainable sukuk. This paper assesses the current state of the SRI sukuk market in Malaysia to identify the factors driving the development and issuance of green sukuk over other types of SRI sukuk and determine if there are any issues in the structure of Sukuk Ihsan that may have caused subsequent SRI sukuk issuers to shy away from social sukuk. The methodology used in this study are a critical review of literature, interview sessions with experts and stakeholders who are familiar with SRI sukuk and Sukuk Ihsan, and a case study analysis of Sukuk Ihsan. The popularity of green sukuk reflects the growing global environmental consciousness. The main factors driving the popularity of green sukuk are the maturity of the market and the existence of a strong supporting infrastructure for green issuances while the positive profiling benefits and availability of incentives for green issuances also contribute to a lesser extent. To promote social sukuk, regulators should focus on building up a similar supporting infrastructure for social sukuk. In addition, issuers of social sukuk may want to reconsider the inclusion of Key Performance Indicators ( KPI ) into the structure of future social sukuk issuance.