Etihad Airways announced the issuance of announced the issuance of a US$600 million sukuk, or sharia compliant bond. The financing marks a number of sustainable finance firsts, being the world’s first Transition Sukuk and the first Sustainability-Linked financing in global aviation, under a Transition Finance Framework, according to Etihad.

Etihad stated that the issuance is tied to investments in next generation aircraft and to its commitments to CO2 emissions reduction, which include achieving Net Zero Carbon emissions by 2050, a 50% reduction in net emissions by 2035, and a 20% reduction in emissions intensity in the airline’s passenger fleet by 2025.

Adam Boukadida, Chief Financial Officer, Etihad Aviation Group, said:

“Sustainability and responsible climate action are the most significant challenges facing the aviation industry. As the UAE’s flag carrier, Etihad is committed to sustainable development in aviation in line with Abu Dhabi’s vision.

“By issuing a Sustainability-Linked Sukuk, Etihad is voluntarily adding to its existing commitments under CORSIA, and also committing to reduce carbon emissions intensity by over 20% from the 2017 baseline.”

In July, Etihad announced a collaboration with Boeing aimed at testing ways to reduce aviation emissions and noise. The companies conducted tests using a Boeing 787-10 Dreamliner, prior to the delivery of the airplane this fall to Etihad. Test flights were flown on a blend of sustainable fuel, which significantly lowers aviation’s environmental footprint.