FSD Ethiopia has joined hands with partners through the emerging Global Islamic Climate Finance Alliance (GICFA), a multi-stakeholder initiative aimed at strengthening the role of Islamic finance in climate resilience, sustainable development and energy transition.

The Alliance was discussed at the Baku Roundtable on mobilizing Islamic finance for climate and energy transition, held in Baku, Azerbaijan, during the Islamic Development Bank Annual Meetings 2026. The discussion brought together leaders and institutions from climate finance, sustainable development, Islamic finance, development finance, investment, standard-setting, and international cooperation.

FSD Ethiopia was represented by its Chief Executive Officer, Hikmet Abdella, who participated in the high-level discussion as part of FSD Ethiopia’s wider commitment to advancing innovative, inclusive and sustainable financing solutions for Ethiopia.

GICFA seeks to strengthen collaboration between Islamic finance and climate finance actors by improving connectivity between capital providers, project pipelines, implementation partners and development priorities. Its focus is particularly relevant for developing and emerging economies, where climate priorities are clear but financing structures are often not sufficiently developed to translate ambition into bankable and investable projects.

Participants highlighted that Islamic finance has significant potential to support climate action. Its principles of stewardship, risk sharing, real-economy investment, asset-backed financing and long-term value creation are closely aligned with climate resilience and sustainable development. However, realizing this potential requires deeper cross-institutional collaboration and market development.

For Ethiopia, the agenda is timely. As the country continues to advance capital market reforms, sustainable finance and broader financial sector development, Islamic finance instruments offer a growing opportunity to mobilize long-term capital for climate-resilient infrastructure, enterprise development and inclusive economic transformation.

FSD Ethiopia’s role in the Alliance reflects its wider market-building mandate in Ethiopia’s financial sector transformation. Across financial inclusion, capital markets, gender and climate finance, FSD Ethiopia works to unlock financing for the country’s development priorities and support a more inclusive, resilient and sustainable financial system.

Speaking on the importance of the Alliance, Hikmet Abdella, CEO of FSD Ethiopia, said:

“Developing countries do not lack climate ambitions; they need the financing structures to turn those ambitions into bankable projects. This Alliance is a practical step toward closing that gap: connecting Islamic finance capital to real pipelines in markets like Ethiopia, where the need is documented and the appetite for innovative instruments is growing. With COP32 coming to Addis Ababa, this work is not only timely but also a valuable opportunity to build momentum and make meaningful progress.”

As part of GICFA, FSD Ethiopia will continue to engage with partners to explore how Islamic finance can support Ethiopia’s climate finance agenda and help build credible, investable project pipelines.

The Baku discussion marks an important step in advancing practical pathways for countries seeking to turn climate ambition into bankable action.