Which country issued the first green Islamic bond, also known as a green sukuk, in the world financial markets?

Introduction / Context:
This question sits at the intersection of finance, environment, and religion. Islamic bonds, commonly called sukuk, are financial instruments structured according to Islamic principles. In recent years, there has been a growing emphasis on green finance, which funds environmentally friendly projects. The question asks which country pioneered the first green Islamic bond, combining the ideas of sukuk and green investment. This is a popular topic in current affairs and international finance sections of exams.

Given Data / Assumptions:
- The instrument mentioned is a green Islamic bond or green sukuk.
- The task is to identify the country that issued the first such instrument in the world.
- The options are Indonesia, Malaysia, Saudi Arabia, and Iraq.
- We assume standard economic and current affairs sources as the reference for this fact.

Concept / Approach:
Malaysia and Indonesia are both leaders in the global Islamic finance industry. When green sukuk emerged, Malaysia was often recognised as a pioneer in issuing Islamic bonds linked to environmentally sustainable projects. The approach is to recall which of these two countries is usually highlighted as the first mover in green sukuk. While Indonesia later issued sovereign green sukuk, Malaysia is widely cited as the earliest issuer of a green Islamic bond in the market, which is why exam questions typically take Malaysia as the correct answer.

Step-by-Step Solution:
Step 1: Focus on the term green Islamic bond and link it with green sukuk in Islamic finance. Step 2: Recall that Malaysia has long been a global hub for Islamic finance and innovation in sukuk structures. Step 3: Remember from current affairs notes that Malaysia launched the first labelled green sukuk to finance environmentally friendly projects. Step 4: Compare this with Indonesia, Saudi Arabia, and Iraq, which have also issued sukuk but were not the first with this specific green label. Step 5: Choose Malaysia as the correct country.

Verification / Alternative check:
To verify, you can recall news pieces on the early development of green sukuk, which often highlight Malaysia as a pioneer in creating frameworks and guidelines for such instruments. Indonesia is also recognised for its sovereign green sukuk, but that came after Malaysia had already set an example with corporate green sukuk. This sequencing supports Malaysia as the correct answer in exam style questions.

Why Other Options Are Wrong:
Indonesia: A very important player in Islamic finance and issuer of sovereign green sukuk, but not usually credited as the first issuer of a green Islamic bond in general market terms.
Saudi Arabia: A major Islamic finance market, yet it did not launch the first green sukuk according to common exam sources.
Iraq: Not known as a leader in the green sukuk space and therefore an unlikely answer for this specific pioneering role.

Common Pitfalls:
Since both Malaysia and Indonesia are leading names in Islamic finance, students sometimes confuse which one achieved which milestone. Another pitfall is to assume that the largest or wealthiest Islamic country must always be first in every innovation. To avoid confusion, it helps to make a small comparative chart where Malaysia is marked as an early pioneer in Islamic bonds and green sukuk, while Indonesia is noted for later sovereign issues and market growth.

Final Answer:
The first green Islamic bond or green sukuk in the world financial markets was issued by Malaysia.