The study matters because many Muslim-majority countries face severe environmental pressures, from deforestation to climate-related disasters, while also operating financial systems guided by Islamic law. The authors argue that Green Sukuk offers a practical solution: a way to finance green development without abandoning Islamic moral principles.
Environmental responsibility as a matter of faith
Environmental degradation is often discussed as a technical or economic problem. Mustafa and her colleagues approach it differently. They frame environmental protection as a moral and spiritual responsibility rooted in Islamic teachings.
Islam, the authors explain, views humans as khalifah stewards of the Earth entrusted (amanah) to maintain balance (mizan) and prevent harm. From this perspective, damaging the environment is not only poor policy, but also a violation of ethical and religious duties. These values are embedded in the broader framework of maqasid al-shariah, the higher objectives of Islamic law, which emphasize the protection of life, wealth, and the environment.
This ethical foundation, the study argues, makes Islamic finance a natural platform for sustainability if its tools are designed with ecological goals in mind.
What makes Green Sukuk different
Sukuk are often described as Islamic bonds, but they differ from conventional bonds in one key way: they avoid interest and are backed by real assets or shared-risk investments. Green Sukuk extends this concept by channeling funds specifically into projects that benefit the environment.
Instead of financing any Sharia-compliant activity, Green Sukuk are used for initiatives such as renewable energy, climate-resilient infrastructure, sustainable transport, water management, and reforestation. They follow Islamic rules that prohibit speculation and harmful activities, while also meeting international standards for green finance.
In simple terms, Green Sukuk combines two filters: they must be Islamically lawful and environmentally responsible.
How the study was conducted
The research uses a qualitative, library-based analysis. Rather than collecting new numerical data, the authors examined existing Islamic legal principles, Qur’anic concepts, and contemporary literature on sustainable finance. They then analyzed how these ethical foundations align with the structure and practice of Green Sukuk.
This approach allows the study to connect theory with real-world examples, showing how abstract values translate into financial mechanisms.
Key findings: ethics turned into action
The study highlights several important findings:
- Green Sukuk operationalize Islamic ethics. They transform principles like stewardship, justice, and balance into concrete financial practices by directing investment toward environmentally beneficial projects.
- Economic growth and environmental care can coexist. By design, Green Sukuk aim to generate financial returns without causing ecological harm, aligning profit with responsibility.
- Faith-based finance supports global sustainability goals. Green Sukuk-funded projects contribute directly to the United Nations Sustainable Development Goals, particularly in clean energy, climate action, and sustainable cities.
- Real-world implementation is already happening. Countries such as Indonesia and Malaysia have issued sovereign Green Sukuk to fund renewable energy, sustainable transportation, and climate resilience projects. Pakistan has used similar instruments to support hydropower development.
According to the authors, these examples demonstrate that Green Sukuk are not theoretical concepts but functioning tools with measurable impact.
Challenges that still need attention
Despite their promise, Green Sukuk face obstacles. The study identifies low public awareness among investors, limited regulatory frameworks in many countries, and the risk of greenwashing, where projects are labeled “green” without delivering real environmental benefits.
Differences in Sharia interpretation across jurisdictions can also complicate cross-border investment. Without clear standards and transparent reporting, investor trust may suffer undermining both financial and ethical goals.
Why the findings matter
The implications extend beyond Islamic finance. For policymakers, the study suggests that religious values can be mobilized to support environmental policy. For financial institutions, it offers a model of ethical investment that appeals to values-driven investors. For communities, it reinforces the idea that caring for the environment is part of everyday moral responsibility.
Mustafa and her co-authors emphasize that institutions such as financial regulators, Islamic councils, and universities can strengthen Green Sukuk by promoting education, setting clear standards, and ensuring accountability. In Indonesia, collaboration between regulators and religious authorities could position the country as a global leader in faith-based sustainable finance.
A bridge between belief and sustainability
The study ultimately presents Green Sukuk as more than a financial innovation. It is portrayed as a bridge between belief and sustainability, showing that religious ethics and environmental action do not have to exist in separate worlds.
As climate change intensifies and societies search for ethical economic models, the authors argue that Islamic finance when guided by its moral foundations can contribute meaningfully to a more balanced and just future.
Author profiles
- Dr. Saira Mustafa is researcher at Universitas Islam Internasional Indonesia (UIII). Her expertise includes Islamic finance, sustainability, and Islamic ethical frameworks.
- Mohsin Ali is a researcher affiliated with UIII, focusing on Islamic economics and development studies.
- Arifa Ibrahim is an academic at UIII with research interests in Islamic finance, ethics, and sustainable development.
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