THE ROLE OF ISLAMIC FINANCE AND GREEN BONDS IN PROMOTING SUSTAINABLE DEVELOPMENT

Abstract

The integration of Islamic finance and green bond has a powerful dynamic filled with a mixture of both merits and demerits. The two strategies have a common goal of achieving environmental sustainability, social justice, and ethical governance, this makes their integration useful in solving the environmental induced problems globally. This study investigates the extent to which this integration can go. Utilizing a case study approach, countries like Indonesia and Malaysia. Findings reveal that the use of green sukuk, in these countries contributes to the mobilization of funding for sustainable projects with strict adherence to Shariah guidelines. But amidst the successes recorded, there were issues of contention, such as stakeholder coordination, regulatory barriers, and equitable distribution of proceeds. The study concluded that there is the need for clear regulation, established public awareness initiatives, and joint partnership efforts among stakeholders to bolster the green sukuk efficacy. Furthermore, it pointed out some key areas for future research, to include comparative studies and impact assessments, which could unearth the integration of Islamic finance and green bonds. Ultimately, this paper argues that leveraging the strengths of both frameworks can contribute significantly to achieving sustainable development goals and fostering a more equitable and environmentally responsible future.