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Nurturing Sustainable Futures: Islamic Green Finance and the Sustainable Development Agenda

In: The Palgrave Handbook of Green Finance for Sustainable Development

Author

Listed:
  • Bushra Zulfiqar

    (University Institute of Management Sciences, PMAS- Arid Agriculture University Rawalpindi)

  • Muhammad Shahzad Ijaz

    (Ilma University)

  • Mahnoor Hanif

    (University Institute of Management Sciences, PMAS- Arid Agriculture University Rawalpindi)

Abstract

Climate change poses a significant threat to present and future generations, impacting financial stability, economic progress, and social well-being. International initiatives, including the United Nations’ Sustainable Development Goals (SDGsSustainable development goals (SDGs)) and the Paris Agreement, aim to address these challenges. The global shift toward sustainable investment presents an opportunity to integrate Islamic financial instruments with green finance, which are aligned with the principles of sustainable finance, encompassing financial stability, poverty alleviation, social integration, and environmental preservation. Expansion of the green bond market offers a platform for Islamic finance to thrive while dispelling misconceptions about the complexity and cost of issuing green bonds. The issuance of green Sukuk, including sovereign green Sukuk, demonstrates the alignment of the Islamic capital market with green finance. Therefore, the emergence of positive screening, instruments of Sukuk-Waqf, and social bonds exemplify the diverse growth of the green finance sector beyond the traditional bond and Islamic finance markets. Islamic finance and green finance both share a commitment to ethical principles rooted in the fundamental spirit of Maqāṣid al-Shariah. Thus, the ability of Islamic finance to attract untapped investment strengthens its role in promoting sustainability. It has the potential to drive global green development, resonating with investors worldwide who are concerned with climate change. However, achieving convergence in standards, promoting innovation, and enhancing transparency are crucial for the expansion of this segment of the market. In this context, this chapter explores the potential of Islamic green finance in addressing climate change. Demand for Sharia-compliant green investments is rising, but a global shortage of viable options persists. Strategic investments in infrastructure and the identification of growth-driving factors are imperative for Islamic green finance to flourish.

Suggested Citation

  • Bushra Zulfiqar & Muhammad Shahzad Ijaz & Mahnoor Hanif, 2024. "Nurturing Sustainable Futures: Islamic Green Finance and the Sustainable Development Agenda," Palgrave Studies in Impact Finance, in: Ahmed Imran Hunjra & John W. Goodell (ed.), The Palgrave Handbook of Green Finance for Sustainable Development, chapter 0, pages 191-206, Palgrave Macmillan.
    • Handle: RePEc:pal:psifcp:978-3-031-65756-6_7
    DOI: 10.1007/978-3-031-65756-6_7
    as

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