Journal of Finance and Islamic Banking
Volume 6, Issue 1, July 2023, 4865
Full Lenght Article
Islamic Financial Instruments and Their Utility in Preserving the Environment
Under a Creative Commons license
Open Access
Abstract
The degradation of environmental sustainability is a global issue currently being faced by the world. The emergence of Green Finance is the financial sector's response to efforts to preserve the environment. Discussions related to Green Finance in connection with Islamic finance are predominantly dominated by green sukuk because this instrument is currently more popular. However, there are still many other Islamic financial instruments that can be explored to support Green Finance. Through a literature review, this paper seeks to explore Islamic financial instruments that can contribute to environmental sustainability. Various literature sources are used in this writing to enrich the literature that examines the role of Islamic finance in preserving the environment with various Shariah-compliant financial instruments. In addition to green sukuk, the development of financing products carried out by Islamic financial institutions with the theme of Islamic green financing can contribute to environmental sustainability by providing services and financial access to environmentally friendly projects. Furthermore, Islamic social financial instruments such as zakat, infaq, sedekah, and wakaf can also be developed to preserve the environment while simultaneously serving as instruments to empower communities.
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