Greening the Future: Islamic Finance's Pivotal Role in Combating Climate Change
DOI:
https://doi.org/10.14421/grieb.2023.112-03Keywords:
Islamic Finance, Climate Change, Systematic Literature Review, SDGs, Green InvestmentAbstract
This study investigates the relationship between Islamic finance and climate change nexus through the lens of the existing literature review articles published in the Web of Science and Scopus databases. Our methodical literature review unveils the full potential of Islamic finance in tackling climate change challenges and contributing to global sustainability endeavors through the creation of Shariah-compliant climate instruments, the promotion of green investments, the establishment of standards for socially responsible investments, the cultivation of cooperation and alliances, the evaluation and disclosure of climate risk, the incorporation of vulnerable communities via Islamic microfinance, and the establishment of a framework for monitoring and assessment. By grasping the potential contribution of Islamic finance to climate change mitigation and adaptation, we can harness its principles and practices to spawn a more sustainable financial system. Islamic finance has the capacity to bolster sustainable development goals by advocating for environmental protection, reducing vulnerability, and facilitating the development of sustainable infrastructure. The paper concludes with important policy implications.
Originality/Value: Islamic finance expands in the worldwide financial industry, boasting its distinct principles and values. Nonetheless, a research gap persists in comprehending the nexus between Islamic finance and climate change. While myriad studies have delved into the societal and economic facets of Islamic finance, research on its capacity to combat climate change and foster sustainability remains scarce. Addressing this research gap assumes paramount significance due to the urgency of the climate change predicament faced by humanity. To bridge this gap, we scrutinized the role of Islamic finance in climate issues by examining literature review articles published in the Web of Science and Scopus databases.
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