Green sukuk is a form of Islamic green finance that helps in mobilisation of funds for green projects. Like conventional sukuk, green sukuk is an asset-based security based on sharia laws and is used mostly in Muslim majority countries to mobilise finances for infrastructure and large-scale developments (Sekuriti, 2019). It is a low-risk, guaranteed return for the investor. These programs provide solutions in areas where financial inclusion is low, as they minimise risk. For instance, they help governments and local authorities to implement sustainable projects or projects aimed at combating climate change such as renewable energy and waste management projects. The use of Sukuk also reduces debt levels by promoting economic security and equality. According to Ng (2015), Sukuk can be restructured to help in the attainment of sustainable development goals by integrating contemporary innovations in financial technology. Consistent with this argument, the OECD (2020) proposed the introduction of the incentive-compatible Sukuk masharakah model in the development of green bonds.
Table of Contents
1. Islamic Green Markets (Green Sukuk)
2. Islamic Endowment (Waqf)
3. Conclusion
Objectives and Topics
The primary objective of this paper is to examine the role and functional integration of Islamic financial instruments, specifically Sukuk and Waqf, in promoting sustainable development and economic stability, particularly within the context of funding green projects and social infrastructure.
- Mechanisms and frameworks for issuing Green Sukuk in Malaysia and Indonesia.
- The potential of Social Impact Bonds (SIBs) within the Islamic finance sector.
- The role of Waqf as a flexible and sustainable tool for infrastructure financing and poverty eradication.
- Integration of Waqf and Sukuk models as innovative financing structures for Sustainable and Responsible Investment (SRI).
Excerpt from the Book
Islamic Green Markets (Green Sukuk)
Green sukuk is a form of Islamic green finance that helps in mobilisation of funds for green projects. Like conventional sukuk, green sukuk is an asset-based security based on sharia laws and is used mostly in Muslim majority countries to mobilise finances for infrastructure and large-scale developments (Sekuriti, 2019). It is a low-risk, guaranteed return for the investor. These programs provide solutions in areas where financial inclusion is low, as they minimise risk. For instance, they help governments and local authorities to implement sustainable projects or projects aimed at combating climate change such as renewable energy and waste management projects.
The use of Sukuk also reduces debt levels by promoting economic security and equality. According to Ng (2015), Sukuk can be restructured to help in the attainment of sustainable development goals by integrating contemporary innovations in financial technology. Consistent with this argument, the OECD (2020) proposed the introduction of the incentive compatible Sukuk masharakah model (figure 1) in the development of green bonds.
Summary of Chapters
Islamic Green Markets (Green Sukuk): This chapter provides an overview of Green Sukuk as an asset-based Islamic financial instrument used to mobilize funds for sustainable development projects and climate change mitigation while reducing debt levels.
Islamic Endowment (Waqf): This chapter explores the historical and modern significance of Waqf as a permanent funding source that supports public goods and social services, highlighting how it can be integrated with Sukuk to enhance economic sustainability.
Conclusion: This chapter synthesizes the potential of Sukuk and Waqf as flexible, synergetic tools for Islamic finance that contribute to societal development goals despite the challenges of wider implementation in non-Muslim majority regions like the UK.
Keywords
Islamic Finance, Green Sukuk, Waqf, Sustainable Development, Sharia Law, Social Impact Bonds, Financial Technology, Economic Sustainability, Infrastructure Financing, SRI, Risk-Sharing, Islamic Economics, Poverty Eradication, Capital Accumulation, Asset-based Securities.
Frequently Asked Questions
What is the primary focus of this work?
The work focuses on how Islamic financial tools, specifically Sukuk and Waqf, can be harnessed to finance sustainable projects and achieve social objectives in accordance with Sharia principles.
What are the central thematic areas covered?
The main themes include the structural framework of Green Sukuk, the integration of Waqf for social and economic development, and the comparison of these models across different regions such as Malaysia, Indonesia, and the United Kingdom.
What is the primary research goal?
The goal is to analyze how these specific Islamic financial instruments provide alternatives to conventional debt and contribute to global sustainable development goals through innovative risk-sharing and asset-backed models.
Which scientific methods are utilized?
The paper utilizes a literature review approach, synthesizing existing academic studies, frameworks proposed by international organizations like the OECD, and country-specific case studies to evaluate the effectiveness and application of these financial tools.
What is addressed in the main body of the paper?
The main body examines the issuance processes of Green Sukuk, the potential of Waqf-Sukuk integration, the role of Social Impact Bonds (SIBs), and the comparative policy frameworks for Sustainable and Responsible Investment (SRI).
Which keywords characterize this paper?
Key terms include Islamic finance, Green Sukuk, Waqf, sustainable development, risk-sharing, and economic sustainability.
How does the Waqf model differ from traditional charitable giving?
Modern Waqf differs by acting as a flexible, permanent, and cumulative funding base that functions as a legal entity, which can be managed efficiently to support infrastructure and socio-economic development without needing constant legal intervention.
Why is the integration of Waqf and Sukuk considered innovative for higher education?
The Waqf-Sukuk model allows institutions, such as higher education institutes, to leverage their underlying assets and property to generate revenue through investment, thereby reducing dependence on conventional debt financing.
What are the identified barriers to the widespread adoption of these models in the UK?
While the UK has shown growth in Islamic finance, the implementation of Green Sukuk and Waqf-related tools remains low due to a lack of awareness and a need for greater interest within the Western corporate and institutional market.
- Arbeit zitieren
- Mourine Atsien (Autor:in), 2022, Islamic Green Bonds. Islamic Green Markets (Green Sukuk), München, GRIN Verlag, https://www.grin.com/document/1326034
