Green Sukuk and Maqāṣid al-Sharī‘ah: Advancing Indonesia’s Climate Financing Strategy
DOI:
https://doi.org/10.71402/sqc3qk59Keywords:
Green Sukuk, Climate Financing, Maqāṣid al-Sharī‘ah, Sustainable Development Goals, Panel Data RegressionAbstract
The critical issue of climate change now poses an imminent economic threat and continues to concern many nations around the globe. As one of the issues with the highest priority, climate change is expected to increase Earth’s temperature between 2.5 and 4.7 degrees Celsius by the year 2100, due to the emission of greenhouse gasses (GHG). Indonesia’s commitment in achieving ‘net-zero emissions’ targets is very important prior to COP26 held in Glasgow, Scotland. The Indonesian government has been actively participating in the innovative construction of various green financing instruments, including Green Sukuk, which has been projected to be viable and sustain high-growth potential from 2018-2022. For this purpose, this paper evaluates the operational mechanism of Green Gross Sukuk, assessing through the lens of Sustainable development goals (SDGs) and Maqāsid Al-Sharīah. In doing so, we are able to collect empirical evidence that draws on data from 1999-2022 using Data Panel Regression and environmental variables from Indonesia. By this study, it is shown that green sukuk does have the ability to reduce the negative impact climate change has on the environment. It is easier to maintain and improve the air quality through the public's willingness rather than environmental finance tools. Sustained green financing using Green Sukuk frameworks guarantees uninterrupted investment in achieving the SDGs towards better environmental enhancement.
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