Green Sukuk: An Innovation in Islamic Capital Markets

Alam, Nafis; Duygun, Meryem; Ariss, Rima Turk

doi:10.1007/978-3-319-32268-1_10

Cited by 37 publications

(22 citation statements)

References 20 publications

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“…This emission reduction is also seen to be greater when using green bonds by the Paris Agreement (Fatica & Panzica, 2021). Alam et al (2016) examined the possibility of green Sukuk to finance projects developed by the Alternative Energy Development Board in Pakistan. The study concludes that one of the challenges of green Sukuk is that this instrument can expose a higher risk profile when compared to other instruments because it involves new technology.…”

Section: Literature Reviewmentioning

confidence: 99%

Corporate green Sukuk issuance for sustainable financing in Indonesia

Endri

Hania

Ma’ruf

2022

Environmental Economics

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Green Sukuk is a source of financing that supports the SDGs. Climate change, the growth of the Islamic finance industry, and the rise of socially responsible investing could make green Sukuk a vital tool for financing clean energy and sustainable infrastructure projects. Many studies have identified its potential and advantages. However, no companies have issued green corporate Sukuk in Indonesia yet. The purpose of this study is to determine the potential and main problems of issuing corporate green Sukuk in Indonesia, along with possible solutions and strategies. The research method used is the analytic network process (ANP). In this study, respondents are experts in the field of green Sukuk (involved experts were from academia, project actors, and regulators). The results of the study indicate that the first destination that has the potential to be financed with green corporate Sukuk is renewable energy. At the same time, the main problem is the lack of understanding from market participants. In terms of solutions, the incentive provided by the government is the best to encourage the issuance of green corporate Sukuk. Moreover, the first strategy is to issue green corporate Sukuk with ijarah contracts. From the research results, it is hoped that the Indonesian government can be more aggressive in providing incentives to green project actors.

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Section: Literature Reviewmentioning

confidence: 99%

Corporate green Sukuk issuance for sustainable financing in Indonesia

Endri

Hania

Ma’ruf

2022

Environmental Economics

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“…According to research by Ibrahim & Shirai (2020), green sukuk use compassionate contracts, equity-like investments, and risksharing finance strategies to assist circular firms driven by the comprehensive goal of maqasid sharia. Green sukuk also provides more diverse range of financing options for projects relevant to achieving the SDG (Hariyani & Kusuma, 2020;Liu & Lai, 2021;Morea & Poggi, 2017;Nehal, 2021), reduce waste through the implementation of environmental restoration projects (Campisi et al, 2018;Hariyani & Kusuma, 2020;Keshminder et al, 2022), enable members of the community to find employment through various empowerment programs (Hariyani & Kusuma, 2020), provide funding for green projects (Alam et al, 2016;Azhgaliyeva et al, 2020;Hariyani & Kusuma, 2020;Munir et al, 2020;Richardson, 2020), economic developent for community and society (Abdullah & Nayan, 2020;Hariyani & Kusuma, 2020;Ibrahim & Shirazi, 2020), paves the way for the country to become a more developed nation and provides possibilities for future generations to preserve nature (Munir et al, 2020;Santoso, 2020), enhance the credibility of companies through the promotion of Corporate Social Responsibility (CSR) programs (Alam et al, 2016), represent a capital market product that may be bought, sold, and traded, offering the possibility of liquidity and portability (Alam et al, 2016), and refinancing previous loans from eligible green projects (Azhgaliyeva et al, 2020).…”

Section: The Benefits Of Green Sukuk For Sustainable Development Agendamentioning

confidence: 99%

“…A study conducted by Azhgaliyeva et al (2020) and Hariyani and Kusuma (2020) shows that using green sukuk in environmentally sustainable projects entails substantial expenses for technology, management, and maintenance. Green sukuk is also a large state property that need to be taken care of properly, raise the financial burden of the State Budget (APBN), insufficient involvement and education of the public (M. S. Hariyani & Kusuma, 2020), absence of assistance from the regional government (Campisi et al, 2018;Hariyani & Kusuma, 2020;Munir et al, 2020), risk of unethical behavior and human error (Hariyani & Kusuma, 2020), require trustworthy and transparent information Abdullah & Nayan, 2020;Alam et al, 2016;Keshminder et al, 2022;Nehal, 2021), requires a concise policy from the responsible authority (Alam et al, 2016;Azhgaliyeva et al, 2020;Ibrahim & Shirazi, 2020), must be supported by an extensive regulatory framework Alam et al, 2016;Liu & Lai, 2021;Richardson, 2020;Santoso, 2020), feature dynamic interactions amongst the involved professionals Alam et al, 2016;Ibrahim & Shirazi, 2020;Morea & Poggi, 2017;Nehal, 2021), and there is a pressing requirement for international cooperation among states to implement green sukuk Araminta, Qudziyah, Timur Published by University of Airlangga.…”

Section: The Challenges In Issuing Green Sukuk For Sustainable Develo...mentioning

confidence: 99%

The Role of Green Sukuk in Realizing the Sustainable Development Goals 2030 Agenda

Araminta

Qudziyah

Timur

2022

JEBIS

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The purpose of this study is to investigate green sukuk and its influence on the implementation of the Sustainable Development Goals (SDGs), as well as to identify and analyze the factors that have an effect on those activities. This research is carrying out a systematic literature review in order to locate, examine, and analyze any and all relevant research that is currently available in order to provide answers to the research questions. In spite of the fact that it is such a great innovative investment instrument and that it is doing well with getting positive response from the market, green sukuk still face many challenges, and there is still room for improvement to bring up its potentials and maximize its social impact for the most recent SDGs agenda. Green sukuk have developed into Islamic financial instruments that are in demand by the public because of their ethical responsibility towards the environment. Green sukuk provides benefits not only for all stakeholders involved in it but also for the environment. The government, as a regulator, is expected to be able to provide support through various strategic policies to support green sukuk, such as by developing a more substantial legal basis and incentives in the form of tax reductions, as well as strengthening information and literacy to the public about green sukuk.

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“…In shari'a, it comprises a settled ethical framework of caring for the environment and its various occupants. Likewise, Alam, Duygun, & Ariss (2016) also cited the main goal behind the development of Green Sukuk is to robust the shari'a existence for preserving the environment. Therefore, the allocation and impact of Green Sukuk must be the manifestation of the maqasid al-shari'a.…”

Section: Introductionmentioning

confidence: 99%

Integrating Green Sukuk and Cash Waqf Linked Sukuk, the Blended Islamic Finance of Fiscal Instrument in Indonesia: A Proposed Model for Fighting Climate Change

Musari

2022

IJIK

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Indonesia is the first global and retail sovereign Green Sukuk issuer in the world. Since its first issuance in 2018, Green Sukuk for four years has been issued seven times to finance and/or refinance the projects/programs of Eligible Green Sectors. Then, in order to support the development of social investment and productive waqf, the Government of Indonesia (GoI) also issues Cash Waqf Linked Sukuk (CWLS) by blending Islamic finance and impact investing for the Sustainable Development Goals (SDGs). CWLS is the first blended Islamic finance for the fiscal instrument in Indonesia which integrates Islamic commercial finance and Islamic social finance. In order to tackle climate change, this study promotes the integration between Green Sukuk and CWLS as well as adopting the Esham concept toward Perpetual Green CWLS as a new green financing alternative. This collaboration can be an innovative one in the future as a fiscal funding source to fight climate change which today becomes the development agenda priority in line with the intensified intension of extraordinary weather. Absolutely, climate change has brought a high-cost impact on vulnerable and low-income people. Along with efforts to the SDGs and Paris Agreement targets achievement, a financing gap holds in the route to tackle climate change. Therefore, by using a literature study on the best practice of Green Sukuk and CWLS in publications mainly sourced from the Ministry of Finance (MoF) Republic of Indonesia, this conceptual paper focuses on three issues, namely: (1) Describing Indonesia's sovereign Green Sukuk; (2) Describing the CWLS; (3) Explaining a proposed Perpetual Green CWLS as Islamic green financing alternative.

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Green Sukuk: An Innovation in Islamic Capital Markets

Cited by 37 publications

References 20 publications

Corporate green Sukuk issuance for sustainable financing in Indonesia

Corporate green Sukuk issuance for sustainable financing in Indonesia

The Role of Green Sukuk in Realizing the Sustainable Development Goals 2030 Agenda

Integrating Green Sukuk and Cash Waqf Linked Sukuk, the Blended Islamic Finance of Fiscal Instrument in Indonesia: A Proposed Model for Fighting Climate Change

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