The Role of Islamic Financial Instruments in Supporting Sustainable Development Goals: An Analysis of Green Sukuk

Abstract

This article analyzes the role of Islamic financial instruments, in particular the Green Sukuk, in supporting the achievement of the Sustainable Development Goals (SDGs). Green Sukuk is a sharia-based financing instrument aimed at financing environmentally friendly projects, in line with sustainability values in Islam. This research was conducted with a qualitative approach through in-depth literature studies and library research to explore the potential and contribution of Green Sukuk in encouraging sustainable development. The results of the study show that Green Sukuk can play a strategic role in providing financing for projects that support environmental conservation, renewable energy, and sustainable management of natural resources. In addition, the implementation of Green Sukuk also shows compliance with sharia principles that focus on justice and balance of the ecosystem, thereby creating added value for society and the environment. However, there are still challenges in the implementation of Green Sukuk, such as regulations, transparency, and reporting standards that need to be harmonized. This study is expected to provide a deeper understanding of the contribution of Islamic financial instruments in supporting the SDGs and encourage the further development of sustainable financial instruments in accordance with sharia principles.