Islamic Finance and Climate Justice: Halal Capital for a Sustainable Future

• Post by: wp-islamicfinancereviewcouk
• June 29, 2025
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Introduction

As the global climate crisis deepens, the question for Islamic finance is no longer whether it should act—but how boldly and how soon. From rising sea levels to severe droughts, the world’s most vulnerable are also the least responsible for climate damage—and many of them live in Muslim-majority regions.

Islamic finance is uniquely positioned to champion climate justice—a movement that centres both ethical sustainability and social equity. Built on values of stewardship (istikhlaf), balance (mizan), and public benefit (maslahah), Islamic finance must now evolve to serve not just what is halal, but what is healing.

“Corruption has appeared on land and sea because of what the hands of people have earned…”
— Qur’an 30:41

🌱 What Does Climate Justice Mean in Islamic Finance?

Climate justice is about more than reducing emissions. It’s about ensuring fairness in climate action—so that the poor, the displaced, and future generations aren’t left behind.

Islamic ethics already support this through:

• Amanah (Trust) – We are caretakers of the Earth, not owners

• Maslahah (Public Interest) – Financial decisions must serve society

• Tawazun (Balance) – Between consumption, environment, and equity

• No Israf (Waste) – Overconsumption is condemned in both Qur’an and Sunnah

“Indeed, the wasteful are brothers of the devils…”
— Qur’an 17:27

💸 How Can Islamic Finance Promote Climate Action?

Islamic finance offers several tools that can be mobilised for sustainability and impact:

📍 Why It Matters Now

• 33 of the world’s 50 most climate-vulnerable nations are Muslim-majority

• Billions in zakat and waqf are underutilised for environmental causes

• Young Muslim donors and investors increasingly seek faith-based, planet-first solutions

• Islamic finance holds over $4 trillion in assets—yet only a fraction addresses climate impact

📊 Real Examples of Change

• Indonesia: The world’s first Green Sukuk, funding climate-resilient infrastructure since 2018

• Malaysia: Takaful models now include protection against flood and crop failure for farmers

• UAE & KSA: Discussions underway on issuing Waqf-backed green bonds

• Global Sadaqah: Includes verified campaigns focused on solar water pumps, eco-schools, and sustainable livelihoods

“The world is green and beautiful, and Allah has appointed you as His stewards over it.”
— Sahih Muslim, Hadith 2742

🛠 What Needs to Change?

To truly serve the planet and the people, Islamic finance must:

• Integrate climate goals into Shariah screening criteria

• Include sustainability experts on Shariah advisory boards

• Link zakat, waqf, and fintech to green causes

• Expand fatwa discourse from riba to include climate ethics

• Invest in Islamic ESG innovation, not just exclusion screening

🌍 Vision: A Faith-Based Climate Finance Movement

Imagine an Islamic finance sector where:

• Every green sukuk is Zakat-eligible

• Every fintech app includes a “Plant a Tree with Your Zakat” feature

• Waqf funds power off-grid solar in climate-impacted regions

• Students learn climate justice in Shariah & finance courses

This is not a dream. It’s a moral imperative, and Islamic finance has all the tools to lead.

“And do not commit abuse on the earth, spreading corruption.”
— Qur’an 2:60

✅ Join the Conversation

Let’s build a future where Islamic finance restores balance to the world—not just portfolios.
Use and share with:
#IslamicFinance #GreenSukuk #FaithAndClimate #RevolutionizingIslamicFinance

🔗 Further Reading & Resources

• Green Sukuk Toolkit – IFSB & World Bank

• Islamic Declaration on Global Climate Change

• UNEP-FI Principles for Islamic Climate Finance

• Obaidullah, M. (2022). Climate Finance in the Islamic World