Green Sukuk and Sustainable Development: An Islamic Finance Perspective on Environmental Investment

Abstract

This study examines the role of green sukuk in promoting sustainable development from the perspective of Islamic finance and environmental investment. The research aims to analyze how green sukuk integrates Shariah-compliant financial principles with sustainability-oriented investment frameworks while evaluating its contribution to environmental governance, renewable energy financing, and sustainable economic transformation. The study employs a qualitative research method using a descriptive case study design because this approach enables an in-depth exploration of institutional practices, ethical financial principles, and sustainability governance within green sukuk implementation. The research was conducted in Indonesia due to its strategic position as one of the leading global issuers of sovereign green sukuk and its active commitment toward sustainable Islamic finance development. Data were collected through semi-structured interviews and document analysis involving fifteen informants consisting of policymakers, Islamic finance practitioners, sustainability experts, environmental consultants, and academic scholars selected purposively based on their expertise and institutional involvement. The findings reveal that green sukuk significantly contributes to sustainable infrastructure financing, climate resilience, and environmentally responsible investment, although governance fragmentation and sustainability reporting limitations remain major challenges. The study recommends strengthening regulatory harmonization, environmental accountability mechanisms, and institutional collaboration to enhance the effectiveness and credibility of green sukuk within global sustainable finance systems.