GREEN AND SUSTAINABLE FINANCE: IDENTIFY THE ISSUE AND RESEARCH GAP BASED ON ISLAMIC PERSPECTIVE
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Aug 31, 2023
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Abstract
Several countries that are global leaders in the Islamic financial industry have established policies regarding implementing a sustainable financial system. The policies are mandatory for both the conventional and Islamic Financial Institutions (IFIs). From this point, various issues, challenges and questions arise about how to implement sustainable finance in IFIs, which have significantly different characteristics and objectives than conventional financial institutions that develop the idea of sustainable finance. Therefore, this research aims to identify the issues and research gap in the existing green and sustainable finance model. This has been achieved through a literature survey and the content analysis used to examine, explain and describe the explicit meaning of a document. This study raised several issues related to green and sustainable finance. It also provides several research gaps that need to be filled soon. The research finding shows that the existing green and sustainable finance models do not emphasize an Islamic perspective and are inappropriate to implement in IFIs. Therefore, this study suggests that more work must be undertaken to construct a sustainable model from Islamic sources that is more appropriate for the Islamic context and reality.
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BUDIHARJO, Anas; ISMAIL, Nor Asmat; RAHIM, Hainnuraqma.
GREEN AND SUSTAINABLE FINANCE: IDENTIFY THE ISSUE AND RESEARCH GAP BASED ON ISLAMIC PERSPECTIVE.
Proceedings of the International Conference of Islamic Economics and Business (ICONIES), [S.l.], v. 9, n. 1, p. 841-850, aug. 2023.
ISSN 2541-3333.
Available at: <http://conferences.uin-malang.ac.id/index.php/iconies/article/view/2244>. Date accessed: 02 may 2024.
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References
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MSCI. (2021). MSCI SRI Indexes Methodology (Issue February).
Myers, T. A., & Hassanzadeh, E. (2013). The Interconnections Between Islamic Finance and Sustainable Finance (Issue July).
Nazari, F. (2016). Model For Islamic Tourism Destination (Case Study Turkey) (Issue August). Gazi University.
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Nicholls, A. (2021). Sustainable Finance: A Primer and Recent Developments. https://www.ubs.com/global/en/ubs-society/philanthropy/ubs-optimus-
Nugroho, L., & Mariyanti, T. (2021). Discourses of Islamic Performance Ratio Based on Tawhid String Relationship. Journal of Islamic Economics & Social Science (JIESS), 2(1), 44–52.
Pichler, S., Blazovich, J., Cook, K., Huston, J., & Strawser, W. (2015). Do LGBT-supportive Corporate Policies Enhance Firm Performance? Academy of Management Proceedings, 2015(1), 15078.
Qoyum, A. (2020). The Environmental, Social, and Governance (ESG) Criteria and Its Impact on the Portfolio Performance: In Search of Integration Between Islamic and ESG Screening In Indonesia And Malaysia. In Universitas Islam Negeri Sunan Kalijaga. Universitas Islam Negeri Sunan Kalijaga.
Qoyum, A., Al Hashfi, R. U., Zusryn, A. S., Kusuma, H., & Qizam, I. (2021). Does an Islamic-SRI portfolio really matter? Empirical application of valuation models in Indonesia. In Borsa Istanbul Review (Vol. 21, Issue 2, pp. 105–124).
Sarkawi, A. A., Abdullah, A., & Dali, N. M. (2016). The Concept Of Sustainability From The Islamic Perspectives. International Journal of Business, Economics and Law, 9(5), 398–403. http://irep.iium.edu.my/51927/
Security Commission. (2019). Islamic Green Finance. In Islamic Social Finance. https://doi.org/10.4324/9781315272221-9
Sommer, S. (2020). Sustainable Finance an Overview. Deuthsche Gesellschaft fur Internationale. https://doi.org/10.1515/zgr-2019-0022
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Tarique, K. M., Mohammed, M. O., & Islam, R. (2020). Developing and Validating the Components of Maqasid Al- Shari’ah-Based Performance Measurement Model for Islamic Banks. https://doi.org/10.1108/IMEFM-12-2018-0432
Von Wallis, M., & Klein, C. (2015). Ethical Requirement and Financial Interest: A Literature Review on Socially Responsible Investing. Business Research, 8(1), 61–98. https://doi.org/10.1007/s40685-014-0015-7
Zaman, A., & Qadir, J. (2020). Islamic Approaches to Sustainable Development. In M. Sarac & M. K. Hassan (Eds.), Islamic Perspective for Sustainable Financial System (pp. 53–70). Istanbul University Press.
Zaman, N. A. (2013). Towards an Authentic Islamic Development Model: Incorporating the Roles of Trust and Leadership in The Islam Iman Ihsan Paradigm [University of Durham]. http://etheses.dur.ac.uk
Altwijry, O. I., Mohammed, M. O., Hassan, M. K., & Selim, M. (2021). Developing a Shari’ah Based FinTech Money Creation Free [SFMCF] Model for Islamic Banking. International Journal of Islamic and Middle Eastern Finance and Management. https://doi.org/10.1108/IMEFM-05-2021-0189
Ascarya, & Sakti, A. (2021). Proposing New Islamic Microfinance Model for Sustainable Islamic Microfinance Institution. In M. K. Hassan, M. Sarac, & A. Khan (Eds.), Islamic Finance and Sustainable Development A Sustainable Economic Framework for Muslim and Non-Muslim Countries (1st ed.). Palgrave Macmillan, Springer Nature.
Azila Ahmad Sarkawi, & Alias Abdullah. (2015). Contextualising the Islamic Fundamentals in the Contemporary Concepts of Sustainability, Livability and Quality of Life in the Built Environment. Middle-East Journal of Scientific Research, 23(6), 1249–1256.
Aziz, A. H. B. A. (2017). Conceptualising Islamic Hospitality Management. Universiti Sanis Malaysia.
Beekun, R. I., & Badawi, J. A. (2005). Balancing Ethical Responsibility Among Multiple Organizational Stakeholders: The Islamic Perspective. Journal of Business Ethics, 60(2), 131–145. https://doi.org/10.1007/s10551-004-8204-5
Berghout, A. (2020). An Islamic Model of Civilisational Development and Sustainability: A Maqashid Approach. In A. R. Moten (Ed.), Spirituality and Sustainability Experiences of The International Islamic University Malaysia. IIUM Press.
Budiharjo, A., & Ismail, N. A. (2020). Islamic Finance and Sustainable Finance: A Convergence? Social Sciences Postgraduate International Seminar (SSPIS) 2020 Conference ProceedingsPROCEEDINGS, 27–34. http://www.soc.usm.my/images/pdf/SSPIS_2020_E-Proceeding.pdf
Dariah, A. R., Salleh, M. S., & Shafiai, H. M. (2016). A New Approach for Sustainable Development Goals in Islamic Perspective. In Procedia - Social and Behavioral Sciences (Vol. 219, pp. 159–166). https://doi.org/10.1016/j.sbspro.2016.05.001
Edwards, M., Kelly, S., Klettner, A., & Brown, P. (2019). Unlocking Australia’s Sustainable Finance Potential. https://www.uts.edu.au/sites/default/files/2019-06/Unlocking Sustainable Finance.pdf
Fidiana. (2016). Performance Measurement for Islamic Bank and Financial Institution. Middle East Journal of Scientific Research, 24(10), 3288–3296. https://doi.org/10.5829/idosi.mejsr.2016.3288.3296
Global Sustainable Investment Alliance. (2020). Global Sustainable Investment Review 2020. 32.
Haneef, M. A., & Furqani, H. (2015). Methodology of Islamic economics: Typology of Current Practices, Evaluation and Way Forward. In Islamic Economics: Theory, Policy and Social Justice (Vol. 966, Issue 2, pp. 1–24). Qatar Foundation.
Haneef, R. (2019). Convergence of Islamic and Sustainable Finance. In J. Ercanbrack (Ed.), Report on SOAS-QFC Islamic Finance Public Lecture & Workshop. SOAS University of London.
Hilmiyah, N. H., Possumah, B. T., & Shaifai, M. H. M. (2016). Tawhidic Based Economic System: A Preliminary Conception. Al-Iqtishad: Journal of Islamic Economics, 9(1), 107–124. https://doi.org/10.15408/aiq.v9i1.3481
Junkus, J., & Berry, T. D. (2015). Socially Responsible Investing: A Review of the Critical Issues. Managerial Finance, 41(11), 1176–1201. https://doi.org/10.1108/MF-12-2014-0307
Kamil, K. H. (2018). Islamic Banks in the Theory of Financial Intermediation: A Review That Leads Towards Different Objectives. Usim Nilai 2 Mei 2018, July 2018. https://www.researchgate.net/profile/Arifa-
Pratami/publication/337591681_COMPLETE_PROCEEDING_NACOSS_III_2_MAY_2018/links/5ddf79caa6fdcc2837f06111/COMPLETE-PROCEEDING-NACOSS-III-2-MAY-2018.pdf#page=452
Krauss, A., Krüger, P., & Meyer, J. (2016). Sustainable Finance in Switzerland: Where Do We Stand? September, 62.
Latiff, Z. A., Yunus, M. Y. M., & Mydin, M. A. O. (2016). The Theory of Sustainability from Islamic Perspective. Research Journal of Fisheries and Hydrobiology, 11(August), 179–183. http://www.aensiweb.com/JASA/
LBTQ100-ESG Index. (2022). No Title. https://lgbtq100.com/
Lebar, O. (2006). Penyelidikan Kualitatif Pengenalan Kepada Teori dan Metod. UPSI Press.
Ma’ruf, A., Mohamed, Z., & Mohamad, S. (2021). Sustainable Finance and Shari’ Analysis of Environmental, Social and Governance (ESG) Criteria. In M. K. Hassan, M. Sarac, & A. Khan (Eds.), Islamic Finance and Sustainable Development A Sustainable Economic Framework for Muslim and Non-Muslim Countries (1st ed., pp. 193–214). Springer Nature Switzerland.
Mohamed, M. O. (2011). The Objectives and Performance Measure of Islamic Banking Based on Maqashid Shariah Framework. Universiti Sains Malaysia.
MSCI. (2021). MSCI SRI Indexes Methodology (Issue February).
Myers, T. A., & Hassanzadeh, E. (2013). The Interconnections Between Islamic Finance and Sustainable Finance (Issue July).
Nazari, F. (2016). Model For Islamic Tourism Destination (Case Study Turkey) (Issue August). Gazi University.
Ngalim, S. M., & Ismail, A. G. (2014). An Islamic Vision Development Based Indicators in Analysing the Islamic Banks Performance : Evidence from Malaysia , Indonesia and selected GCC Countries (WP# 1436-02; Vol. 11, Issue 9).
Nicholls, A. (2021). Sustainable Finance: A Primer and Recent Developments. https://www.ubs.com/global/en/ubs-society/philanthropy/ubs-optimus-
Nugroho, L., & Mariyanti, T. (2021). Discourses of Islamic Performance Ratio Based on Tawhid String Relationship. Journal of Islamic Economics & Social Science (JIESS), 2(1), 44–52.
Pichler, S., Blazovich, J., Cook, K., Huston, J., & Strawser, W. (2015). Do LGBT-supportive Corporate Policies Enhance Firm Performance? Academy of Management Proceedings, 2015(1), 15078.
Qoyum, A. (2020). The Environmental, Social, and Governance (ESG) Criteria and Its Impact on the Portfolio Performance: In Search of Integration Between Islamic and ESG Screening In Indonesia And Malaysia. In Universitas Islam Negeri Sunan Kalijaga. Universitas Islam Negeri Sunan Kalijaga.
Qoyum, A., Al Hashfi, R. U., Zusryn, A. S., Kusuma, H., & Qizam, I. (2021). Does an Islamic-SRI portfolio really matter? Empirical application of valuation models in Indonesia. In Borsa Istanbul Review (Vol. 21, Issue 2, pp. 105–124).
Sarkawi, A. A., Abdullah, A., & Dali, N. M. (2016). The Concept Of Sustainability From The Islamic Perspectives. International Journal of Business, Economics and Law, 9(5), 398–403. http://irep.iium.edu.my/51927/
Security Commission. (2019). Islamic Green Finance. In Islamic Social Finance. https://doi.org/10.4324/9781315272221-9
Sommer, S. (2020). Sustainable Finance an Overview. Deuthsche Gesellschaft fur Internationale. https://doi.org/10.1515/zgr-2019-0022
Swiss Sustainable Finance. (2019). Swiss Sustainable Investment Market Study 2019. 76.
Tarique, K. M., Mohammed, M. O., & Islam, R. (2020). Developing and Validating the Components of Maqasid Al- Shari’ah-Based Performance Measurement Model for Islamic Banks. https://doi.org/10.1108/IMEFM-12-2018-0432
Von Wallis, M., & Klein, C. (2015). Ethical Requirement and Financial Interest: A Literature Review on Socially Responsible Investing. Business Research, 8(1), 61–98. https://doi.org/10.1007/s40685-014-0015-7
Zaman, A., & Qadir, J. (2020). Islamic Approaches to Sustainable Development. In M. Sarac & M. K. Hassan (Eds.), Islamic Perspective for Sustainable Financial System (pp. 53–70). Istanbul University Press.
Zaman, N. A. (2013). Towards an Authentic Islamic Development Model: Incorporating the Roles of Trust and Leadership in The Islam Iman Ihsan Paradigm [University of Durham]. http://etheses.dur.ac.uk