Managing Climate Change: The Role of Islamic Finance

Obaidullah, Mohammed

doi:10.2139/ssrn.3303687

Cited by 26 publications

(36 citation statements)

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“…qard), sale-based (Murabahah), leasing-based (Ijara, Ijara-thummal-bai), and are also based on partnership (Musharaka and Mudaraba). There are also products based on service charge (Ujr), guarantee (Kafalah) and agency (Wakalah) that are often combined to design composite products (Obaidullah 2017).…”

Section: Islamic Finance and The Environmentmentioning

confidence: 99%

“…According to Islamic laws, humanity as deputies of the Supreme Being, have the task of loyally adhering to the values prescribed by their Creator. In their short stay in this planet they can use the economic resources of the world as agents (Obaidullah 2017). Islam is a global religion infused with several elements of rationality.…”

Section: Islamic Finance and The Environmentmentioning

confidence: 99%

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Modelling the relationship between financing by Islamic banking system and environmental quality: evidence from bootstrap autoregressive distributive lag with Fourier terms

Solarin

2019

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The aim of the paper is to contribute to the extant empirical literature on the determinants of pollution by investigating the impact of financing by Islamic banking on a comprehensive index of emission in Malaysia. Using the stochastic environmental impact, population, affluence and technology (STIRPAT) framework, we controlled for the impact of industrial production index and demography. A residual augmented least squares (RALS) method is used to examine stationarity of the series. We have also used a recently proposed bootstrap autoregressive distributive lag (ARDL) test, which is further augmented with Fourier terms to cater for any nonlinearity in the estimation. The results show evidence for cointegration among the series. The long run estimates suggest that financing by Islamic banks has a negative impact on emission, while labour force increases it. The industrial production index does not have significant impact on emission. The policy implications and recommendations are discussed in the body of the paper.

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Section: Islamic Finance and The Environmentmentioning

confidence: 99%

Section: Islamic Finance and The Environmentmentioning

confidence: 99%

Modelling the relationship between financing by Islamic banking system and environmental quality: evidence from bootstrap autoregressive distributive lag with Fourier terms

Solarin

2019

Qual Quant

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“…Discussions of the mutual compatibility between green and Islamic finance emerged in July 2017 when a Malaysian solar photovoltaic company issued the world's first green sukuk . Partly in response to the United Nations Sustainable Development Goal and the Paris Climate Agreement, some practitioners are identifying synergies between green finance and Islamic finance in contributing to sustainability and climate goals, especially in Islamic economies (Ahmed et al, 2015; Bennett and Iqbal, 2013; Obaidullah, 2017; RFI, 2018; UNPRI, 2017; White and Case, 2016). Specifically in Malaysia, the development of green Islamic finance opens an Islamic-compliant avenue for a low carbon ‘capital switch’ (Castree and Christophers, 2015), particularly for its most carbon intensive and polluting oil and gas and agroforestry industries (Begum et al, 2015).…”

Section: Introductionmentioning

confidence: 99%

“…According to this framework, businesses should fulfil people's needs within the boundaries of a sustainable and efficient economic system. Financial activities that induce disorder, including environmental depletion, are thus prohibited (Obaidullah, 2017; RFI, 2018). In the face of climate change, environmental degradation and subsequent humanitarian crisis, Islamic scholars argue that the injunctions between Sharia and environmental sustainability meant Islamic finance must contribute to environmental conservation and climate action (Obaidullah, 2017).…”

Section: Introductionmentioning

confidence: 99%

“…Financial activities that induce disorder, including environmental depletion, are thus prohibited (Obaidullah, 2017; RFI, 2018). In the face of climate change, environmental degradation and subsequent humanitarian crisis, Islamic scholars argue that the injunctions between Sharia and environmental sustainability meant Islamic finance must contribute to environmental conservation and climate action (Obaidullah, 2017). Green sukuk , with its specific structural requirements and underpinning philosophy of concurrently express economic, environmental and Islamic values, has the potential of overcoming some of the issues faced by green finance.…”

Section: Introductionmentioning

confidence: 99%

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Ecologies of green finance: Green sukuk and development of green Islamic finance in Malaysia

Liu

Lai

2021

Environ Plan A

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In this paper, we analyse the recent development of green sukuk (often referred to as an Islamic green bond) since its issuance in Malaysia in 2017, and critically evaluate whether it addresses some of the existing contradictions of green finance. Using a financial ecologies approach, we examine Malaysia's configuration of green sukuk as drawing from the existing international green bond regime, partnership with the World Bank, and Malaysia's own experience and expertise in Islamic finance, with the objective of building Kuala Lumpur's competitiveness as a global Islamic financial centre. Through documents analysis and interviews with key market actors in Kuala Lumpur and other financial centres, our findings point to the emergent international adoption of green sukuk. While this achieves Malaysia's state-building objectives, specifically through expanding Malaysia's sukuk market and advancing its status as a frontier of Islamic financial innovations, the potential for improving the current green bond regime has been more doubtful. A key limitation is the incorporation of existing Green Bond Principles, which enables not only green sukuk's international acceptance but also renders it susceptible to greenwashing. By examining the intersection of different ecologies of green and Islamic finance, we reveal the contradictions and limitations of green sukuk in contributing to Malaysian state-building and climate action.

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