Green Sukuk, Waqf, and Sustainable Development: Advancing Islamic Financial Instruments for the Ecological Transition

Abstract

Climate change, environmental degradation, and the demand for financing to advance the SDGs have renewed interest in ethical, socially inclusive approaches to ecological transition. Although green finance has expanded, it remains unclear whether it can integrate sustainability with social inclusion, ethical accountability, and community resilience. This study examines integrating Green Sukuk and Waqf as complementary Islamic financial instruments for sustainable development. It analyses their characteristics, assesses synergies between market-based and endowment-based financing, and develops an integrated framework. Using a qualitative analytical approach, it draws on classical Islamic sources, contemporary literature, policy reports, and selected initiatives. Green Sukuk can mobilise capital for renewable energy, infrastructure, and climate adaptation, while Waqf can provide enduring support for conservation, ecological education, and community development. Their integration combines Sukuk's capital-mobilisation capacity with Waqf's perpetual, social orientation, creating a more diversified financing structure. Institutional coordination, regulatory harmonisation, governance, Shariah compliance, transparency, and risk management are critical conditions. The Green Sukuk–Waqf framework provides a basis for climate finance aligned with Islamic principles