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Managing Climate Change: The Role of Islamic Finance


  • Obaidullah, Mohammed

    (The Islamic Research and Teaching Institute (IRTI))


Environmental protection and sustainability fits in nicely with the Islamic finance agenda that seeks to enhance the general welfare of society. Protection of the planet and the environment, climate management and adaptation, as organizational goals are clearly in conformity with the goals of the Shariah as well as with the SDGs. This paper takes the argument further and seeks to demonstrate how Islamic finance can significantly contribute to the global search for climate finance solutions. Islamic social funds can potentially play a significant role in absorbing the incremental costs with clean technologies where subsidies are not forthcoming to absorb the same. For zakat funds to be used for the purpose, an additional condition need to be met, i.e. the beneficiaries must be poor. The institution of waqf, along with zakat and Sadaqa, can certainly play a role in coping with humanitarian crises resulting from climate change. Awqaf like foundations may directly engage in provision of goods and services related to mitigation and adaptation. Awqaf may also be dedicated to research and development and towards increasing consumer awareness and stronger support of action to mitigate climate change. Similar to SRI Funds, the Islamic Green Funds and similar to Green Bonds, the Islamic Green Sukuk can contribute significantly to the agenda of climate change.

Suggested Citation

  • Obaidullah, Mohammed, 2017. "Managing Climate Change: The Role of Islamic Finance," Policy Papers 2017-1, The Islamic Research and Teaching Institute (IRTI).
  • Handle: RePEc:ris:irtipp:2017_001

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    Cited by:

    1. Felicia HM Liu & Karen PY Lai, 2021. "Ecologies of green finance: Green sukuk and development of green Islamic finance in Malaysia," Environment and Planning A, , vol. 53(8), pages 1896-1914, November.
    2. Sakiru Adebola Solarin, 2019. "Modelling the relationship between financing by Islamic banking system and environmental quality: evidence from bootstrap autoregressive distributive lag with Fourier terms," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(6), pages 2867-2884, November.

    More about this item


    Environmental Protection; Climate Change; Islamic Social Funds; Green Sukuk;
    All these keywords.

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