| Abstract: |
Islamic finance, based on ethical investing principles and socio-economic
justice, has the potential to tackle worldwide financial difficulties and
advance sustainable development. This article examines Islamic finance's
historical background, present condition, and prospects, focusing on its
compatibility with Environmental, Social, and Governance (ESG) standards and
sustainable development goals (SDGs). Throughout its history, Islamic finance
has developed from its initial focus on fairness and societal accountability
to become a complex business that includes Sukuk, Islamic banking, and
Takaful. The industry encounters obstacles such as discrepancies in
regulations and fluctuations in the economy while also having prospects for
expansion and incorporation into the global financial system. Global
uncertainties, such as technological upheavals and socio-political dynamics,
require Islamic finance to possess resilience and adaptation. The future of
Islamic finance hinges on its ability to incorporate ESG (Environmental,
Social, and Governance) and sustainability factors. This can be achieved by
utilizing novel financial instruments such as Green Sukuk and Social Impact
Sukuk, which aim to raise funds for projects with positive environmental and
social impacts. Strategic measures such as standardization, increasing
awareness, improving regulations, and creating capacity are essential for
promoting the integration of ecological, social, and governance (ESG) factors.
The capacity of Islamic finance to appeal to socially aware investors and
promote sustainable economic growth highlights its crucial role in
establishing a fairer and more robust global financial system. This article
offers valuable insights and suggestions on utilizing Islamic finance's
ethical principles to promote sustainable development and enhance economic
resilience. |