This article proposes a structured framework for Green Sukuk grounded in Islamic principles and contemporary sustainability standards.

Islamic Foundations for Environmental Responsibility
Environmental care is not a modern invention within Islam. It is deeply embedded in its worldview.

1. Khilafah (Stewardship)

Allah appoints humans as stewards (khalifah) on earth:

“It is He who has made you successors upon the earth…” (Qur’an 6:165)

This stewardship implies responsibility to protect natural resources, prevent harm, and maintain ecological balance.

2. Mizan (Balance)

The Qur’an emphasizes balance in creation:

“And the sky He raised and imposed the balance, that you not transgress within the balance.” (Qur’an 55:7–8)

Environmental destruction and excessive exploitation violate this divinely established balance.

3. Prohibition of Harm (La Darar wa La Dirar)

A foundational legal maxim in Islam states:

“There should be neither harm nor reciprocating harm.”

Environmental damage, pollution, and unsustainable practices contradict this principle.

These concepts establish a clear ethical foundation for sustainable finance within Islam.

What is Green Sukuk?
Green Sukuk is a Shariah-compliant financial instrument designed to raise funds exclusively for environmentally beneficial projects. Like conventional sukuk, it represents ownership in tangible assets, usufruct, or services. However, Green Sukuk adds an additional layer: proceeds must be allocated to projects that promote environmental sustainability.

Examples include:

• Renewable energy projects (solar, wind, hydro)
• Sustainable water management
• Green buildings
• Clean transportation
• Waste management systems

A Proposed Framework for Green Sukuk
A robust Green Sukuk framework should integrate both Shariah compliance and environmental integrity. The following components are essential:

1. Shariah-Compliant Structure

The sukuk must be based on valid Islamic contracts such as:

• Ijara (leasing)
• Musharakah (partnership)
• Murabaha (cost-plus sale)
• Istisna’ (construction/manufacturing contract)

The structure must avoid:

• Riba (interest)
• Gharar (excessive uncertainty)
• Maysir (gambling)
• Investment in haram industries
• A qualified Shariah Supervisory Board should certify and oversee the structure.

2. Clear Environmental Eligibility Criteria

The framework must define what qualifies as “green.” This can be guided by:

• International Green Bond Principles (GBP)
• Climate Bonds Initiative standards
• National sustainability taxonomies

However, from an Islamic perspective, projects should also meet the objectives of Shariah (Maqasid al-Shariah), particularly:

• Protection of life (hifz al-nafs)
• Protection of wealth (hifz al-mal)
• Protection of future generations
• Projects that reduce environmental harm and promote long-term societal welfare align directly with maslahah (public interest).

3. Use of Proceeds

• Transparency: Transparency is essential in Islamic finance. The framework must ensure:
• Clear allocation of funds to eligible green projects
• Segregation of proceeds
• Periodic public reporting

This fulfills the Qur’anic emphasis on honesty and accountability in financial dealings.

4. Environmental Impact Measurement

Islam emphasizes accountability (hisab). Therefore, Green Sukuk issuers should:

• Define measurable environmental objectives
• Report carbon reduction metrics
• Provide independent environmental audits
• Impact reporting transforms Green Sukuk from a symbolic instrument into a measurable vehicle of positive change.

5. Governance and Oversight

• Effective governance requires:
• A Shariah Supervisory Board
• Independent environmental reviewers
• Ongoing compliance monitoring

This dual oversight ensures both Islamic and environmental integrity.

Alignment with Maqasid al-Shariah

• Green Sukuk directly supports the higher objectives of Islamic law:
• Preservation of Life (Hifz al-Nafs): Reducing pollution improves public health.
• Preservation of Wealth (Hifz al-Mal): Sustainable investment protects long-term economic stability.
• Preservation of Future Generations: Environmental sustainability ensures intergenerational justice.

Thus, Green Sukuk is not merely permissible — it can be seen as an application of Islamic ethical finance in addressing global challenges.

Challenges and Considerations

Despite its promise, Green Sukuk faces several challenges:

• Lack of standardized green definitions
• Higher certification and reporting costs
• Risk of “greenwashing”
• Limited awareness among investors

Addressing these requires collaboration between scholars, regulators, environmental experts, and financial institutions.

Finally…..
Green Sukuk represents a powerful convergence between Islamic finance and sustainable development. Grounded in principles of stewardship, balance, and public welfare, it provides a practical mechanism for mobilizing capital toward environmentally responsible projects.

By integrating Shariah compliance with rigorous environmental standards, a well-designed Green Sukuk framework can serve not only as a financial instrument but as a manifestation of Islamic ethical responsibility toward the planet.

In a world facing ecological crisis, Green Sukuk offers a model of finance that is both spiritually grounded and globally relevant — fulfilling the trust of stewardship entrusted to humanity.

Your sister,
Dr Thamina (Samina) Anwar
Founder of the Global Halal Shura Hub

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