The Role of Islamic Finance in Addressing Climate Change: A Systematic Literature Review
Abstract
Abstract: This study aims to examine the role of Islamic finance in supporting the sustainable climate financing agenda through a library research approach with an integrative literature review method. This study identifies and analyzes relevant literature to gain a comprehensive understanding of the contributions, challenges, and opportunities of Islamic finance in the context of climate change mitigation and adaptation, especially in Indonesia. Data were obtained from various credible academic sources such as Google Scholar, Scopus, DOAJ, and Scispace, with a publication year range of 2015-2024. Inclusion criteria included literature discussing Islamic finance and climate change, including instruments such as green sukuk, zakat and waqf. The results show that Islamic finance has strategic potential in creating an ethical, inclusive and sustainable financing system. The integration of sharia principles with ESG principles and the development of green instruments can strengthen economic and social resilience in the face of climate crisis. This study recommends synergy among stakeholders to accelerate literacy, innovation, and policy collaboration to optimize the role of Islamic finance in climate financing.
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