Islamic finance for sustainable development in clean technology: dynamic capabilities and natural resource-based view

Purpose This study aims to investigate the contribution of Islamic green financing (IGF) for renewable energy in the Gulf Cooperation Council nations from 2019–2023, with the objective of promoting a transition to a low-carbon economy. Design/methodology/approach The study uses a fixed effects model to examine individual effects and time heterogeneity. Findings The Natural Resource Based-View addresses strategic questions regarding the resources, capabilities and firms most suited to build dynamic capabilities for clean (renewable) technologies. Using a fixed effect approach, IGF enhances solar-based renewable technologies through energy efficiency and climate policy. Practical implications The dynamic capabilities view is used to conceptualize green orientation (reflected in national climate policy), meanwhile, the Natural Resource Based-View in this study is used to conceptualize managerial environmental commitment (reflected in IGF), product stewardship (reflected in energy use) and eco-innovation (reflected in renewable energy) within a unified framework. Social implications This study advocates for energy justice in climate policy and energy structure reformation. Energy justice (inherent in Islamic financing) can provide powerful conceptualization and analysis tools for policymaking to achieve a fair and balanced energy system, ensuring an equal distribution of benefits. Additionally, with a risk-sharing mechanism in joint ventures, IGF reforms the energy competition structure by enabling new entrepreneurs to compete with established enterprises in energy technologies, resulting in more effective and efficient products, services and prices. Originality/value This study fills the important gaps of product stewardship and sustainable development strategies in Natural Resource Based-View studies and expands the Natural Resource Based-View body of knowledge by systematically linking financial resources and sustainable development in clean technology while most empirical studies solely focus on pollution prevention and firm profitability. Therefore, this paper explores the understudied impact of IGF on renewable energy via national climate policy and energy efficiency.