The Impact of Sharia Green Financing on Sustainable Development in Indonesia

This research investigates the impact of Sharia green financing on sustainable development in Indonesia, with a particular focus on the role of green sukuk as an innovative financial instrument. The study is motivated by the growing global urgency to address climate change, promote renewable energy, and support green economic transitions, as well as Indonesia’s commitment to achieving the Sustainable Development Goals (SDGs). Employing a qualitative approach supported by descriptive and comparative analysis, this research examines policy documents, existing financial reports, and case studies of Sharia-based green projects to assess their contribution to economic growth, environmental preservation, and social equity. The findings reveal that Sharia green financing has successfully mobilized substantial funds for renewable energy, sustainable infrastructure, and other environmentally friendly initiatives, while simultaneously adhering to the ethical and spiritual principles of maqasid al-shariah. This dual alignment highlights the unique position of Islamic finance in bridging faith-based values with global sustainability objectives. However, challenges remain in the limited availability of long-term data, the difficulty of measuring broader socio-economic impacts, and the gap between regulatory frameworks and practical implementation. This study contributes in three main dimensions. Practically, it provides recommendations for policymakers, Islamic banks, and investors to strengthen Sharia green financing mechanisms. Academically, it enriches the literature on the intersection between Islamic finance and sustainable development. Socially, it illustrates how Sharia-based financing can advance the SDGs while upholding the principles of justice, welfare, and environmental stewardship central to Islamic teachings. Overall, the research demonstrates that Sharia green financing holds significant potential to serve as both a religiously grounded and developmentally effective instrument for Indonesia’s sustainable future.