GREEN ECONOMY AND ISLAMIC-BASED ENVIRONMENTAL SUSTAINABILITY : A LITERATURE REVIEW OF CHALLENGES AND OPPORTUNITIES IN THE MODERN ERA

Abstrak

This literature review explores the philosophical and ethical convergence between Green
Economy and Islamic-based sustainability principles, analyzing challenges and identifying
implementation opportunities in the modern era, as a response to the global
environmental crisis driven by conventional economic models. The analysis confirms a
strong ethical alignment, where Maqāṣid al-Sharī‘ah serves as the primary normative
framework, elevating environmental protection (Hifẓ al-Bī‘ah) to an essential need
(ḍarūriyyah), fundamentally rejecting exploitation and waste (Isrāf). Islamic financial
instruments, particularly Green Sukuk, have proven effective in mobilizing commercial
capital for green projects, while social instruments such as Waqf (Productive Cash Waqf)
and Zakat (Zakat) offer inclusive solutions to the social dimension of ESG at the
grassroots level. However, practical implementation faces significant challenges,
particularly the lack of regulatory harmonization between Islamic financial institutions and
environmental authorities, as well as low green financial literacy that hinders the utilization
of social instruments and long-term financing. A key criticism of this review is the
identification of substantial empirical gaps, as quantitative evidence regarding the actual
impact of Sharia instruments on specific sustainability indicators remains limited,
highlighting the urgent need to develop integrated ESG-Shariah Performance Metrics and
a National Roadmap. Therefore, while the Islamic theoretical framework offers strong
ethical advantages, the success of the Green Economy transition is largely determined by
the ability of stakeholders to bridge the normative and empirical gaps through regulatory
innovation and enhanced impact accountability.