THE ROLE AND IMPORTANCE OF GREEN ISLAMIC FINANCE MODELS IN SUSTAINABLE DEVELOPMENT

Abstract

This study examines the relationship between green Islamic finance models and the Sustainable Development Goals (SDGs), providing a comprehensive analysis based on global and Turkish examples. The core principles of Islamic finance prohibition of interest (riba), risk-sharing, asset-backing, and social justice are highly aligned with environmental and social sustainability objectives. Instruments such as green sukuk, murabaha, mudaraba, musharaka, waqf, and zakat-based projects are utilized to finance environmentally friendly investments, including renewable energy, energy efficiency, waste management, and sustainable agriculture. The literature review highlights the pioneering practices of Malaysia, Indonesia, and the United Arab Emirates at the global level, as well as the initiatives undertaken by participation banks and regulatory authorities in Türkiye. However, challenges such as lack of standardization, limited product diversity, and low investor awareness slow down the development process. The study identifies conceptual and practical gaps in the literature and provides recommendations for policymakers, financial institutions, and investors. Key suggestions include harmonizing Shariah-compliant green finance standards at the international level, developing environmental impact measurement criteria, diversifying products, and enhancing investor education activities. In conclusion, green Islamic finance models represent a strategic financial tool that can contribute not only to environmental sustainability but also to strengthening social justice and economic stability. Therefore, developing integrated strategies at both policy and implementation levels through a multi-stakeholder approach is of critical importance.