Integrating Shariah Principles with ESG for Sustainable Finance: A Comprehensive Framework

In this paper, we explore how economic policy to support sustainability can coordinate efforts to tackle climate risk, overcome environmental challenges and ensure human security. The financial system faces very significant risks posed by climate change, as well as the transition to a low carbon eco...

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Bibliographic Details
Published in:World Scientific Annual Review of Islamic Finance 2024, Vol.2
Main Author: Mohamed, Hazik
Format: Article
Language:English
Online Access:Get full text
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Summary:In this paper, we explore how economic policy to support sustainability can coordinate efforts to tackle climate risk, overcome environmental challenges and ensure human security. The financial system faces very significant risks posed by climate change, as well as the transition to a low carbon economy. As such, the ESG framework as it is needs to be enhanced in order to be itself effective and sustainable. Hence, we propose an enhanced ESG framework that is grounded in strong Islamic fundamentals to anticipate gaps that can be exploited. Considering human relationships with the natural world from the perspective of Islamic teachings holds great promise for rethinking resource management and preservation. A fundamental role of humans in Islam is that of trustees of creation. The need to achieve sustainable economic development globally and its transition to a low-carbon economy requires strong policies and initiatives to drive green and sustainable finance for the purpose of achieving public policy objectives effectively.
ISSN:2811-0234
2811-0226
DOI:10.1142/S2811023424500023