The Impact of Sharia-Based Green Investment on Community Welfare and Environmental Sustainability in Indonesia
DOI:
https://doi.org/10.70062/greeneconomics.v1i1.411Keywords:
Community Welfare, Environmental Sustainability, Income Inequality, Sharia-Based Green Investments, Suistainable DevelopmentAbstract
Environmental degradation and poverty remain pressing challenges in Indonesia, exacerbated by rapid economic growth and resource exploitation. The increasing demand for sustainable development has highlighted the need for alternative financial models that integrate both economic growth and environmental protection. Sharia-based green investments have emerged as a promising solution, offering a framework that aligns ethical considerations with sustainability goals. This study examines the impact of Sharia-based green investments on social welfare and environmental sustainability in Indonesia, with a focus on reducing income inequality and fostering community development. Using a mixed-method approach, including quantitative analysis of secondary data on green investment performance and qualitative interviews with key stakeholders, the research evaluates how these investments contribute to enhancing income equality, providing access to renewable energy, and promoting sustainable economic activities. Findings show that Sharia-based green investments not only improve income distribution, especially in rural areas and small businesses, but also contribute to environmental sustainability through renewable energy projects and eco-friendly infrastructure. The study also compares the environmental benefits of Sharia-based investments with conventional models, emphasizing their superior alignment with long-term sustainability goals. The research underscores the potential of Sharia-based green investments as a model for inclusive economic growth and environmental protection, supporting Indonesia’s progress toward achieving the Sustainable Development Goals (SDGs).
References
Alam, A., Ratnasari, R. T., Jannah, I. L., & Ashfahany, A. E. (2023). Development and evaluation of Islamic green financing: A systematic review of green sukuk. Environmental Economics, 14(1), 61–72. https://doi.org/10.21511/ee.14(1).2023.06
Alnabulsi, K., & Jreisat, A. (2024). Green finance on Islamic financial markets: A sustainable approach to growth. In 2024 International Conference on Sustainable Islamic Business and Finance, SIBF 2024. https://doi.org/10.1109/SIBF63788.2024.10883851
Anggraeni, V., Achsanta, A. F., & Purnomowati, N. H. (2023). Measuring opportunities: Transforming Indonesia's economy through utilizing natural resources for sustainable development through green economy indicators. IOP Conference Series: Earth and Environmental Science, 1180(1), 012011. https://doi.org/10.1088/1755-1315/1180/1/012011
Badowska, M., & Szkultecka-Dębek, M. (2023). Indicators affecting the quality of life of an individual and society. Journal of Health Policy and Outcomes Research, 2023(1), 11–20. https://doi.org/10.7365/JHPOR.2023.1.2
Badowska, S., & Szkultecka-Dębek, M. (2023). The multidimensional approach to quality of life and social inclusion in local communities. Social Indicators Research, 166(3), 1239–1256. https://doi.org/10.1007/s11205-023-03184-2
Basile, A., & Ferrari, G. (2024). ESG investing and sustainable corporate finance in Europe: A regulatory perspective. Journal of Cleaner Production, 448, 140872. https://doi.org/10.1016/j.jclepro.2023.140872
Billah, M. M., Hassan, R., Haron, R., & Zain, N. R. M. (2024). Islamic finance and sustainable development: A global framework for achieving sustainable impact finance. Routledge. https://doi.org/10.4324/9781003468653
Cadman, T., Chappel, B., Ahlström, H., Bose, A., Basak, B., Bradley, T., … Uz Zaman, K. A. (2022). Sustainable development and finance post-pandemic - future directions and challenges. In De Gruyter Handbook of Sustainable Development and Finance (pp. 653–665). https://doi.org/10.1515/9783110733488-028
Delle Foglie, A., & Keshminder, J. S. (2024). Challenges and opportunities of SRI sukuk toward financial system sustainability: A bibliometric and systematic literature review. International Journal of Emerging Markets, 19(10), 3202–3225. https://doi.org/10.1108/IJOEM-04-2022-0601
Global Ethical Finance Initiative. (2022). Financing a sustainable future: Integrating Islamic finance and ESG principles. Edinburgh: GEFI. https://www.globalethicalfinance.org/wp-content/uploads/2022/10/Financing_A_Sustainable_Future_Web.pdf
Habibullah, M. (2023). A holistic approach to green finance within maqāṣid al-shariah. Al-Maqasid: The International Journal of Maqāṣid Studies and Advanced Islamic Research, 4(2), 42–45. https://doi.org/10.33102/maqasid.v4i2.96
Höck, A., Klein, C., & Landau, A. (2020). The effect of green bond announcements on stock prices: Evidence from the US and Europe. Journal of Banking & Finance, 118, 105861. https://doi.org/10.1016/j.jbankfin.2020.105861
Irfany, M. I., Utami, A. D., Lubis, D., Ramadhini, F., Suwari, L. F., Maula, N. R., Fitriyatustany, & Haq, D. A. (2024). Islamic finance and environmental sustainability: Empirical insight from OIC countries. International Journal of Energy Economics and Policy, 14(6), 707–715. https://doi.org/10.32479/ijeep.17400
Johan, S. (2022). Complementary or substitute: Sharia financing, green financing, and sustainable development goals? International Journal of Sustainable Development and Planning, 17(2), 487–495. https://doi.org/10.18280/ijsdp.170213
Khalfi, M., & Saâdaoui, F. (2023). Banking efficiency: Basic concepts, forms, and specificities of Islamic finance. In Islamic Accounting and Finance: A Handbook (pp. 431–460). https://doi.org/10.1142/9781800612426_0015
Khan, S., Yahong, W., & Zeeshan, A. (2022). Impact of poverty and income inequality on the ecological footprint in Asian developing economies: Assessment of Sustainable Development Goals. Energy Reports, 8, 670–679. https://doi.org/10.1016/j.egyr.2021.12.001
Kismawadi, E. R., Irfan, M., Haron, R., & Masitah, M. (2024). Bridging finance and sustainability: Islamic financial institutions' contributions to the transition to sustainable energy. In Issues of Sustainability in AI and New-Age Thematic Investing (pp. 138–161). https://doi.org/10.4018/979-8-3693-3282-5.ch009
Liu, Z. (2023). The significance and path of promoting green finance under the concept of green development. Environmental Science and Engineering, 713–720. https://doi.org/10.1007/978-3-031-25284-6_76
Mahadi, N. F., Yunus, S. M., & Batubara, M. (2024). Fiqhi and fatwa rulings governing green finance. In Islamic Green Finance: A Research Companion (pp. 78–88). https://doi.org/10.4324/9781032672946-12
Othman, A. H. A., & Haron, R. (2024). Shari’ah instruments that facilitate Islamic green finance. In Islamic Green Finance: A Research Companion (pp. 144–157). https://doi.org/10.4324/9781032672946-20
Rahim, R., Rathore, H. S., Rabbani, M. R., & Alam, M. N. (2024). Maqasid al-Shariah and green finance: A theoretical framework on Islamic finance with sustainable development goals for a greener future. In 2024 International Conference on Sustainable Islamic Business and Finance, SIBF 2024 (pp. 255–261). https://doi.org/10.1109/SIBF63788.2024.10883847
Raimi, L., Abdur-Rauf, I. A., & Ashafa, S. A. (2024). Does Islamic sustainable finance support Sustainable Development Goals to avert financial risk in the management of Islamic finance products? Journal of Risk and Financial Management, 17(6), 236. https://doi.org/10.3390/jrfm17060236
Razali, N., & Hassan, R. (2024). Contributions of Islamic green finance to SDGs. In Islamic Green Finance: A Research Companion (pp. 24–32). https://doi.org/10.4324/9781032672946-5
Robiyanto, R., Nugroho, B. A., & Lako, A. (2020). Safe haven and performance of extension-Markowitz portfolio on Indonesian ethical investments. International Journal of Economic Policy in Emerging Economies, 13(3), 225–243. https://doi.org/10.1504/ijepee.2020.109050
Sabri, A., Aimon, H., & Amar, S. (2024). Economic growth and environmental degradation in Indonesia: The roles of investment, inflation, income inequality, fossil consumption, and poverty. International Journal of Sustainable Development and Planning, 19(5), 1941–1946. https://doi.org/10.18280/ijsdp.190532
Safitri, D., Fahrurrozi, Marini, A., Dewiyani, L., & Attas, S. G. (2023). The role of environmental degradation and green investment on the renewable energy production in ASEAN countries: Evidence using novel MMQR technique. Environmental Science and Pollution Research, 30(12), 33363–33374. https://doi.org/10.1007/s11356-022-24302-z
Sumargo, B., Kurniawan, R., Nasution, B. I., Firmansyah, A., Laksono, B. C., Gio, P. U., … Tarigan, V. C. E. (2024). Green infrastructure vulnerability and regional poverty reduction: New sustainable development recommendations based on a spatial clustering approach. Journal of Poverty. https://doi.org/10.1080/10875549.2024.2379769
Supriyadi, A. P., Fidhayanti, D., & Ramadhita. (2023). Green sukuk in Indonesia: Unraveling legal frameworks for sustainable Islamic bonds. El-Mashlahah, 13(2), 151–180. https://doi.org/10.23971/el-mashlahah.v13i2.7372
Szalai, I., & Czakó, K. (2023). The theoretical framework of sustainable financial development through literature outlook. Chemical Engineering Transactions, 107, 595–600. https://doi.org/10.3303/CET23107100
Tikadar, A. (2019). Concept of social indicators and quality of life in social sciences. In Multidimensional Approach to Quality of Life Issues: A Spatial Analysis (pp. 69–74). https://doi.org/10.1007/978-981-13-6958-2_5
Ahmed, U. (2024). The role of Islamic finance in sustainable and green economic development. Suhuf: Journal of Islamic Finance, 17(1), 1–15. https://doi.org/10.28944/suhuf.v17i1.6314
Yahman, Y., & Setyagama, A. (2023). Government policy in regulating the environment for development of sustainable environment in Indonesia. Environment, Development and Sustainability, 25(11), 12829–12840. https://doi.org/10.1007/s10668-022-02591-1
Zahroh, U. A., & Najicha, F. U. (2022). Problems and challenges on environmental law enforcement in Indonesia: AMDAL in the context of administrative law. Indonesian State Law Review, 5(2), 53–66. https://doi.org/10.15294/islrev.v5i2.46511
Zulham, T., Dawood, T. C., Farlian, T., Saputra, J., Juliansyah, R., & Hadi, F. (2021). The nexus of human development index, economic and population growth on environmental degradation in Aceh Province, Indonesia. WSEAS Transactions on Environment and Development, 17, 314–320. https://doi.org/10.37394/232015.2021.17.31
