A Systematic Review on the Green Sukuk after Paris-Agreement

Abstract

This paper aims to identify, critically evaluate, and synthesize extant literature on Islamic green bonds. This study also identifies gaps and limitations in green Sukuk literature to highlight areas for further development of knowledge in this field of study. The study utilized a scoping review to identify all relevant literature from the EBSCO Host, Emerald, and Google Scholar databases. Our findings suggest that the concept of green sukuk is still emergent, and there are several gaps regarding the technical definitions and green taxonomy that need to be addressed. In addition, we discovered that there is a significant demand for sustainable investments, and the potential for liquid Islamic economies to supply this demand makes green sukuk an attractive investment option. Furthermore, the limitations of conventional green bonds in attracting Islamic investment further support the development of green sukuk. However, we also identified factors that hinder the development of green sukuk. The emergent nature of the concept and the lack of consistent green taxonomy for sukuk create a lack of understanding and hinder the development of effective legal frameworks. To overcome these challenges, we recommend that academics and Islamic scholars work towards developing a clear green taxonomy for sukuk. Such a taxonomy would help regulators develop a stronger legal framework for green sukuk and facilitate the growth of the market.