Sustainable development and Islamic finance - A tool to extricate the nature.

Byline: UROOJ

There is no doubt in the fact that financial sector play a pivotal role in the socio-economic development of any nation as it mobilize and allocate resources necessary for socio-economic progress. But the development of socio-economic sector through Islamic finance is quite different from the conventional modes of financing as interest is prohibited in Islamic finance where generating money by money is also prohibited.

According to Shariah, money itself has no value and the risk involved in investment of money should be divisible among all stakeholders ensuring increase in wealth through productive activities. In Islamic finance investment in gambling, unethical industries like tobacco and speculator activities are considered to be illegal where avoidance of uncertainty is only permitted through equity as Islam believes in comprehensive development of an economy that emphasizes social welfare by serving the public interest of maximizing benefit and reducing harm to the society. Therefore, firms in the society have a dual objective of generating economic gains along with a positive impact on society. There is a strong nexus between Islamic finance and nature. Islamic principles always intensify the worth of sustainable use of resources by discouraging the over exploitation, realizing the value of the environment even if it is in no one's private ownership is vital for fostering a culture of care and responsibility towards the environment. The steps towards preserving and conserving the climate are fundamental to promote environmental sustainability. The first step in this dimension recognition of climate as an asset endowment by Allah and its use responsible use.

The financing of firms working with an objective to achieve sustainable environment during production is a challenging issue. The acceptability and growth in sustainable green finance require work in two domains i.e. creating a conducive environment for mobilizing capital for financing climate-friendly projects or firms and developing environment-friendly innovative financial instruments. The conducive environment means the development of a green finance ecosystem involving stakeholders that encourage the green businesses through regulatory frameworks and ensure the availability of financial instruments along with financing and an advisory mechanism. Sustainable Islamic finance shares similar kind of principles as that of sustainable finance which means financial...