Islamic Finance Conference in Jakarta Highlights Halal and Thayyib Concepts as Solutions for Climate Financing

Jakarta, MINA – Greenpeace Indonesia and the Ummah for Earth Alliance, in collaboration with the Indonesia Banking School, launched an Islamic finance campaign in Jakarta on Thursday.

The conference was attended by various stakeholders, including Bank Indonesia, the Financial Services Authority (OJK), and the National Committee for Sharia Economics and Finance (KNEKS).

Rahma Shofiana, Project Lead Ummah for Earth, explained that the campaign aims to foster dialogue among stakeholders and connect climate solutions with Islamic finance principles.

“Islamic finance can be a strategic solution for climate action financing. Through this dialogue, we hope the concept of Islamic finance will gain greater recognition in supporting the transition to sustainable energy,” said Rahma.

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Dr. Hayu Prabowo, Chairman of the Environmental Preservation and Natural Resources Agency at the Indonesian Ulema Council (LPLH-SDA MUI), emphasized the unique potential of Islamic finance to support climate action through its halal (permissible) and thayyib (wholesome) principles.

“As a manifestation of Islam as a blessing for all creation, Sharia finance, with its halalan-thayyiban principles, does not only focus on financial profit but also delivers social and environmental benefits,” he explained.

Tariq Al-Olaimy, Islamic Finance Advisor for the Ummah for Earth Alliance, emphasized the critical role of Islamic finance in supporting the global energy transition. 

“With projected assets reaching $6.7 trillion by 2027, allocating just 5% to renewable energy could mobilize $400 billion for climate solutions by 2030,” he explained.

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In Indonesia, the country’s pioneering green sukuk program has helped prevent more than 974,000 tons of CO2 emissions annually. ESG sukuk reaching $9.9 billion in the first half of 2024 alone demonstrates the growing momentum of sustainable Islamic finance.

The event is a continuation of the launch of a new report titled ‘Islamic Finance and Renewable Energy’, highlighting the potential of Islamic finance to accelerate the renewable energy transition. The report, a collaboration between Greenpeace MENA, Ummah for Earth Alliance, and the Global Ethical Finance Initiative (GEFI), reveals that allocating 5% of the $4.5 trillion Islamic finance sector’s assets to renewable energy projects could raise $400 billion for climate financing.

The report’s findings also underscore the alignment of Islamic finance principles—emphasizing ethical investment, social responsibility, and environmental stewardship—with the urgent need for sustainable energy investments.

With the annual renewable energy funding gap reaching $5.7 trillion, the Islamic finance sector is strategically positioned to bridge this gap and help address the world’s three major crises: climate change, pollution, and biodiversity loss. []

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Mi’raj News Agency (MINA)