Islamic Finance and Sustainable Development: Key Ethical Features and Proactive Initiatives  Promoting Financial Inclusion: Islamic Finance and Sustainable Development

Laura Maria Franciosi

doi:10.13135/2421-2172/11175

Authors

Laura Maria Franciosi University of Bologna

DOI:

https://doi.org/10.13135/2421-2172/11175

Keywords:

Islamic finance, Sustainable Development (SDGs), Green or ESG Sukuk, Fintech, South-East Asia, Sub-Saharan Africa

Abstract

The 17 Sustainable Development Goals set forth by the UN 2030 Agenda require the adoption of proactive initiatives by countries in a global partnership and by companies, consumers, and citizens. SDGs recognise that ending poverty is strictly intertwined with strategies to reduce inequality and spur economic growth, all while tackling climate change and preserving the environment. In this context, the lack of financial inclusion increases poverty and frustrates economic development since access to essential financial services helps people nurture their education and financial plans, and financial inclusion can help alleviate poverty and lift economic development. The study highlights how, within this scenario, Islamic finance can play an important role in promoting sustainable and ethical development and financial inclusion, specifically in environmental sustainability, by increasing the so-called “green sukuk” or “ESG Sukuk.” Accordingly, the article analyses, from the comparative law perspective, the context of two Asian countries, Malaysia and Indonesia, that are pivotal markets for developing Islamic financial instruments and that of Sub-Saharan Africa, highlighting the potentialities of Islamic finance to foster sustainable development (in particular, SDG-01 No Poverty; SDG-05 Gender Equality; SDG-08 Decent Work and Economic Growth; SDG-09 Industry Innovation and Infrastructure; SDG-10 Reduced Inequalities; SDG-11 Sustainable Cities and Communities). It also provides significant examples of initiatives adopted by Malaysia and Indonesia, grounded on the tools of Islamic finance, to support sustainable economic and social development in sub-Saharan Africa. As a result, the article stresses, through the adoption of the comparative law methodology, the importance of a proper transnational legal framework – in a broad sense, including legal language and formation of scholars and practitioners - to promote Islamic finance and financial inclusion: such aspect tends to be neglected in current literature, seemingly more focused on techno-economic aspects.

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Islamic Finance and Sustainable Development: Key Ethical Features and Proactive Initiatives Promoting Financial Inclusion