Chapter in Book

The urgent call to climate action has placed responsibility on all corporate sectors to contribute to carbon neutral and net zero emissions by 2050. An integral enabler to the corporate sector is the financial market. Green bond principles and other green standards have provided guidelines for financing climate-friendly projects referred to as green . The proliferation of green bonds since 2007 (CAGR of 58%) has driven the emerging sector ofgreen sukuk over the last five years as well. The green financing market, however, is incentivized through cheaper funding or lower return requirements, increasing the potential for unscrupulous actors and greenwashing. This qualitative study reviews trends in greenwashing cases, the key drivers to greenwashing, and whether regulatory robustness and more stringent governance would curb greenwashing violations in conventional and Islamic financial markets. We find that developed countries and corporates are taking advantage of weaker oversight and economic vulnerabilities of developing and lower-income countries as a means of arbitrage in the application of green principles. We also find that greenwashing violators suffer little to no significant repercussions when found guilty. Stronger international oversight is recommended, with more diligent green audit processes for corporates claiming green status. Banks that act as lead arrangers for corporate capital raising play a pivotal role in providing this oversight, incentivizing compliant green issuers and penalizing offenders through higher mark-ups. However, regulatory oversight and remedial action need to be significantly more effective and severe penalties implemented to act as a deterrent to curb greenwashing across international markets.

This chapter explores the transformative role of artificial intelligence (AI) in enhancing the collection and distribution of zakat funds. It delves into the utilization of AI for streamlining collection processes, accurate identification of eligible recipients, and ensuring effective fund allocation. Various AI applications are explored, such as predictive analytics, chatbots, and real-time monitoring, highlighting their impact on improving efficiency, transparency, and donor engagement. The challenges and ethical considerations inherent in integrating AI into religious and social welfare contracts are explored. The exploration concludes by emphasizing AI's potentila to revolutionize zakat management, aligning, technological advancements with the core principles of Islamic social welfare.

The idea of expressing the objectives of Islamic, law (al-Shari'ah), the maqasid al-Shari'ah, goes back to works of early prominent Muslim scholars Al-Juwayni (1979), Al-Ghazali (1970) and Al-Shatibi (1302H). However, in the time of these scholars and later, no research was under-taken to explore the potential of maqasid as a tool for the measurement of well-being of a society, while in the West, with the introduction of quantitative methods into human sciences, many indexes were developed to measure the well-being of a society such as the gross domestic production (GDP), Human Development Index (HDI), etc. See OCDE (1982) for more details. Most of these indexes are not comprehensive and do not include the social and psychological dimensions of human life. Moreover, they could not predict the devastating financial and economic crises that occurred in the last decade and before. Therefore, they came under severe critics Stiglitz (2009). In the last decade, Chapra (2009), referring to the work of Ibn Khaldun, pointed out that maqasid al-Shari'ah could be used as the components of a socio-economic system. This work revived the interest of Muslim scholars to explore the theoretical and practical potential of maqasid al-Shari'ah in social sciences.

The announcement of the SDGs in 2015 marked a dramatic shift in global development, culminating in an age of international cooperation where the international community bands together to tackle the world's most pressing challenges. This chapter discusses the peculiar connection between Islamic financing and the SDGs and focuses on the possible harmony between these two sectors. It emphasizes the need for significant financial resources to advance sustainable development. Researchers argue it is crucial to bring digital technologies together with Islamic finance to reach sustainable economic growth through innovations like artificial intelligence (AI), blockchain, and fintech. In addition, the chapter explains core principles of Islamic finance that conform to Shari'ah, which will eradicate poverty and promote conscientious consumption. Islamic finance opens the opportunity for financially and socially excluded groups, poverty reduction, and environmental sustainability through programs like renewable energy projects. However, SDG integration with Islamic finance still poses some challenges, namely, Shari'ah scholars' understanding of the SDGs, regulatory and operational difficulties, the necessity for innovation, and measuring nonfinancial benefits. Through case studies, the authors provide pragmatic insights into successful integration processes as well as practical lessons for the concerned parties. The chapter ends by making policy recommendations grounded on active support by governments, compulsory educational initiatives, new interesting Islamic finance products, and shared efforts (or undertakings) among various stakeholders. In short, this chapter positions Islamic finance as a potent catalyst for SDGs, furnishing a sustainable economic and social development framework while acknowledging and addressing challenges on the integration journey.

Research and innovation are crucial for the progress of the Islamic economy and finance, as they provide the foundation for its growth and long-term sustainability. Engaging in ongoing research, creates novel financial solutions that not only adhere to Shariah principles but effectively cater to the specific requirements of various markets and stakeholders in Muslim countries. This innovation is essential for the expansion of Islamic finance, as it guarantees accessibility to all sectors of society, including those who are unserved and underserved. Research also plays a crucial role in developing maqasid-driven financial solutions that promote financial inclusion and empower individuals and communities. By optimizing research and fostering innovation, Islamic finance has the potential to adapt and address contemporary difficulties while adhering steadfastly to its ethical and social justice values. Furthermore, research plays a pivotal role in the establishment of a strong regulatory framework that promotes the expansion of Islamic finance, guaranteeing its durability and stability. This is the process of establishing uniform standards across many countries, which enables more seamless transactions across borders and enhances the worldwide influence of Islamic finance. Research and innovation enhance the inclusivity and resilience of Islamic financial sectors, aligning them with the Islamic worldview that helps understand the universe, people, and their connection with Allah and serve as guidance on morality, social interactions, and influence our behaviour and decision-making. Islamic finance may contribute significantly to the sustainable development of Muslim nations by advocating for ethical investment, environmental stewardship, and social justice.

Islamic economics is ethical as its principles are derived from the religion Islam that gives paramount consideration to application of moral principles in all aspects of human lives. As such, there is no need to mention the word ethics with Islamic economics to describe its moral dimension since ethical values are inherently included in Islamic economics. This chapter provides a basic overview of the lex loci applicable to Islamic economics, which is Shariah, in order to understand the Islamic world view surrounding the subject and its economic teachings derived from tawheed. Furthermore, the differences between an Islamic economic system, on the one hand, and socialism and capitalism, on the other hand, are also provided, followed by a discussion of Islamic economic governance via the institution of hisbab and the practice of Islamic economics in classical and contemporary times. This chapter aims to provide readers with an understanding of Islamic economics by presenting the theoretical foundations undergirding it contemporaneous practical application.