Integrating Green Sukuk and Cash Waqf Linked Sukuk, the Blended Islamic Finance of Fiscal Instrument in Indonesia: A Proposed Model for Fighting Climate Change

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Indonesia is the first global and retail sovereign Green Sukuk issuer in the world. Since its first issuance in 2018, Green Sukuk for four years has been issued seven times to finance and/or refinance the projects/programs of Eligible Green Sectors. Then, in order to support the development of social investment and productive waqf, the Government of Indonesia (GoI) also issues Cash Waqf Linked Sukuk (CWLS) by blending Islamic finance and impact investing for the Sustainable Development Goals (SDGs). CWLS is the first blended Islamic finance for the fiscal instrument in Indonesia which integrates Islamic commercial finance and Islamic social finance. In order to tackle climate change, this study promotes the integration between Green Sukuk and CWLS as well as adopting the Esham concept toward Perpetual Green CWLS as a new green financing alternative. This collaboration can be an innovative one in the future as a fiscal funding source to fight climate change which today becomes the development agenda priority in line with the intensified intension of extraordinary weather. Absolutely, climate change has brought a high-cost impact on vulnerable and low-income people. Along with efforts to the SDGs and Paris Agreement targets achievement, a financing gap holds in the route to tackle climate change. Therefore, by using a literature study on the best practice of Green Sukuk and CWLS in publications mainly sourced from the Ministry of Finance (MoF) Republic of Indonesia, this conceptual paper focuses on three issues, namely: (1) Describing Indonesia's sovereign Green Sukuk; (2) Describing the CWLS; (3) Explaining a proposed Perpetual Green CWLS as Islamic green financing alternative.