Green Sukuk Research Articles

Green Sukuk in Indonesia: Unraveling Legal Frameworks for Sustainable Islamic Bonds

Green sukuk is a contemporary-era sharia investment revolution that accommodates environmental aspects. Integrating Sustainable Financing in green sukuk can be an alternative investment platform contributing to sustainable development. The concept paradigm is relevant for strengthening the proportional construction of green sukuk law in Indonesia. The study aimed to analyze the concept of sustainable financing as the legal basis for implementing green sukuk in supporting sustainable development programs in Indonesia. The study used normative legal research methods. This research approach used a conceptual approach through reasoning the concepts of sustainable financing, green sukuk, and other concepts relevant to the topic of study to strengthen the discussion argument. The study showed that there are 2 (two) components of the relevance of the Sustainable Financing paradigm as the basis for implementing green sukuk in Indonesia. First, the implementation of green sukuk in various countries has rules that accommodate sustainable financing in response to climate change problems. Second, the sustainable financing Paradigm is relevant as a source of green sukuk legal construction to strengthen the policy basis for implementing environmentally sound investment in Indonesia. The urgency of the regulation is to increase investment commitments that can increase environmental resilience, alleviation of social problems and business transparency in contributing to sustainable development in Indonesia.

Eight Years of Research Related to the Green Sukuk in the Global Stock Exchange Market to Support the Implementation of SDG: A Bibliometric Review

The awareness of investors that only invest in green instruments has been increasing recently. Green sukuk was an investment that followed the Sharia principle and promoted environmental preservation. This study aims to analyze green sukuk in previous studies as an alternative financing for green infrastructure development in Indonesia. This study used a bibliometric method by taking secondary data from meta-data papers from Scopus and SCI. Forty papers from Scopus and 29 from SCI during 2016-2023 were taken as samples. Data were analyzed with Vosviewer and Biblioshiny. The results of this study show that the energy was closely related to the topic of green sukuk. Energy was mostly used in the abstract and titles of papers. Moreover, the abstract and the title showed that the word sustainable was used frequently, implying that the energy power plant could become an underlying asset for green sukuk due to its sustainable revenue. However, the government should take action to create regulations that could support the green project as an underlying asset of Green Sukuk.

The Effect of Dividends and Capital Gains on Underlying Assets in Green Sukuk

Underlying assets are one of the required instruments for issuing sukuk to attract investors to invest in the Sharia capital market. Green sukuk is one of the sharia investment instruments issued by companies for retail sukuk products and has the aim of obtaining funding through debt securities or securities to encourage the company's growth and development performance through underlying assets. This research aims to determine the effect of dividends and capital gains on the underlying assets in retail sukuk. This research method uses a quantitative method with a descriptive approach. In collecting data, the random sampling method was used, where the research determined the number of samples using the Slovin method to know the number of samples and determine the sample categories for distributing questionnaires. The results of dividend research do have a significant influence on underlying assets. Based on the graph, dividend distribution has increased every year, thereby influencing the growth performance of underlying assets. A company will be said to be good if the income it earns is greater than its expenses, so it affects the company's assets. While capital gains also have a significant effect on the underlying assets in retail sukuk, it does not rule out the possibility that they will be influenced by other factors that are related to capital gains. Underlying aset merupakan salah satu instrumen yang diperlukan dalam penerbitan sukuk untuk menarik minat investor berinvestasi di pasar modal syariah. Green sukuk merupakan salah satu instrumen investasi syariah yang diterbitkan perusahaan untuk produk sukuk ritel dan bertujuan untuk memperoleh pendanaan melalui surat utang atau surat berharga untuk mendorong pertumbuhan dan perkembangan kinerja perusahaan melalui aset yang mendasarinya. Penelitian ini bertujuan untuk mengetahui pengaruh dividen dan capital gain terhadap underlying asset pada sukuk ritel. Metode penelitian ini menggunakan metode kuantitatif dengan pendekatan deskriptif. Dalam pengumpulan data digunakan metode random sampling, dimana penelitian menentukan jumlah sampel dengan menggunakan metode Slovin untuk mengetahui jumlah sampel dan menentukan kategori sampel untuk penyebaran kuesioner. Hasil penelitian dividen memang mempunyai pengaruh yang signifikan terhadap aset dasar. Berdasarkan grafik, pembagian dividen mengalami peningkatan setiap tahunnya sehingga mempengaruhi kinerja pertumbuhan aset dasar. Suatu perusahaan akan dikatakan baik apabila pendapatan yang diperoleh lebih besar dibandingkan dengan pengeluarannya, sehingga mempengaruhi kekayaan perusahaan. Meskipun capital gain juga berpengaruh signifikan terhadap aset dasar sukuk ritel, namun tidak menutup kemungkinan hal tersebut akan dipengaruhi oleh faktor lain yang terkait dengan capital gain.

Current Issues on the Transition to a Sustainable Economy in the European, Italian and Middle East Framework: Green Bonds Standards and Greenwashing

The Italian Constitutional amendments (artt.9 and 41) represent an implementation of the UN Sustainable Development Agenda in the European framework. The package of measures adopted by the EU in this context, outlines the importance of sustainable finance strategy, aimed at financing the transition towards a sustainable economy. A tool to enable the pursuit of this transition is Green Bond. The EU Commission launched a taxonomy proposal aimed at creating Green Bonds quality standards and certifications, because the existing industry standards are still based on definitions of green projects that are not sufficiently uniform, rigorous or comprehensive. The adoption of uniform universal standards for the definition of green projects could also contribute to stop “greenwashing”(the practice of falsely attributing green qualities to an investment which in reality does not possess them). For example a recent Italian decision (Alcantara vs Miko) stated that the rules for communication on sustainability are different from those on traditional advertising because sustainability should be real and not a façade. This study examines the possibility of a uniform adoption of standards at EU level and compares the European Green Bond standards with other similar initiatives, such as the Shari’ah-compliant Green Sukuk. Italian Constitution, UN Sustainable Development, ESG Principles, Sustainable Finance, Green Bond, EU Taxonomy Regulation, Green Bond Standards, Greenwashing, Shari’ah, Green Sukuk

Modeling dependence structure between green sukuk spread in Malaysia and the uncertainty factors before and during the COVID-19 pandemic

Purpose This paper aims to analyze the dependence structure between the Green Sukuk Spread in Malaysia and uncertainty factors from January 1, 2017, to May 23, 2023, covering two main periods: the pre-COVID-19 and the COVID-19 periods. Design/methodology/approach This study contributes to the current literature by explicitly modeling nonlinear dependencies using the Regular vine copula approach to capture asymmetric characteristics of the tail dependence distribution. This study used the Archimedean copula models: Student’s-t, Gumbel, Gaussian, Clayton, Frank and Joe, which exhibit different tail dependence structures. Findings The empirical results suggest that Green Sukuk and various uncertainty variables have the strongest co-dependency before and during the COVID-19 crisis. Due to external uncertainties (COVID-19), the results reveal that global factors, such as the Infect-EMV-index and the higher financial stress index, significantly affect the spread of Green Sukuk. Interestingly, in times of COVID-19, its dependence on Green Sukuk and the news sentiment seems to be a symmetric tail dependence with a Student’s-t copula. This result is relevant for hedging strategies, as investors can enhance the performance of their portfolio during the COVID-19 crash period. Originality/value This study contributes to a better understanding of the dependency structure between Green Sukuk and uncertainty factors. It is relevant for market participants seeking to improve their risk management for Green Sukuk.

Green Sukuk or Green Bonds: A Comparative Study of Diversification and Hedging Prospects

This study employs the wavelet coherence and the spillover index methodologies to compare time-varying relationship between green sukuk (GSI) and green bonds (SPGB) with S&P 500, FTSE 100, KBW NASDAQ Financial Technology Index and Bitcoin between October 2019, and December 2022. While the predominant tonality of the coherence of GSI and SPGB was weak, GSI and SPGB failed to offset spillover during the covid-19 pandemic. Overall, GSI exhibited superior diversification and hedging performance. The spillover index results unveiled the influence of bearish market conditions on the intensity of market connectedness, prompting temporal transmission of risks between markets which can last up to eight days following the emergence of a shock. GSI slightly outperformed SPGB in portfolio diversification amid low total market connectedness, less net spillover, and less net-pairwise spillover as revealed by the findings of the spillover index. A combination of GSI or SPGB with S&P 500, FTSE 100, KBW NASDAQ Financial Technology Index, and Bitcoin under the same investment portfolio is likely to offer long-term investors diversification and hedging opportunities. Keywords: green sukuk, green bond, co-movement, spillover, wavelet, risk management.

DETERMINANTS OF INVESTOR BEHAVIOR IN GREEN SUKUK ON THE INDONESIAN ISLAMIC DIGITAL BANKING PLATFORM TOWARDS SUSTAINABLE FINANCE ASEAN SUMMIT 2023

As the leader of the 2023 ASEAN Summit, Indonesia has put forward one of itsideas, namely, regarding sustainable finance. One of the sustainable finance schemesoffered by the government is green sukuk. Islamic digital banking platforms in Indonesiainclude platforms that facilitate online purchases of green sukuk for investors. Individualdecision-making or intention in carrying out economic activities is often influenced byvarious factors, one of which is the Unified Theory of Acceptance and Use ofTechnology (UTAUT) model. This study aims to analyze the determinants of individualbehavior as investors in green sukuk investment through the Islamic digital bankingplatform in Indonesia. The study population consisted of the people of Central Java, anda sample of 125 respondents was selected using purposive sampling. Data analysis usingStructural Equation Modeling-Partial Least Square (SEM-PLS). The results showed thatEffort Expectancy and Social Influence had an insignificant effect and had a positiveand negative effect, respectively. Meanwhile, Facilitating Condition and PerformanceExpectancy have a positive and significant influence on Behavioral Intention.Keywords: green sukuk, sharia digital banking, sustainable finance, UTAUT

Do Determinants of Behaviors Influence the Intention to Invest in Green Sukuk?

Do Determinants of Behaviors Influence the Intention to Invest in Green Sukuk?

An empirical study of the effects of green Sukuk spur on economic growth, social development, and financial performance in Indonesia

An empirical study of the effects of green Sukuk spur on economic growth, social development, and financial performance in Indonesia

A Systematic Review on the Green Sukuk after Paris-Agreement

This paper aims to identify, critically evaluate, and synthesize extant literature on Islamic green bonds. This study also identifies gaps and limitations in green Sukuk literature to highlight areas for further development of knowledge in this field of study. The study utilized a scoping review to identify all relevant literature from the EBSCO Host, Emerald, and Google Scholar databases. Our findings suggest that the concept of green sukuk is still emergent, and there are several gaps regarding the technical definitions and green taxonomy that need to be addressed. In addition, we discovered that there is a significant demand for sustainable investments, and the potential for liquid Islamic economies to supply this demand makes green sukuk an attractive investment option. Furthermore, the limitations of conventional green bonds in attracting Islamic investment further support the development of green sukuk. However, we also identified factors that hinder the development of green sukuk. The emergent nature of the concept and the lack of consistent green taxonomy for sukuk create a lack of understanding and hinder the development of effective legal frameworks. To overcome these challenges, we recommend that academics and Islamic scholars work towards developing a clear green taxonomy for sukuk. Such a taxonomy would help regulators develop a stronger legal framework for green sukuk and facilitate the growth of the market.

Instrumen Green Sukuk Dalam Mendukung Pembangunan Infrastruktur

Green sukuk is a new financial instrument designed to help Indonesia fulfill its commitment to growth in accounting flows in the economy but is also important for sustainable development that is in line with environmental welfare efforts. State development funding is the main thing in infrastructure development in various countries. The government will finance several road and bridge infrastructure developments using state sharia securities (SBSN) aka sukuk. The development of sukuk in Indonesia has always increased from 2013 to November 2018. Basically, the majority of Indonesians are Muslims and what is the strategy for developing sukuk as a sharia capital market product so that it plays a significant role in infrastructure development in Indonesia. Analysis is used to provide a clear picture starting from the benefits of sukuk and the role of sukuk in development. The results of the study show that the planning process for issuing Green Sukuk aims to align programs to ensure synergy/convergence of all government and community activities in optimizing sukuk development. Issuance of "Green Sukuk" as an Effort to Increase the Sukuk Market Share. As a new product, Green Sukuk still faces several obstacles. Among other things, clear and specific regulations governing Green Sukuk are needed. As well as creating a sharia basis regarding the issuance of Green Sukuk. The second strategy is to form an APS (Accelerated Sukuk Development) Team. This team is a forum or organization that was formed to accommodate the acceleration and growth of sharia bonds or sukuk.

Green Sukuk Development Strategy in Indonesia: ANP-SWOT Approach

<p><em>Green sukuk are State Sharia Securities (SBSN) that put forward the concept of financing programs for environmentally friendly projects. However, since the issuance of this instrument, the number of green sukuk is still small compared to other SBSNs. This study aims to identify strengths, weaknesses, opportunities, threats, and solutions and develop strategies for developing green sukuk in Indonesia. The Analytic Network Process with a SWOT (Strength-Weakness-Opportunity-Threat) network structure is used. Respondents in the study amounted to five experts, consisting of academics, regulators, and practitioners. The results show that opportunities are a top priority in supporting the development of green sukuk. The most influential variables of strengths, weaknesses, opportunities, and threats are green sukuk which impacts reducing greenhouse emissions and preserving the environment. The number and types of funded projects are limited, increasing public awareness of environmentally friendly sustainable lifestyle trends and reputational risks. The priority strategy for developing green sukuk in Indonesia is increasing awareness of the issue of climate change.</em></p>

Policy approach adopted for issuance of Green Sukuk: is priority given to priority needed areas?

PurposeGreen Sukuk (GS) is a recent innovation that has the potential to serve humankind in sustainable development. However, its potential can only be achieved if the proceeds of GS are used for the priority areas needed. Therefore, the purpose of this study is to find out, using selected GS issued to determine whether the proceeds of GS are actually given to the needed areas.Design/methodology/approachThis is qualitative research utilizing case studies where the “priorities given” areas are observed through information collected from the library that consists of primary and secondary sources, such as statutes, books, articles and internet sources, while “priorities needed to issue GS” areas are determined through information collected from Al-Quran and Hadiths to derive conclusions.FindingsThe outcome of this study reveals some untouched areas that needed immediate attention where GS can be implemented. This study recommends implementing GS for the plant, agriculture, forests, road, water, animal and others. One example in this regard is to create “forest sukuk,” which is a tool for financing forest preservation.Originality/valueIt is anticipated that, via the outcome of this research, GS issuance frameworks can be enhanced, especially in revising the areas in which Sukuk proceeds can be used, and it will provide guidance to the potential GS issuers to choose financing projects.

Development and evaluation of Islamic green financing: A systematic review of green sukuk

The threat of the global climate crisis demands improvement and adjustment from various sides, including the financial sector. Islamic finance responds to environmental responsibility by presenting environmentally friendly financing products in green sukuk. This study aims to show the development trend of the number of publications in green sukuk and systematize the results of studies that explain the development and evaluation of the emergence of green sukuk investments. This study analyzed 15 publications on green sukuk during the 2016-2022 years indexed by the Scopus database. As for methodology, the descriptive analysis was used to explain the green sukuk data quantitatively; the synthesis analysis was used to describe data based on four directions (the development of models (10 sources), opportunities (12 sources), challenges (12 sources), and evaluations of green sukuk (10 sources). Preferred Reporting Items for Systematic Review and Meta-Analyses standard were used to choose samples for this investigation. The green sukuk challenge is dealing with the sukuk market after the pandemic. Several evaluation findings regarding managing commitment from the government and investors for the renewable energy sector and efforts to provide low-cost sukuk financing and risk minimization are found. Green sukuk demands efficient management to be more viable, competitive, and attractive to investors if the operational area supports it. Green sukuk projects face expanding green funding, global climate financing, managing renewable energy, and validating greenhouse gas emissions. The green stock market reaction requires coordination amongst economic subsectors.

THE EXISTENCE OF GREEN SUKUK AS A SUSTAINABLE ISLAMIC FINANCIAL INVESTMENT INSTRUMENT

AbstractThe purpose of this research is to see the role and urgency of green sukuk, in supporting sustainable Islamic finance. The heat of the issue of climate change and concern for environmental sustainability is currently a very serious conversation. The presence of green sukuk in addition to innovation in the investment sector in Islamic finance is also a form of support for sustainable development. This research applies a qualitative method with a literature study approach coupled with analysis, this research can be concluded that green sukuk has the potential to be further developed in Indonesia and green sukuk has a major role in realizing resilience to climate change as seen from the development of green projects such as drought management, flood mitigation, and food security.Keywords: Green Sukuk, Islamic Finance, Sustainability

Examining the Purchase Intentions of Indonesian Investors for Green Sukuk

The purpose of this paper is to investigate the impact of functional, social, emotional, religious, and knowledge values on customers’ intentions to purchase green sukuk (Islamic bonds) products. This study employs the Theory of Consumption Value (TCV) and analyzes data from a sample of 300 respondents using the Partial Least Squares Structural Equation Model (PLS-SEM). The results suggest that these values significantly influence the choice to purchase the products. The study is limited to the western area of Indonesia, one of the most populated and dominated economic powers in the country, and focuses specifically on green sukuk using TCV. Nevertheless, it provides valuable insights for understanding the determinants that stimulate potential investors in purchasing green financial products in Islamic finance industry, which has emerged as an important element in the country’s economic engines.

Financing Biofuel Through Green Sukuk Corporate: Stage, Potential, and Maturity

Climate mitigation and adaptation policy financing have emerged as a critical topics in climate discussions. Effective financing schemes are often debated as potential mitigation measures, with the proceeds going toward adaptation activities. This research aims to investigate the viability of green sukuk corporate as a source of financing for biofuel development initiatives in Indonesia. A forecasting process, indexation, and early warning system (EWS) method are used to test the model to assess possible risks at a specific maturity level. In this study, factor variables include GDP, Inflation, the Jakarta Islamic Index (JII), sukuk corporate outstanding, and accumulated sukuk corporate issued. The main findings of this study suggest that to generate sustainable biofuel finance, three-stage models/concepts must be built; the commitment to business as usual, the greenhouse gas mitigation stage, and the debt repayment stage. In terms of potential, the trend of green corporate sukuk is toward greater participation by sovereigns and non financial corporations. In terms of maturity, corporate green sukuk requires a longer repayment period than conventional bonds, with a time tenor of 3–5 years being suitable. Finally, we show that the issuance of green corporate sukuk is supported by macroeconomic stability. The bond scheme can be repaid and carried out to provide sustainable benefits for renewable energy.

Analysis of Green Sukuk Potential Against Green Infrastructure in Bekasi City

The Republic Indonesia Government in realizing the welfare has a fundamental role that is realized through economic and infrastructure development in various cities in Indonesia. The problem faced by Indonesia in realizing this development is how to keep infrastructure development in line with efforts to preserve the environment, and this is also one of the sustainable development goals. In this study using qualitative descriptive method. Case study that uses the object of research, is City of Bekasi-West Java. Data obtained through interviews with Bekasi City Government officials, documentation and literature studies. The analysis carried out is a SWOT analysis. Based on this research, it proves that Bekasi City, when viewed from geographical aspect, regulations, and existing legal aspects, is able to issue sukuk and carry out green infrastructure development with financing from the green sukuk. However, the reality is, until now there has been no green infrastructure development in Bekasi City that uses financing sources from sukuk or green sukuk. The existing green infrastructure in Bekasi City is a project of several ministries and is not a project of Bekasi City itself.

Development of State Green Sukuk as A Government Effort to Realize Green Environment

Development of State Green Sukuk as A Government Effort to Realize Green Environment

Green sukuk in Saudi Arabia: Challenges and potentials of sustainability in the light of Saudi Vision 2030

This research aimed to provide insights into the green sukuk in Saudi Arabia regarding its challenges and potential of sustainability in the light of Saudi Vision 2030 for financing green projects. Moreover, it examines the current framework adopted by the Saudi Electricity Company (SEC) for facilitating transition to a low–carbon economy and circular economy, empowering communities, and enabling responsible business practices. Due to the nature of the topic, the research followed the descriptive research design. The results indicated that the issuance of green sukuk faces some challenges including lack of a clear definition, lack of awareness of its benefits, absence of a standard for measuring it, lack of institutional capacity, and the long time required to structure and legalize it. Consequently, a clear definition and measurement standard should be presented. Furthermore, the results of this research have implications for researchers, governments, policymakers, industries, businesses, investors and regulators regarding the development and raising of green sukuk.