The Role of Green Islamic Sukuk in Achieving Environmental Sustainability in Indonesia: Reality, Challenges, and Future Prospects

This research paper aims to highlight the role of green Islamic sukuk in achieving environmental sustainability, with reference to the experience of Indonesia, one of the leading countries in the field of Islamic finance. The study adopts a descriptive-analytical approach by describing and analyzing the key concepts and procedures related to green sukuk in Indonesia. The study found that green sukuk have significantly contributed to financing sustainable projects, helped attract foreign investment, and strengthened Indonesia’s commitment to the Sustainable Development Goals. It also showed that the lack of awareness among financial institutions about environmental risks, in addition to the weak role of the government in supporting environmentally friendly projects, are among the main obstacles hindering the effective implementation of green sukuk in Indonesia. Accordingly, the study recommends developing mechanisms to monitor environmental performance and increasing financial incentives to support this sustainable financing model.