Islamic Green Finance and Renewable Energy in OIC Countries: Integrating Ethics and Sustainability

Abstract

The urgency of renewable energy development in OIC (Organization of Islamic Cooperation) countries is exacerbated by climate vulnerability and energy insecurity. Islamic green finance—rooted in sharī‘ah-compliant principles of risk-sharing, ethical investment, and environmental stewardship—offers a promising solution to bridge financing gaps in this critical sector. This conceptual study explores the potential of Islamic green finance to support renewable energy development, focusing on the alignment of Islamic legal principles with sustainability goals. Using a qualitative approach grounded in document analysis, the paper investigates the applicability of financial instruments such as green sukuk, mushārakah, and wakālah contracts in the context of energy transition. Findings indicate a strong theoretical compatibility, but practical implementation is hindered by regulatory fragmentation, limited technical capacity, and underdeveloped market infrastructure. The study proposes pathways including regulatory harmonization, capacity building, and public-private partnerships to unlock the full potential of Islamic green finance. By bridging the gap between ethics and environmental policy, this research contributes to both academic discourse and practical policymaking in sustainable finance across the Islamic world.