Ecologies of green finance: Green sukuk and development of green Islamic finance in Malaysia

Felicia HM Liu and Karen PY Lai
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Felicia HM Liu: Department of Geography, 4616King’s College London, UK; Department of Geography, 37580National University of Singapore, Singapore
Karen PY Lai: Department of Geography, 3057Durham University, UK

Environment and Planning A, 2021, vol. 53, issue 8, 1896-1914

Abstract: In this paper, we analyse the recent development of green sukuk (often referred to as an Islamic green bond) since its issuance in Malaysia in 2017, and critically evaluate whether it addresses some of the existing contradictions of green finance. Using a financial ecologies approach, we examine Malaysia's configuration of green sukuk as drawing from the existing international green bond regime, partnership with the World Bank, and Malaysia's own experience and expertise in Islamic finance, with the objective of building Kuala Lumpur's competitiveness as a global Islamic financial centre. Through documents analysis and interviews with key market actors in Kuala Lumpur and other financial centres, our findings point to the emergent international adoption of green sukuk . While this achieves Malaysia's state-building objectives, specifically through expanding Malaysia's sukuk market and advancing its status as a frontier of Islamic financial innovations, the potential for improving the current green bond regime has been more doubtful. A key limitation is the incorporation of existing Green Bond Principles, which enables not only green sukuk 's international acceptance but also renders it susceptible to greenwashing. By examining the intersection of different ecologies of green and Islamic finance, we reveal the contradictions and limitations of green sukuk in contributing to Malaysian state-building and climate action.

Keywords: Islamic finance; Malaysia; financial ecologies; green bond; sukuk (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:envira:v:53:y:2021:i:8:p:1896-1914

DOI: 10.1177/0308518X211038349

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