Integrating ESG and Maqashid Syariah for Sustainable Islamic Finance in Indonesia

Delta Khairunnisa; Suhel; Imam Asngari

doi:10.37641/jimkes.v13i6.4025

Authors

Delta Khairunnisa Politeknik Negeri Sriwijaya, Indonesia
Suhel Universitas Sriwijaya, Indonesia
Imam Asngari Universitas Sriwijaya, Indonesia

DOI:

https://doi.org/10.37641/jimkes.v13i6.4025

Keywords:

ESG, Green Sukuk, Islamic Finance, Maqashid Sharia, Sustainable Investment

Abstract

The global financial sector has shifted toward sustainability, emphasizing environmental, social, and governance principles alongside ethical frameworks like Islamic law objectives. This study explores the integration of environmental, social, and governance principles with Islamic law objectives to develop sustainable Islamic financial investment strategies in Indonesia. As the world’s largest Muslim-majority country, Indonesia offers significant potential for aligning these principles with its growing Islamic finance market. The research employs a qualitative approach, utilizing a systematic literature review and thematic content analysis to examine relevant academic articles, institutional reports, and policy documents. Findings reveal a strong conceptual alignment between environmental, social, and governance principles and Islamic law objectives, particularly in environmental preservation, social justice, and ethical governance. Practical applications include Green Sukuk, with Indonesia issuing over six billion dollars since 2018, and waqf sukuk, supporting social welfare projects. However, challenges such as low awareness and regulatory gaps hinder broader adoption. This study proposes a conceptual framework to integrate these principles, enhancing Indonesia’s position as a global leader in sustainable Islamic finance. This study recommends collaboration among regulators, industry players, and academics to develop standardized guidelines, fostering a financial ecosystem that balances profitability, ethical values, and sustainability.

Downloads

Download data is not yet available.

References

Abozaid, A. (2016). The internal challenges facing Islamic finance industry. International Journal of Islamic and Middle Eastern Finance and Management, 9(2), 222–235.

Adawiah, A. M., Fahmi, M. A., & Anshori, I. (2025). Musyarakah dalam kerangka ESG dan Maqashid al-Shariah: Strategi keuangan syariah untuk mendukung tujuan pembangunan berkelanjutan (SDGs). SAUJANA: Jurnal Perbankan Syariah dan Ekonomi Syariah, 7(2), 1–23.

Agustin, F., Muhtadi, R., & Sahal, S. (2023). The importance of implementing environment, social and governance (ESG) and Maqasid Sharia-based Islamic finance in Islamic bank. Journal of Islamic Economic Laws, 6(2), 133–158.

Alif, Y. S., Fitri, S. R., & Pertiwi, H. P. (2025). Implementation of ESG (Environmental, Social, Governance) in Islamic banks: A critical and strategic review. Al-Muwazanah: Indonesian Journal of Islamic Economics, 1(1), 13–25.

Asutay, M. (2012). Conceptualising and locating the social failure of Islamic finance: Aspirations of Islamic moral economy vs the realities of Islamic finance. Asian and African Area Studies, 11(2), 93–113.

Aziz, M. R. A., Nor, F. M., Marzuki, A., Basah, M. Y. A., Sabri, H., Ramli, N. A., & Shahwan, S. H. (2022). Research and publication trends in environmental, social and governance (ESG), sustainable and responsible investment (SRI) and Maqasid Shariah framework between 2012-2021. Journal of Information and Knowledge Management, 12(1), 1–30.

Azizah, R. N. (2024). Integrasi ESG (Environmental, Social, Governance) dalam investasi syariah. Jurnal Ekonomi Islam, 1(1), 1–24.

Azkiya, S. T., Azmi, I. N., & Kurniawan, R. (2024). The effect of environmental and social governance on company profitability levels. Jurnal Ilmiah Manajemen Kesatuan, 12(5), 2045–2054.

Chapra, M. U. (2008). The Islamic vision of development in the light of Maqāsid al-sharī ‘ah. Jeddah: Islamic Research and Training Institute Islamic Development Bank.

Clark, M. P., Nijssen, B., Lundquist, J. D., Kavetski, D., Rupp, D. E., Woods, R. A., Freer, J. E., Gutmann, E. D., Wood, A. W., & Brekke, L. D. (2015). A unified approach for process‐based hydrologic modeling: 1. Modeling concept. Water Resources Research, 51(4), 2498–2514.

Dusuki, A. W., & Abozaid, A. (2007). A critical appraisal on the challenges of realizing Maqasid Al-Shariaah in Islamic banking and finance. International Journal of Economics, Management and Accounting, 15(2), 143–165.

Ercanbrack, J. (2022). Islamic social finance and the sustainable development goals. Jeddah: Islamic Development Bank.

Fahmi, R. A. (2025). Islamic social finance and environmental sustainability: A critical review of policy and practice. Iqtishodiah: Jurnal Ekonomi dan Perbankan Syariah, 7(1), 64–77.

Farhan, M. (2024). Keseimbangan risiko dan imbal hasil dalam strategi investasi berkelanjutan: Pendekatan integratif terhadap faktor lingkungan, sosial, dan tata kelola perusahaan (ESG). Currency: Jurnal Ekonomi dan Perbankan Syariah, 2(2), 243–264.

Febrina, I., & Abdulah, B. (2024). Hisbah in the context of Shariah governance in Islamic finance: A comparison between Indonesia and Malaysia. Jurnal Ilmiah Manajemen Kesatuan, 12(6), 2457–2466.

Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233.

Gomber, P., Kauffman, R. J., Parker, C., & Weber, B. W. (2018). On the fintech revolution: Interpreting the forces of innovation, disruption, and transformation in financial services. Journal of Management Information Systems, 35(1), 220–265.

Hadi, A., Yunani, A., Swandari, F., Hayat, A., & Maharani, D. (2025). Integrating ESG into Islamic investment: A scoping review of challenges and opportunities. Asian Journal of Management, Entrepreneurship and Social Science, 5(2), 879–905.

Haniffa, R., & Hudaib, M. (2007). Exploring the ethical identity of Islamic banks via communication in annual reports. Journal of Business Ethics, 76(1), 97–116.

Hoang, T. (2018). The role of the integrated reporting in raising awareness of environmental, social and corporate governance (ESG) performance. In Stakeholders, governance and responsibility (pp. 47–69). Bingley: Emerald Publishing Limited.

Keenan, J. C., Kemp, D. L., & Ramsay, R. B. (2016). Company–community agreements, gender and development. Journal of Business Ethics, 135(4), 607-615.

Khan, M. A. (2022). ESG disclosure and firm performance: A bibliometric and meta analysis. Research in International Business and Finance, 61(3), 651-668.

Marianingsih, I. (2025). Green Islamic finance: Sustainable financing strategies from the perspective of Maqasid al-Shariah. PAPUA: International Journal of Sharia Business Management, 2(1), 84–100.

Matos, P. (2020). ESG and responsible institutional investing around the world: A critical review. London: CFA Institute Research Foundation.

Muarif, I. (2025). Integrasi ESG (Environment, Social, and Governance) dalam keuangan syariah untuk mendukung pembangunan berkelanjutan. Jurnal Akuntansi, Keuangan, Perpajakan dan Tata Kelola Perusahaan, 2(3), 968–974.

MUI. (2025). Sekjen Kemenag ungkap potensi wakaf mencapai Rp180 triliun per tahun. Retrieved on March 1, 2025, from https://mui.or.id/baca/berita/sekjen-kemenag-ungkap-potensi-wakaf-mencapai-rp180-triliun-per-tahun

Muklis, M., Bisri, A., Rahmat, P., & Hannum, U. (2025). Investasi syariah sebagai strategi pembangunan masa depan yang berkelanjutan: Kajian konseptual dan empiris. MAMEN: Jurnal Manajemen, 4(3), 511–521.

Nartey, E. K. (2025). Beyond profit: Ethical imperatives and the role of duty of care in sustainable investment strategies. International Journal of Economics and Finance, 17(1), 22–47.

Noor, A., Wulandari, D., & Afif, A.-S. M. (2023). Regulating fintech lending in Indonesia: A study of regulation of Financial Services Authority No. 10/POJK. 05/2022. Qubahan Academic Journal, 3(4), 42–50.

Rahman, F. K., Tareq, M. A., Yunanda, R. A., & Mahdzir, A. (2017). Maqashid Al-Shari’ah-based performance measurement for the halal industry. Humanomics, 33(3), 357–370.

Regita, R., Huda, Q., & Mu’allifin, D. A. (2024). Optimizing Maqasid Syariʿah in Sharia banking law: A philosophical perspective on Islamic economics. Yogyakarta: Universitas Islam Indonesia.

Rezaee, Z. (2008). Corporate governance and ethics. Hoboken: John Wiley & Sons.

Shalhoob, H. (2025). ESG disclosure and financial performance: Survey evidence from accounting and Islamic finance. Sustainability, 17(4), 1571-1582.

Siregar, R. (2025). ESG and Islamic accounting for sustainable Islamic finance: A qualitative study. Jurnal Ilmiah Akuntansi Kesatuan, 13(3), 555–566.

Sofya, N., & Puteri, H. E. (2024). Model integrasi environmental, social and governance dan Maqashid Syari’ah dalam keberlanjutan Bank Syari’ah Indonesia tahun 2020-2023. Krigan: Journal of Management and Sharia Business, 2(2), 190–203.

Sullivan, R., & Mackenzie, C. (2017). Responsible investment. London: Routledge.

Taleb, A., & Khater, T. (2024). The role of using Islamic finance to boost infrastructure development for sustainable economic growth. International Journal of Economic Perspectives, 18(3), 730–754.

Yusuf, N., & Harun, N. (2024). Examining the basis of Maqashid sharia in renewal of Islamic law in Indonesia. Petita, 9(3), 357–375.

Zain, F. A. M., Muhamad, S. F., Abdullah, H., Sheikh Ahmad Tajuddin, S. A. F., & Wan Abdullah, W. A. (2024). Integrating environmental, social and governance (ESG) principles with Maqasid al-Shariah: A blueprint for sustainable takaful operations. International Journal of Islamic and Middle Eastern Finance and Management, 17(3), 461–484.

Ziarmal, A. (2025). Exploring the contribution of green sukuk in achieving sustainable development goals (SDGs): Case study of Malaysia and Indonesia. El Barka, 8(1), 31–49.