The Investigation of Green Sukuk Compliance with Maqasad Shariah

This paper discusses the reciprocal effect between environmental factors and financial investment in green sukuk. We have discussed sukuk specificities investment, while referring to the Maqasad shariah of environment as « Hifz-al-nafs » (preservation of human soul) intended to protect the environment and life from pollution, « Hifz-al-nasl » (progeny preservation) ensuring sustainability, « Hifz-al-din » (preservation of religion) addressed to keep ethic in green financial transaction, « Hifz-al-aql » (preservation of intellect) intended an ecological conscience in green real investment, « Hifz-al-mal » (preservation of wealth) guarantying a well management of natural resources. We have investigated the effect of environmental factors including mainly air pollution, energy consumption, renewable energy consumption, carbon emission, on the market value and yield coupon of green sukuk among a country groups (Indonesia, Malaysia, Saudi Arabia, The United Arab Emirates (UAE), and Turkey). The result shows that the degradation of environment quality as the air quality and carbon emission leads investors to emit more green sukuk. Whereas after emission, investors channel fund to the non-green real investment leading to emission carbon rising. This is in contradiction with the Maqasad shariah of environment.