Prospects of Green Sukuk for Environmental Financing in Brazil: A Legal and Shariah Perspective
Article Sidebar
-
Green Sukuk, Islamic Capital Markets, Shariah Compliance
Abstract
Brazil, as one of the world's most biodiverse countries, faces mounting environmental challenges requiring sustainable financing mechanisms aligned with global climate objectives. Green bonds have gained traction in Brazil, yet Shariah-compliant financial instruments remain largely unexplored, despite their global expansion. Green sukuk—Islamic bonds structured to finance environmentally beneficial projects—offer a unique opportunity to bridge Brazil’s sustainability goals with ethical finance practices grounded in Shariah principles. This study explores the legal and Shariah viability of introducing green sukuk as an alternative instrument for environmental financing in Brazil. Employing a qualitative legal research design, the study analyzes Brazil’s existing environmental finance framework, sukuk-related laws in key Islamic finance jurisdictions, and Shariah standards from bodies such as AAOIFI and IFSB. Interviews with Islamic finance scholars, legal experts, and Brazilian regulators supplement the doctrinal analysis. Findings indicate that while Brazil’s regulatory environment permits green financial instruments, legal reforms and institutional support would be necessary to accommodate Shariah-compliant structures. The study concludes that green sukuk could be a viable tool in Brazil’s sustainable finance arsenal, provided that cross-jurisdictional legal harmonization and Shariah alignment are proactively addressed.
Full text article
References
Akbar, N., Suryomurti, W., & Kassim, S. (2024). Investment Behaviour in Retail Green Sukuk: Case of Indonesia. Dalam Stud. Syst. Decis. Control (Vol. 515, hlm. 437–448). Springer Science and Business Media Deutschland GmbH; Scopus. https://doi.org/10.1007/978-3-031-48479-7_37
Ali, Q., Rusgianto, S., Parveen, S., Yaacob, H., & Zin, R. M. (2024). An empirical study of the effects of green Sukuk spur on economic growth, social development, and financial performance in Indonesia. Environment, Development and Sustainability, 26(8), 21097–21123. Scopus. https://doi.org/10.1007/s10668-023-03520-6
Alnabulsi, K., & Jreisat, A. (2024). Green Finance on Islamic Financial Markets: A Sustainable Approach to Growth. Int. Conf. Sustain. Islam. Bus. Financ., SIBF. 2024 International Conference on Sustainable Islamic Business and Finance, SIBF 2024. Scopus. https://doi.org/10.1109/SIBF63788.2024.10883851
Al-Otaibi, M. I., Nor, N. M., & Yusri, Y. (2024). EXAMINING THE IMPACT OF VALUE ADDED TAX ON SUKUK YIELD: A REVIEW. Petita: Jurnal Kajian Ilmu Hukum Dan Syariah, 9(2), 606–623. Scopus. https://doi.org/10.22373/petita.v9i2.429
Bhutta, U. S., & Qazi, A. Q. (2024). Financial System Readiness to Achieve Carbon Neutrality. Dalam Sustain. Finance.: Vol. Part F4263 (hlm. 143–160). Springer Nature; Scopus. https://doi.org/10.1007/978-3-031-56419-2_7
Chavarría-Flores, A., & Warren, P. (2024). Sovereign climate bonds: Policy innovation for just transitions in developing countries. Journal of Climate Finance, 7. Scopus. https://doi.org/10.1016/j.jclimf.2024.100041
Delle Foglie, A., & Keshminder, J. S. (2024). Challenges and opportunities of SRI sukuk toward financial system sustainability: A bibliometric and systematic literature review. International Journal of Emerging Markets, 19(10), 3202–3225. Scopus. https://doi.org/10.1108/IJOEM-04-2022-0601
Faizi, F., Kusuma, A. S., & Widodo, P. (2024). Islamic green finance: Mapping the climate funding landscape in Indonesia. International Journal of Ethics and Systems, 40(4), 711–733. Scopus. https://doi.org/10.1108/IJOES-08-2023-0189
Ghaemi Asl, M., & Shahzad, U. (2024). How do conventional, Islamic and green bonds idiosyncratically differ when it comes to their inherent nonlinear reliance on carbon emission future price? A novel approach to greenwashing detection. Environment, Development and Sustainability. Scopus. https://doi.org/10.1007/s10668-023-04351-1
Guedira, S., El Amri, M. C., & Mohammed, M. O. (2024). Contributions of SRI Sukuk to SDGs: An analysis of selected cases. Dalam Islamic Green Finance: A Research Companion (hlm. 120–131). Taylor and Francis; Scopus. https://doi.org/10.4324/9781032672946-17
Haque, M. M., & Meo, M. S. (2024). Optimizing Portfolios with Sustainable Finance: A Comparative Approach to Green Bonds and Green Sukuk. Dalam Green Bonds and Sustainable Finance: The Evolution of Portf. Management in Conventional Markets (hlm. 120–135). Taylor and Francis; Scopus. https://doi.org/10.4324/9781032686844-8
Husain, A., Karim, S., & Sensoy, A. (2024). Financial fusion: Bridging Islamic and Green investments in the European stock market. International Review of Financial Analysis, 94. Scopus. https://doi.org/10.1016/j.irfa.2024.103341
Kachkar, O., & Al Fares, M. (2024). Sri Sukuk to Achieve SDGs with a Special Reference to the Legal and Regulatory Framework in Malaysia. Dalam Contrib. Manag. Sci.: Vol. Part F3298 (hlm. 159–184). Springer Science and Business Media Deutschland GmbH; Scopus. https://doi.org/10.1007/978-3-031-61778-2_9
Karim, N. A., Muhamat, A. A., Nizar, N., & Senawi, A. R. (2024). Green Sukuk and its challenges faced by public universities in Malaysia: An empirical study. Dalam Islamic Green Finance: A Research Companion (hlm. 193–202). Taylor and Francis; Scopus. https://doi.org/10.4324/9781032672946-24
Kassim, S. (2024). SRI Sukuk-Led Sustainable Microfinance. Dalam Islamic Sustainable Finance: Policy, Risk and Regulation (hlm. 208–221). Taylor and Francis; Scopus. https://doi.org/10.4324/9781003395447-23
Katterbauer, K., Castanho, R. A., Syed, H., Meyer, D., Cleenewerck, L., & Yilmaz, S. (2024). Green Deep Seabed Mining: The Opportunities for Islamic Finance. WSEAS Transactions on Business and Economics, 21, 2736–2746. Scopus. https://doi.org/10.37394/23207.2024.21.223
Kismawadi, E. R., Irfan, M., Haron, R., & Masitah, M. (2024). Bridging finance and sustainability: Islamic financial institutions’ contributions to the transition to sustainable energy. Dalam Issues of Sustain. In AI and New-Age Themat. Invest. (hlm. 138–161). IGI Global; Scopus. https://doi.org/10.4018/979-8-3693-3282-5.ch009
Masood, A., Rahim, N., & Lee, U. H. M. S. (2024). Driving Green Sukuk Development to Meet ESGs and Society 5.0 Aspirations Through Innovative Technology. Dalam Contrib. Manag. Sci.: Vol. Part F3298 (hlm. 1–18). Springer Science and Business Media Deutschland GmbH; Scopus. https://doi.org/10.1007/978-3-031-61778-2_1
Muhamat, A. A., Nizar, N., Senawi, A. R., Karim, N. A., Kassim, S., & Ismail, H. (2024). GREEN SUKUK ISSUANCE: A CASE STUDY OF PUBLIC UNIVERSITY IN MALAYSIA. Journal of Sustainability Science and Management, 19(11), 210–222. Scopus. https://doi.org/10.46754/jssm.2024.11.013
Mustapha, Z., Kunhibava, S., Muneeza, A., & Khalid, M. (2024). Navigating the Paradigm Shift in Malaysia’s Sustainable Responsible Investment Sukuks. Manchester Journal of Transnational Islamic Law and Practice, 20(3), 457–464. Scopus.
Nik Abdullah, N. A. I., Hidayat, A., & Haron, R. (2024). Strategic Action-Plan of Islamic Banks Towards Sustainable Finance. Dalam Islamic Sustainable Finance: Policy, Risk and Regulation (hlm. 33–40). Taylor and Francis; Scopus. https://doi.org/10.4324/9781003395447-6
Nomran, N. M., Haron, R., Kashi, A., Laallam, A., Abumughli, A. A., & Abey, J. (2024). Impact of Islamic green finance on GDP: A cross-country analysis. Dalam Islamic Green Finance: A Research Companion (hlm. 45–54). Taylor and Francis; Scopus. https://doi.org/10.4324/9781032672946-8
Nomran, N. M., Haron, R., Kashi, A., Laallam, A., Abumughli, A. A., Shaikh, Z. H., & Del Rosario Bunagan, V. (2024). SDGs and how does Islamic green finance matter?: An experience. Dalam Islamic Green Finance: A Research Companion (hlm. 33–42). Taylor and Francis; Scopus. https://doi.org/10.4324/9781032672946-6
Pirgaip, B., & Arslan-Ayaydin, O. (2024). Exploring the greenium in the green Sukuk universe: Evidence from the primary market. International Journal of Islamic and Middle Eastern Finance and Management, 17(3), 423–440. Scopus. https://doi.org/10.1108/IMEFM-05-2023-0186
Rahim, R., Rathore, H. S., Rabbani, M. R., & Alam, M. N. (2024). Maqasid Al-Shariah and Green Finance: A Theoretical Framework on Islamic Finance with Sustainable Development Goals for a Greener Future. Int. Conf. Sustain. Islam. Bus. Financ., SIBF, 255–261. Scopus. https://doi.org/10.1109/SIBF63788.2024.10883847
Rahman, A., Ahmad, A. U. F., Bin-Nashwan, S. A., Muneeza, A., Abdul Halim, A. H., & Markom, R. (2024). Policy approach adopted for issuance of Green Sukuk: Is priority given to priority needed areas? Journal of Islamic Accounting and Business Research, 15(5), 818–837. Scopus. https://doi.org/10.1108/JIABR-10-2022-0279
Raimi, L., Abdur-Rauf, I. A., & Ashafa, S. A. (2024). Does Islamic Sustainable Finance Support Sustainable Development Goals to Avert Financial Risk in the Management of Islamic Finance Products? A Critical Literature Review. Journal of Risk and Financial Management, 17(6). Scopus. https://doi.org/10.3390/jrfm17060236
Razali, N., & Hassan, R. (2024). Contributions of Islamic green finance to SDGs. Dalam Islamic Green Finance: A Research Companion (hlm. 24–32). Taylor and Francis; Scopus. https://doi.org/10.4324/9781032672946-5
Riaz, T., Selamat, A. I., Nor, N. M., & Hassan, A. F. S. (2024). DO INVESTORS GET BENEFITS FROM CORPORATE GREEN SUKUK ISSUANCE. Journal of Islamic Monetary Economics and Finance, 10(3), 445–470. Scopus. https://doi.org/10.21098/jimf.v10i3.1944
Saffa, S., & Marwan, S. (2024). Green Sukuk: Issues, challenges and the way forward. Dalam Islamic Green Finance: A Research Companion (hlm. 182–192). Taylor and Francis; Scopus. https://doi.org/10.4324/9781032672946-23
Shafi, R. M., Shaharuddin, N., Bakar, N. A., Muhamat, A. A., & Tabash, M. I. (2024). BIBLIOMETRIC AND AI ANALYSIS OF ENVIRONMENTAL RISKS OF SUKUK AND BOND YIELDS. Journal of Sustainability Science and Management, 19(11), 138–152. Scopus. https://doi.org/10.46754/jssm.2024.11.009
Suriani, S., Masbar, R., Agustina, M., & Khairul, A. D. (2024). Do Global Green Sukuk affect on Climate Change? Evidence in Issuing Countries. International Journal of Energy Economics and Policy, 14(1), 98–107. Scopus. https://doi.org/10.32479/ijeep.14987
Tahir, S., & Naz, F. (2024). Financial inclusion in sukuk and green sukuk a case study through bibliometric and slr. Dalam Financ. Inclusion, Sustainability, and the Influence of Relig. And Techn. (hlm. 133–163). IGI Global; Scopus. https://doi.org/10.4018/979-8-3693-1475-3.ch007
Ulfah, I. F., Sukmana, R., Laila, N., & Sulaeman, S. (2024). A structured literature review on green sukuk (Islamic bonds): Implications for government policy and future studies. Journal of Islamic Accounting and Business Research, 15(7), 1118–1133. Scopus. https://doi.org/10.1108/JIABR-10-2022-0255
Authors
Copyright (c) 2025 Bruna Costa, Rafaela Lima, Thiago Rocha
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
