Guest editorial: Islamic finance and sustainable development in the Anthropocene era Free

The global financial landscape is undergoing a paradigm shift as the realities of the Anthropocene, a geological epoch defined by significant human impact on Earth’s ecosystems, demand more than just conventional risk management. Meeting the Anthropocene challenges requires a profound transformation of corporations so that they cooperate better with the Earth system (e.g. Shrivastava et al., 2019; Tarim, 2022). The Anthropocene calls for new economic principles and models for transitioning to an economy that does not destroy the richness of life processes on Earth but preserves and enhances them. As climate policy uncertainty (CPU) and ecological degradation accelerate, the need for ethical, resilient and sustainability-linked financial systems has never been more urgent. A new direction of focus in research and policy is emerging to tackle the question of sustainable development in the era of the Anthropocene.

Within this context, Islamic finance has re-emerged not merely as a faith-based alternative but as a framework naturally aligned with the Sustainable Development Goals (SDGs) and the imperatives of environmental stewardship (e.g. Ben Jedidia and Ghroubi, 2025). While the theoretical synergy between Islamic finance and sustainability is well-established through the lens of Maqasid al-Shari’ah (e.g. Boudawara et al., 2023), a significant gap remains regarding Anthropocene issues. Current studies have predominantly emphasised the social dimensions of the field (e.g. Shu et al., 2022); consequently, empirical focus on environmental sustainability remains scarce, despite the central importance of environmental care within Islamic doctrine (e.g. Miyan et al., 2026; Hermala et al., 2025).

This special issue brings together nine pioneering articles that address Islamic finance and sustainable development (IFSD) in the Anthropocene era. From bibliometric mapping of the field’s evolution to empirical analyses on Islamic banks (IBs), Sharī’ah-Compliant Investment (SCI) funds, Islamic Green Financing (IGF) and Sukuk market, the contributions herein offer a comprehensive examination of the Islamic finance-sustainability nexus. The editorial proceeds with a review of the nine articles. In conclusion, we provide some thoughts for policymakers, practitioners and academics and offer directions for future research.

The nine selected papers for the special issue offer a multifaceted perspective on IFSD in the Anthropocene, drawing on a diverse range of research settings, methodologies and geographical contexts. The literature is first mapped via a bibliometric analysis (Fodol and Aslan, 2025), followed by targeted investigations into sustainable development issues within IBs (Tumewang et al., 2025; Srairi, 2025), Islamic investment funds (Tariq et al., 2025; Ghlamallah and Gialdini, 2025; Mirza et al., 2025) and Sukuk (Helmi et al., 2026; Achyar, 2025a, 2025b). The findings are derived from diverse methodological frameworks, incorporating semi-structured interviews, content analysis, scientific mapping and econometric modelling. From a geographical perspective, the articles offer a wide-reaching scope, encompassing emerging markets, the Gulf Cooperation Council (GCC) and Middle East and North Africa (MENA) regions and the international and European context. By exploring diverse geographical contexts, this issue seeks to elucidate how Islamic finance can act as a pivotal vehicle for long-term climate resilience in an increasingly volatile global environment.

The paper “Mapping the evolution of Islamic finance for sustainability: a bibliometric analysis”, co-authored by Mohamed Zakaria Fodol and Hakan Aslan, offers a bibliometric analysis of the literature on IFSD from 1995 to 2024. The primary interest of Fodol and Aslan’s (2025) research is to move beyond fragmented studies to offer a systematic cartography of the field, identifying how Islamic finance has evolved from simple transaction-based compliance to an impact-oriented sustainability framework. By combining performance analysis with scientific mapping, Fodol and Aslan (2025) offer a comprehensive and systematic view of the IFSD landscape, enabling particularly the identification of thematic clusters and research gaps. Thematic evolution analysis within the IFSD context shows a shift from foundational concepts in Islamic finance and economics (1995–2021) to broader multidisciplinary themes that align with the global sustainability agenda (2022–2024). While empirical evidence confirms the traditional dominance of IBs and Sukuk in the literature, it also reveals an emerging frontier focused on Islamic social finance, financial inclusion and digital finance. This shift illustrates how Islamic finance can effectively address socio-economic challenges and bridge the wealth gap in low-Human Development Index (HDI) regions. However, the thematic mapping uncovers a compelling paradox: while the ethical underpinnings of Islamic finance and economics are inherently aligned with global crisis management, their integration into circularity and green finance paradigms is still emerging, representing a strategic misalignment between current research and global sustainability efforts.

The subsequent paper, “Does ESG reporting truly align with carbon performance? New evidence from the dual banking sector in emerging markets”, co-authored by Yunice Karina Tumewang, Esraa Esam Alharasis and Kaouther Toumi, investigates the relationship between Environmental, Social and Governance (ESG) reporting and carbon emissions. By focusing on dual banking systems in emerging markets, Tumewang et al. (2025) study provides a comparative analysis of conventional banks (CBs) and IBs from 11 countries and covers 11 years, from 2013 to 2023. Their results demonstrate that emerging market banks with higher ESG scores emit higher levels of carbon produced by emerging market banks, indicating a potential carbon-washing practice in these banks. For IBs, the findings show that the positive association between the ESG score, and carbon emissions is reinforced despite the adverse effect of being an IB on carbon emissions levels. The findings reveal that, although there is an increasing focus on banks’ ESG and carbon performance to ensure transparency, accountability and credibility of reporting methodologies appear to be challenging in the emerging market banking sector. Tumewang et al.'s (2025) study is of high interest for policymakers as it highlights the disconnect between high ESG scores and actual carbon reduction, calling for more rigorous disclosure mandates.

Expanding on the theme of Islamic banking and ESG issues, the next paper is entitled “ESG performance in GCC banks: the influence of ownership structure, risk attitude and board characteristics in Islamic vs conventional contexts”. Srairi (2025) examines how ownership structure shapes ESG performance within the 48 GCC banking sector over the period 2013–2022, with a specific focus on IBs. The research provides a nuanced analysis by exploring risk attitude as a mediator and corporate governance quality as a moderator within this association. The findings reveal a negative correlation between ownership concentration and ESG performance across both banking sectors. Furthermore, the analysis identifies bank risk as a key mediating variable for both banks. Interestingly, the moderating role of corporate governance quality is found to be context-dependent, showing a significantly positive moderation effect in CBs while failing to exert a similar effect (insignificant) in IBs. The interest of this study lies in its findings regarding ownership concentration, warning that dominant shareholders can inadvertently hinder ESG progress in the GCC region, thus necessitating specific regulatory frameworks.

Shifting the focus from Islamic banking to SCI funds, the next paper, titled “Integrating societal issues into the asset allocation and selection strategies of ethical funds: the case of socially responsible funds and Islamic funds”, is co-authored by Ezzedine Ghlamallah, Laurence Gialdini and Sami Ben Larbi. The study investigates how Socially Responsible Investment (SRI) and SCI funds integrate societal issues into their asset allocation and selection strategies. Adopting a multi-theoretical framework and a qualitative approach, Ghlamallah et al. (2025) draw on 30 semi-structured interviews with asset management professionals across the SRI, SCI and conventional sectors from Europe, MENA, North America and Asia to decode their allocation and selection processes. The findings indicate that ethical fund managers adopt specific asset allocation and selection practices that incorporate societal criteria. The authors highlight the emergence of new asset management practices and identify three typical profiles of managers according to their degree of ethical commitment: cosmetic, chameleon and committed managers. The study also delineates a seven-stage framework for integrating Anthropocene-related challenges into the management practices of SCI and SRI funds, as is the process of SCI–SRI hybridization currently at work in the industry.

Expanding the theme on SCI funds and ESG issues, the next paper explores the strategic integration of Sharia-compliant and ESG-focused investments within global equity portfolio optimisation frameworks. This paper, titled “Optimising global risk-conscious portfolios: the strategic role of Sharī’ah-Compliant and ESG investments”, is co-authored by Nawazish Mirza, Cristiana Doina Tudor, Alexandra Horobet and Lucian Belascu. Mirza et al. (2025) investigate the impact of Shari’ah-compliant and ESG-focused investments on portfolio variance minimisation and the efficacy of dynamic rebalancing approaches in maximising risk-adjusted returns. Drawing on a historical data set of SCI, ESG and conventional equity ETFs (Exchange Traded Funds), the paper applies quadratic programming techniques to perform mean variance optimisation. Mirza et al. (2025) find that portfolios integrating SCI frequently outperform those composed solely of conventional equity ETFs. Dynamic optimisation with monthly rebalancing demonstrated enhanced portfolio resilience during market turbulence such as the COVID-19 epidemic and the Ukraine–Russia War. The observation that SCI had significant allocations during key periods, with weights reaching up to 100% in the first half of 2020, whereas ESG-focused investments had more limited and sporadic allocations, sheds light on the relative roles these investments can play in risk management and portfolio resilience. The findings reinforce the growing consensus on the long-term viability of faith-based asset allocation.

The next paper, titled “Return and volatility spillover among green finance, sustainable and Islamic investments: evidence for environmental sustainability via financial convergence” and co-authored by Anam Tariq, Arshad Hassan, Umar Kayani, Syed Arslan Haider and Amer Qasim, expands the literature on SCI and sustainability issues. Tariq et al. (2026) examine the dynamic connectedness of green bonds, sustainable investments and Islamic investments exclusively considering extensive data of daily observations from 2013 to 2022. Their research provides a new dimension to the empirical research done on portfolio diversification by analysing their diversification benefits. The findings reveal that green bonds, clean energy and Sharī’ah-Compliant investments are the net recipients of shocks, whereas gold, Islamic stocks and sustainable investments act as net transmitters of shocks. The results provide evidence for investors to diversify portfolios by focusing more on green and faith-based investments. Such diversification options will not only provide financial benefits to the investors but also the psychological benefit of maintaining a portfolio with a majority of assets to be environmentally friendly. The interest of Tariq et al.'s (2026) study lies in proving that ethical filters act as a natural volatility buffer, outperforming conventional funds during systemic shocks.

Shifting the focus from SCI funds to the specialised realm of Sukuk, the paper titled “Islamic climate bond for electric vehicle and renewable energy: religion as an open innovation for climate action”, authored by Dzakiyy Hadiyan Achyar, investigates the nexus between green financing and environmental performance in Saudi Arabia, Malaysia and Indonesia from 2019 to 2023. Achyar (2025a, 2025b) examines the direct and indirect effects of IGF, including green Sukuk, and climate bonds on environmental performance by incorporating electric vehicles and renewable energy as mediating variables. Mobilising natural resource-based view and open innovation view (OIV) as theoretical foundations, Achyar’s (2025a, 2025b) results confirm that green financing is positively associated with greenhouse gas reduction. The findings also show that green financing can elevate renewable energy and electric vehicle sectors for preserving environmental performance, validating the mediation effects of these variables and, thus, the transmission mechanisms through which green financing operates to mitigate external environmental challenges.

Aligning with this perspective, the subsequent study by Dzakiyy Hadiyan Achyar, titled “Islamic finance for sustainable development in clean technology: dynamic capabilities and natural resource-based view”, examines the impact of IGF on renewable energy within the GCC region. Covering the period from 2019 to 2023, the research leverages the Natural Resource-Based View (NRBV) to explain how IGF foster renewable energy adoption. Achyar’s (2025a, 2025b) results show that IGF promotes renewable technologies by improving energy efficiency and climate policy in the GCC region. By integrating IGF, climate policy, and energy efficiency into a unified framework, Achyar’s (2025a, 2025b) study represents a pioneering empirical investigation into the NRBV.

In a similar vein, the final paper of this special issue, authored by Mohamad Husam Helmi, Abdelkader ElAlaoui and Mehmet Asutay, titled “Sukuk and Environmental Challenges: Evaluating the Impact of Climate Policy Uncertainty on Major Sukuk Indices” offers new insights into the interplay between CPU and Islamic financial markets. Helmi et al. (2026) investigate the association between CPU and key Sukuk indices across different time horizons. They explore the dynamic nature of this relationship, particularly during periods of economic instability and climate-related events, mobilising wavelet coherence analysis. The research utilises a comprehensive data set spanning more than 14 years, encompassing 15 sukuk indices that reflect a range of structures, geographic regions, and currencies, including the US dollar, British pound, and local currencies such as the Malaysian ringgit. The findings reveal A dynamic and complex relationship between CPU and Sukuk indices, characterised by both short- and long-term interactions. The analysis demonstrates that changes in CPU often precede movements in sukuk markets across various time horizons. This relationship is notably influenced by major global events, including the COVID-19 pandemic and significant climate-related incidents. This suggests that the CPU can shape investor sentiment, alter perceptions of risk, and influence how funds are allocated to sustainable investments. The study of Helmi et al. (2026) is of immense interest, as it reveals that Sukuk indices can serve as effective hedging tools against the volatility of environmental regulations, particularly during times of increased environmental consciousness and the rise of green Sukuk.

The collective findings of this special issue provide a strategic roadmap for harmonising Islamic financial principles with the global sustainability agenda. From a policy perspective, the evidence underscores a critical need for enhanced regulatory oversight to tackle carbon-washing in non-financial reporting in emerging markets, where higher ESG scores often fail to reflect actual carbon performance in both Islamic and CBs. Furthermore, regulators should incentivise ownership diversification and mandate stringent governance practices to mitigate the undue influence of dominant shareholders on ESG outcomes across both conventional and Islamic banking sectors. The research also offers substantial managerial value by providing a roadmap for fund managers to reconcile ESG criteria with Sharī’ah mandates. For investors, the research demonstrates that Shari’ah-compliant and green investments are not merely niche offerings but vital tools for risk management. These assets offer superior resilience during market turbulence and serve as effective hedges against CPU. By integrating capital markets with global environmental stewardship, the results provide a new orientation to investors to play a part in environmental preservation and climate resilience, clarifying the operational pathways necessary to achieve long-term SDGs.

While this special issue significantly deepens our understanding on Islamic finance-sustainability nexus in the Anthropocene era, it simultaneously reveals key avenues for subsequent research. While current studies focus heavily on carbon reduction and renewable energy, there is a profound circularity gap in the literature. Moving forward, future research should investigate how Islamic financial instruments can be redesigned to support circular economy business models and regenerative finance. Researchers should explore the synergies between the Shari’ah prohibition of waste (Israf) and the regenerative principles of the circular economy to restore ecosystems. Future empirical research should also expand beyond the traditional dominance of banking and Sukuk sectors to explore the green transformative potential of Islamic social finance. Researchers should explore the hybridisation of Islamic social finance with climate finance and address the Just Transition, ensuring that the shift to a green economy does not marginalise vulnerable populations. Finally, further investigation into the transmission mechanisms will be essential to further understand how IGF contributes to environmental resilience in contexts of uncertainty regarding climate policies.