Roles of Islamic Capital Market in Developing Sustainable Bonds and Sukuk Framework in Malaysia
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2025-11-05
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Abstract
The Islamic capital market, through the development of sustainable bonds and sukuk, integrates Islamic financial principles with global sustainability objectives. The global Islamic finance leader, Malaysia, maintains a strong regulatory system that supports the development of green and socially responsible sukuk that meet Islamic financial values and international environmental, social, and governance (ESG) standards. This research investigates how the Malaysian Islamic capital market advances sustainable finance by analysing its legal and regulatory frameworks. The research investigates Malaysian Islamic finance development through critical industry milestones such as the creation of the Sustainable and Responsible Investment (SRI) Sukuk Framework in 2014, which placed the country at the forefront of sustainable Islamic finance. The evaluation demonstrates how sustainability sukuk differ from traditional sukuk since the former requires project financing that includes proven environmental and social value creation. Furthermore, the study emphasizes how market stability depends on clear reporting and Shari’ah compliance as well as global sustainable standards for earning investor trust. Malaysia’s integrated sustainable financial strategy, together with tax benefits and regulatory control systems and foreign partnerships, has produced substantial expansion in its Islamic capital market operations. The conclusions from this research show that Malaysia’s strategic development model serves as a valuable reference point for nations building sustainable finance structures through Islamic financial methods that support global financial transition towards sustainability.
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Islamic Green Finance: Towards Ethical and Environmentally Responsible Investing