Integrating Sharia-Based Monetary Instruments with ESG Indicators: A Hybrid Model for Sustainable Islamic Economic Growth

Abstract

Sustainable economic growth has become a global imperative, necessitating the integration of faith-based financial frameworks with international sustainability standards. This study aims to develop a hybrid model that integrates Sharia-based monetary instruments—such as sukuk, productive zakat, and qard hasan—with Environmental, Social, and Governance (ESG) indicators to promote green economic growth aligned with Islamic values. Employing a qualitative exploratory approach and a systematic review of contemporary literature, this research reveals substantial potential for synthesizing maqāṣid al-sharīʿah (the higher objectives of Islamic law) with ESG frameworks to construct a governance model that is both ethically grounded and environmentally responsible. The findings indicate that this integration enhances the role of Islamic financial institutions in supporting Sustainable Development Goals (SDGs), reinforces social accountability, and fosters innovation in Islamic fiscal and monetary policies. The proposed model offers practical relevance for regulators, scholars, and financial practitioners in designing an Islamic economic system that not only complies with Sharia but also addresses pressing environmental and social challenges.