SUSTAINABLE DEVELOPMENT AND THE SHIFT FROM A GREEN TO A BLUE ECONOMY: AN ISLAMIC DISCOURSE
Othman Altwijry Assistant Professor
Department of Economics and Finance, College of Business and Economics,
Qassim University Buraydah, Saudi Arabia
othman@qu.edu.sa
ABSTRACT
This study aims to enhance the literature of economic and Islamic economic particularly on the role of blue economy as its main objective to increase economic growth, the standard of living and social inclusion without disturbing the environmental balance. Although conventional economic literatures have widely discussed the importance of shifting to blue economy, there was a short of discussion to it from Islamic point view. The methodology employed in this study is via the inductive approach. Consequently, a major finding of this study is that Quran and Sunnah have generously pointed out to the main principal sets of ocean activities including fisheries, economy and transportation where ocean can be an essential source of people welfare and growth of trade.
It also reveals that Islamic sources support moving to blue economy as it is ethical and moral practices that additionally support SDGs. Unlike the conventional economic practices, Islamic economic is more resilient and sustainable as it has different structure that based on universal teaching via Quran and Sunnah. These sources prohibit all means to harm people or other creators and encourage their protection. It also highlights the contributions of Islamic finance industry towards providing more sustainable financial products and services like blue bonds. Therefore, this study would give a path for further studies in this field.
Keywords: Green Economy, Blue Economy, SDGs, Islamic Economic
INTRODUCTION
The green economy focuses on reducing the environmental risk in a given consumption–
production link to achieve sustainable development that improves and maintains the environment.
The emergence of an ecological scarcity of land resources is forcing the world’s economies to explore and exploit maritime resources without destroying their environmental sustainability and
4 demonstrates the shift from a green economy to a blue economy. The blue economy’s prime objective is also to increase economic growth, the standard of living and social inclusion without disturbing the environmental balance. The World Bank Group and the United Nations (UN) (2017) describe the blue economy as a concept that seeks to promote economic growth, social inclusion and the preservation or improvement of livelihoods while ensuring environmental sustainability of the oceans and coastal areas.
However, in the literature of Islamic economics and Islamic finance, there is still no significant effort on the blue economy. When the conventional literature is reviewed, it is clear that the blue economy has the same objectives as the green economy to reduce CO2, reduce the global temperature and develop new technologies for the protection of the environment. In the literature related to marine biology, some researchers have observed that maritime resources are highly supportive of the growth of the economy and the sustainability of the environment. Particularly, the roles of the great whales and the smallest creature, phytoplankton, are very important in reducing CO2, as they produce at least 50% of the oxygen in the atmosphere.
This study will attempt to explore what the teachings of Islamic Shari’ah are in the above context.
How can we improve Islamic economies and the rest of the world by following the teachings of the Qur’an and Sunnah? This study is organised in the following way: After the introduction, section one explains sustainable development and its goals; section two explains how the environment will be more sustainable if we move from a green economy to a blue economy;
section three discusses the same in the light of Islamic teachings and under the guidance of Islamic Shari’ah; section four discusses how Islamic financial institutions and other supplementary institutions can play a role in developing the concept of the blue economy; section five contains the conclusion.
Sustainable Development and Its Goals
One hundred ninety-five countries signed the Paris Agreement to protect the environment.
Everywhere, everyone, in the East and in the West, is trying to save Earth’s environment from climate change. However, most signatory countries are underdeveloped, have insufficient funds, lack technical ability and capacity, lack capability and are vulnerable to climate change. There is a dire need to support these countries so that they can improve their capacity and technological status and, subsequently, may achieve the minimum targets of the ambitious goals of the Paris Agreement. It is also worth noting that most Muslim countries are also the least developed.
Therefore, it is necessary for them to follow the path that will lead them to protect Earth’s environment under the umbrella of Islamic jurisprudence.
Similarly, the program of the UN, ‘Transforming our world: The 2030 Agenda for Sustainable Development’, emphasises improving the planet, people and prosperity. Among all the actions taken by international organisations, the most important has been to reduce the level of poverty. It is important to note that the environment can be improved only if we can eradicate poverty from Earth. There is a consensus among experts that the planet can be protected only if we free humans from poverty. This program has developed 17 sustainable development goals (SDGs), and the main objective is that ‘no one will be left behind. The list of SDGs is as follows: 1: No poverty; 2:
Zero hunger; 3: Good health and well-being; 4: Quality education; 5: Gender equality; 6: Clean water and sanitation; 7: Affordable and clean energy; 8: Decent work and economic growth; 9:
5 Industry, innovation and infrastructure; 10: Reduced inequalities; 11: Sustainable cities and communities; 12: Responsible consumption and production; 13: Climate action; 14: Life below water; 15: Life on land; 16: Peace, justice and strong institutions; 17: Partnerships for the Goals (UN Sustainable Development Goals, 2016). SDGs mainly concentrate on issues such as the protection of human rights, gender equality and the empowerment of women. However, the main target is to improve the economic level of each and everyone, reduce economic and social disparities and protect the environment. Moreover, it is also recognised that without moving forward with universal moral and ethical values, it would be difficult to achieve the above- mentioned targets. It is also highlighted that instead of the 3Ps (people, planet and prosperity), we should follow the 5Ps (people, planet, prosperity, peace and partnership) to achieve these targets and goals.
Thus, both the Paris Agreement and the 2030 Agenda of the UN emphasise that at the universal level, we have to redefine our political, administrative, economic and social systems and should try to transform all activities to achieve a carbon-neutral, sustainable world. Therefore, the governments of the signatory countries and international organisations encourage Earth-friendly new technologies and green innovations and also recognise the role of moral, ethical and religious values. In the opinion of experts, moral and religious models significantly support the process of mitigating the negative impacts of climate change. Transforming structures in line with the SDGs has also been emphasised by agencies and organisations. This is for all economies, whether they are developed, emerging or the least developed.
Not only governments and international and national institutions but also societies are engaged in the cause of sustainability. In most countries, overwhelmingly, young people are participating in discussions related to sustainable development. This generation feels that its survival will be at stake if it does not support the campaign against climate change. There are a number of examples where youngsters have taken very bold steps for the protection of Earth. Here, we just mention two examples from India and Sweden. ‘India’s Licypriya Kangujam is the world’s youngest climate activist, who is urging the world leaders to “act now against climate change”. Greta Thunberg, a celebrated young Swedish climate, refutes “the children should not worry” mantra and ascertains the actions of world leaders as empty words and promises’ (Burki et al., 2021).
People have also realised that the resources we have on land are not sufficient and that perhaps they will not be able to fulfil the requirements of the next generations. Experts have also realised that we have to explore the resources of the whole planet and that, specifically, we should explore the blue economy.
SDGS AND GREEN AND BLUE ECONOMIES
According to the SDGs of the UN, the cost of greenhouse gas emissions (GHG) and the benefit of the blue economy should be analysed.
GHGs and Costs
The main objective of the Paris Agreement is to reduce the global temperature and keep it as it was during the pre-industrialised period, i.e. below 2 degrees Celsius. Another target of this agreement is that 50% of GHG emissions should be reduced by 2030. However, it is known that approximately 75% of the signatory countries are wholly or partially unable to achieve this target.
6 It is worth noting that only 12% have the capability to achieve this target set by the 2030 Agenda of the UN and that 6% have wholly insufficient capabilities, 4% have partially insufficient capabilities, and 70% have insufficient capabilities. Most of the countries in the Muslim block are in the least-developed country group.
It has also been observed that more than 50% of GHG emissions are produced by the USA, Europe, China, Russia and India. These countries and regions committed to significantly reducing GHG emissions by 2030. For instance, China and the USA committed to reducing them by 60 to 65%
and 26 to 28% from the 2005 level by 2030 and 2025, respectively. On the other hand, the 28 member countries of the European Union committed to 40% by 2030, comparable to 1990. India’s commitment is to reduce the size of GHG emissions by 35% from the level of 2015 by 2030. It is astonishing to note that Russia still has not submitted any plan for the reduction of GHG emissions.
An interesting phenomenon is that most GHG emissions projects are very economical, whereas Earth-friendly projects are comparatively costly. For example, coal-fired plants are the main source of GHG emissions but provide very cheap energy. Over 2,400 new coal-fired plants are in different phases of planning and construction all over the world. If this situation remains the same, then how would it be possible to reduce the temperature of Earth? Keeping that in mind, researchers have suggested that we can save $500 billion if every household attempts to use efficient and environmentally friendly energy sources, as CO2 would be reduced by 40% by 2040 (Watson et al., 2019). As mentioned above, there are a number of constraints faced by most signatory countries to achieve the above-mentioned SDG targets. It is worth noting that approximately 130 countries cannot meet the SDG targets, which is of great economic loss to the whole world—calculated at $2 billion per day by 2030 (Burki et al., 2021).
Global warming and GHG emissions come at a substantial cost, which can be seen around the world. Both negatively impact the productivity of the agricultural sector, enhance the degree of global wildfires and raise the level of the sea, causing flooding and increases in both severe weather and global temperatures (Bhatt, 2019). The International Monetary Fund has proposed a carbon tax. Burki et al. (2021) concluded ‘that by imposing a tax of US $75 on the per ton production of CO2, we are in a position to achieve the GHG emission target agreed under the Paris agreement.
Moreover, this cost is less expensive than the cost of producing nuclear energy’.
Thus, this is a call to reduce GHG emissions at the global level by using environmentally friendly technologies, low-cost greenhouse gas mitigation and low-carbon innovation. If the world concentrates on this challenge, then it will be possible to protect the environment (Gillingham, 2019). There is no doubt that right now, green technologies are expensive, but that does not mean that these technologies should not be adopted. The key goal is the survival of all the creatures in this world. However, cumulative, continuous steps will offset the extra cost observed now at the beginning. For example, Earth-friendly technologies like those used in the semiconductor industry have positive externalities, which will offer lower-cost CO2 reductions (Irwin and Klenow, 1994).
Moving from a Green to a Blue Economy
The convention arranged by the UN on the law of the sea in 1982 discussed the structure of various maritime zones, and it also emphasised the transformation of the green economy to a blue economy.
7 The main objective of the green economy is to reduce the risk to the environment, with a given link of production and consumption, without degrading the environment. The agenda is to improve standards of living and maintain the environment. However, experts and policymakers are aware that there is a scarcity of resources. Therefore, now is the time to explore more productive and useful resources. Having considered the above, experts and policymakers have suggested exploiting and exploring maritime resources, but the constraint is not to destroy the sustainability of the environment. They have suggested a move from the current green economy to a blue economy. The ‘blue economy’ concept seeks to promote economic growth, social inclusion and the preservation or improvement of livelihoods while at the same time ensuring environmental sustainability of the oceans and coastal areas. (Gillsater, B., 2018; World Bank Group and United Nations, 2017). The prime objective of the blue economy is to increase economic growth, improve standards of living and enhance the degree of social inclusion without degrading and disturbing the planet’s environment.
The blue economy is a universal set, and its subsets are as follows: ‘The Blue Economy is sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health. The Blue Economy encompasses many activities, such as renewable energy (sustainable marine energy can play a vital role in social and economic development), Fisheries (marine fisheries contribute more than US$ 270 billion annually to global GDP), Maritime transport (over 80% of International goods traded are transported by sea. This volume is expected to double in 2030 and quadruple in 2050), Tourism (ocean and coastal tourism can bring jobs and economic growth. Coastal least developed countries and small Islands developing states receive more than 41 million visitors per year), Climate Change (the impacts of climate change on the ocean- rising sea-levels, coastal erosion, changing ocean current patterns and acidification are staggering. At the same time, oceans are on important carbon sink and help mitigate climate change) and waste management (80% of litter in the ocean is from land-based sources, better waste management on land can help oceans sources), ( The World Bank, 2022).
From an environmental viewpoint, the blue economy is more beneficial for the universe than the green economy. It reduces CO2 and the global temperature more than the green economy, which supports environmental sustainability. It has also been discovered by marine biologists that whales absorb a huge and significant of CO2 from the atmosphere into their bodies (Roman et al., 2014).
Chami et al. (2019) explained this phenomenon: ‘The carbon capture potential of whales is truly startling. Whales accumulate carbon in their bodies during their long lives. When they die, they sink to the bottom of the ocean; each great whale sequesters 33 tons of CO2 on average, taking that carbon out of the atmosphere for centuries. A tree, meanwhile, absorbs only up to 48 pounds of CO2 a year’. Moreover, researchers described phytoplankton as the smallest creation of the ocean and discovered a very interesting phenomenon. Phytoplankton use the waste of whales (nitrogen and iron); therefore, they live where the whales reside in the ocean. Burki et al. (2021) explained that the ‘phytoplankton contribution towards oxygen formation in the atmosphere [is at least 50%]. They capture 37 billion metric tons of CO2 (an estimated 40% of all CO2 produced), which is equivalent to capturing capacity of CO2 of 1.70 trillion trees. The whale activity (whale pump and whale conveyor belt) increases the phytoplankton productivity, which ultimately capturing 100 million of tons CO2 per year which is equivalent to [a] billion mature trees.
Ironically, no one is interested in paying for this public good, produced by whales and their activities, a highly significant positive externality’ (Chami et al., 2019). Furthermore, governments
8 and international organisations should support and develop a mindset that supports a transition towards a blue economy.
A RELIGIOUS APPROACH TOWARDS SDGS AND THE BLUE ECONOMY Religion and Sustainable Development
It is assumed in the subject of economics that people are homo economicus, so as consumers or producers, their decisions are rational and narrowly self-interested. However, after the Paris Agreement and the 2030 Agenda of the UN about the SDGs, the concept of ‘economic man’ has shifted towards the ethical and moral values of humans. This concept has motivated people to look after their fellow humans and the planet. All religions, particularly Abrahamic religions, focus on the welfare of the people, their stage of prosperity, the protection of the Earth, peace and partnership. Singh and Clark (2016) discussed these 5Ps under the umbrella of the existing prominent religions on this planet. Many studies have identified the relationship between the environment and the moral values of religions in detail (e.g. Kinsley, 1995; Menta, 2004). Thus, it is impossible to discuss the ecosystem without mentioning its moral value. In this context, religion plays a very important role, especially in development projects, their practices and the formulation of policies (Rakdoi, 2012).
After the publication of the Brundtland Commission Report, different religious institutions and organisations opened the door to discussions related to the association between religious values and sustainable development, and different journals published special issues on religion and sustainable development. It has become fashionable to discuss the link between religious values, sustainability and sustainable development, and various scholarship has been published on the topic. For instance, Clarke (2011), Deneulin and Bano (2009), Giri et al. (2004) and Kauffman (2010) have published works in this field. Many faith-based organisations have provided funds to researchers for research on this emerging topic using the research questions of why religion is important for sustainable development and what role religion can play in sustainability.
Singh and Clark (2016) elucidated that the main objective of sustainable development is to improve the living standards of humans on this planet without degrading the environment, which will need a complete synchronisation of the mind and the heart. Therefore, this task can easily be performed by religions because the minds and hearts of the people follow their religion. Some also observe that whenever any community or society needs any social and economic support, religious institutions extend their services for solutions to these issues. Burki et al. (2021) explained: ‘For example, religious institutions such as Waqf has a solid significance in Islamic history. Similarly, the philanthropic role of the church, Satrams in Hinduism, the institution of Tzedakah in Judaism, and Dharma Drum Mountain in Buddhism underline the vital role of religious foundations in human behavior’.
According to Singh and Clark (2016), if we want to achieve the SDGs of 2030, then we have to follow the ethical and moral values of religions. It is a well-known phenomenon that religions maintain a balance between material and spiritual needs. For example, all religions dislike extravagance, consider the needs of the next generations, teach us about the purpose of our lives and guide us about virtues and vices. Furthermore, each religion guides us about peace and
9 partnership. Singh and Clark (2016) quoted the statement of German theologian Hans Küng, ‘No peace among the nations without peace among the religions. No peace among the religions without dialogue between the religions’. The Synod of Western Australia (2001, p. 4) gave the following moral call to its followers: ‘We affirm our belief that the natural world is God’s creation; good in God’s eyes, good in itself, and good in sustaining human life. Recognizing the vulnerability of the life and resources of creation, we will work to promote the responsible management, use and occupation of... [E]arth by human societies. We will seek to identify and challenge all structures and attitudes, which perpetuate and compound the destruction of creation’ (cited in Narayanan, 2013, p. 133). Burki et al. (2021) summarised, ‘In short, science teaches us how we can achieve SDGs, whereas morals and religious values guide us why we need it. A combination of both is a necessary condition for achieving SDGs’. In the Book of Genesis, this is explained as, ‘serve the garden in which we have been placed’ (Genesis, 2:15). One can conclude that sustainable development needs religious and moral values; otherwise, it will be impossible to achieve the SDGs.
The Islamic Approach Towards Sustainable Development and the Blue Economy
Islam, as a universal religion, discusses all dimensions of life. The SDGs discussed by the UN are already mentioned in the Qur’an. Islam condemns poverty and its institution like zakat, the interest-free system, the law of inheritance, the institution of charity, waqf and many others for the achievement of these goals. Islam discourages the wastage of resources. Extravagance is not permitted, and spreading corruption or mischief on Earth is not allowed. It is mentioned in the Qur’an, surah Al Baqrah, verse 27:
‘Those who break the covenant of Allah after ratifying it, and sever that which Allah ordered to be joined, and [who] make mischief [on Earth]: Those are they who are the losers’ (2:27).
And the saying of the Prophet (swt) about the relationship with relatives and other humans is as follows:
‘Allah created the creations, and when He finished from His creations, Ar-Rahm (womb) said, “(O Allah) at this place I seek refuge with You from all those who sever the ties of kith and kin”. Allah said, “Yes, won’t you be pleased that I will keep good relations with the one who will keep good relations with you, and I will sever the relation with the one who will sever the relations with you”.
Allah’s Apostle added, “Read [in the Qur’an], if you wish, the Statement of Allah”— “Would you then, if you were given the authority, do mischief in the land and sever your ties of kinship?”’
(Sahih al-Bukhari, 8:73:16).
Allah (swt) discussed the green economy and mentioned corruption in the land of Allah (swt). For example, in Surah 28, verse 77 and Surah 2, verse 60, Allah (swt) said:
‘…And do not desire corruption in the land. Indeed, God does not like corruptors’.
Eat and drink from the provision of Allah, and do not commit abuse on... [E]arth, spreading corruption’.
10 About the preservation of the water, Allah (swt) said in Surah 50, verse 9:
‘And We have sent down blessed rain from the sky and made grow thereby gardens, and grain from the harvest’.
In the Qur’an, Surah 6, verse 99, Allah (swt) mentioned the green economy in a very beautiful way:
‘And it is He who sends down rain from the sky, and We produce thereby the growth of all things.
We produce from it greenery from which We produce grains arranged in layers. And from the palm trees – of its emerging fruit are clusters hanging low. And [We produce] gardens of grapevines and olives and pomegranates, similar yet varied. Look at [each of] its fruit when it yields and [at] its ripening. Indeed in that are signs for a people who believe’.
Allah (swt) also mentioned in Sural An Nahl, verse 14, about the different dimensions of the blue economy. In this verse, Allah (swt) mentioned food, economy, transportation and all other bounties related to the blue economy:
‘And it is He who subjected the sea for you to eat from it tender meat and to extract from it ornaments which you wear. And you see the ships plowing through it, and [He subjected it] that you may seek of His bounty; and perhaps you will be grateful’.
From the above verse, it is clear what Allah’s (swt) blessing to humans is. He informed us ‘how He has subjected the seas, with their waves lapping the shores, and how He blesses His servants by subjecting the seas for them’. With the order of Allah (swt), there is food for man in the oceans in the form of the flesh of fish and this halal for man; in both of the situations, they are caught either dead or alive. Even in the state of Ihram, it is permitted to eat them. This is the provider of not only food but also trade and business. As mentioned in section two, marine fisheries contribute more than US$ 270 billion annually to global GDP.
However, Allah (swt) also mentioned the trade and economic benefit of the precious jewels and pearls he had created in the oceans. These can also be used as ornaments. The value of pearls and jewels in the global market can be observed from world data. According to a reasonable forecast, the global pearl jewellery market is likely to grow at a compound annual growth rate of over 13%
during the period 2019–2025 (PRNewswire, 2019). The UN’s partnerships platform discussed the sustainability of the pearls in the following way,‘Cultured pearl farming and surrounding services have become a vital source of income and significantly contributed to economic development in a large number of remote coastal communities in French Polynesia and the Cook Islands. More recently, Fiji and Micronesia have attempted to emulate these successes. Producing a beautiful pearl is not reserved for large-scale entrepreneurs; a great number of small-scale and artisanal stakeholders also benefit from the pearl oyster resource in different ways. Marine cultured pearl farming does not harm the environment if adequate management practices are implemented, and a healthy ecosystem is a prerequisite to producing beautiful pearls. Cultured pearl farming can be regarded as a sustainability element in improving not only coastal livelihoods but also fostering environmental conservation in biodiversity hotspot regions in the Pacific. These synergies can prosper further if the resource continues to be managed responsibly and value chains are designed to support these positive environmental and socio-economic impacts (OECD, 2022).
11 Allah (swt), after the above-mentioned section, mentioned transportation and tourism. Allah (swt) taught human beings how to make ships; the first ship was manufactured by Prophet Nuh (aws) in this land, and that knowledge was given by Allah (swt) to His Prophet Nuh (aws). He and his companions were the first to travel by ship, and these ships were used for the transportation of traded goods from country to country and from place to place. The following is UN Secretary- General Ban Ki‑moon’s message on World Maritime Day, observed on 29 September 2016:
‘Everybody in the world benefits from shipping, yet few people realize it. We ship food, technology, medicines, and memories. As the world’s population continues to grow, particularly in developing countries, low-cost and efficient maritime transport has an essential role to play in the growth and sustainable development (Ki-moon, 2016). Approximately 90% of the world’s trade is carried by sea. However, whether this transportation is a risk to the environment is yet to be determined. As discussed in section two, whales and phytoplankton maintain the atmospheric balance by releasing oxygen and absorbing CO2. Also discussed above was the wastage of whales that is used by the phytoplankton. As Allah (swt) mentioned in Surah 41, verses 9–10:
‘He is the Lord of all creation. He set mountains over [Earth after its creation] and bestowed blessings on it, and provided in it means of sustenance adequately according to the needs and demands of all those who ask’. And Mawdudi in Tafhim ul Qur’an explained the dependency of one creature on another, and this system of nature works in the following manner:
‘“Blessings of... [E]arth” imply those measureless and countless things continuously coming out of it for millions and millions of years and are fulfilling the ever-increasing needs and requirements of all the creatures, from the microscopic germs to the highly civilized man. Among these, the principal blessings are the air and the water by which alone vegetable, animal and then human life became possible on... [E]arth.’
Therefore, not disturbing the natural environment through ocean transportation should be considered. Corbett and Winebrake (2008, p.23) mentioned the risk of the lethality of marine mammals:
‘Shipping’s shift to larger and faster ships is also associated with increased lethality to marine mammals and other animals that may be struck by vessels (Vanderlaan and Taggart, 2007). The reported number of vessels striking large whales worldwide has increased three-fold since the 1970s, as has the number, sizes and speeds of vessels in the world fleet (Corbett et al., under review). North Atlantic right whales (Eubalaena glacialis) are critically endangered throughout their range along North America’s East Coast. The primary risk right whales face within this area, along with several other species of large whales, is being struck by large vessels transiting between ports along the Eastern Seaboard of the United States (Laist et al., 2001). Approximately 35% of all right whale deaths documented between 1970 and 1989 have been attributed to ship strikes, while data from the period 1991–1998 attribute 47% of right whale deaths to ship strikes (Knowlton and Kraus, 2001; Laist et al., 2001).
The Economies of the Islamic World
‘The economy of Muslim countries differs from low to medium and high income. Based on the World Bank classification, 18 OIC countries are classified as low income countries, 34 are middle
12 income (18 lower middle and 16 upper middle), and 7 countries are categorized as high income countries. More so, it is observed that there is a significant gap between the rich and poor countries.
This gap will keep increasing due to population outbursts and scarcity of resources on land thus, now shifting from a green to a blue economy is imperative. Before proceeding further, it is essential to scroll basic definitions relating to various sea zones’. (World Bank, 2016). The Islamic Declaration of Sustainable Development (2012) mentioned that moral and ethical values are an integral part of Islamic teachings. The sustainable development model integrates moral and market values. Justice and equity are the main targets, with no room for corruption on this Earth. Among the main targets, the eradication of poverty is the key target besides reducing unemployment.
However, most Muslim countries are highly vulnerable to natural and man-made hazards. Some African countries are facing natural disasters, and some countries are suffering due to political instability, like Iraq, Libya and Syria. Only a few are trying to move from a green economy to a blue economy. However, most Muslim countries are not competently managed and have a high degree of poverty, political instability, food instability and insecure borders. These are the most significant challenges they are facing. Therefore, it has been suggested that they should move from the green economy to the blue economy. By doing this, they can increase their levels of investment;
due to the very extreme weather they observe, drought and floods along with the high pressure of populations, poverty and unemployment, they can move towards the blue economy.
THE ROLE OF FINANCIAL INSTITUTIONS
Generally, financial institutions receive fund feasibility reports from clients to review. The experts at these institutions evaluate these reports based on different risks, such as liquidity, credit, market, operations and interest rates. In the words of Chenet (2019), ‘Move along, nothing to see’. Burki et al. (2021) mentioned that ‘[h]owever, in 2000, environmental NGOs and activists [were]
pressurising the financial institutions to examine... [if] the project[s] they [we]re financing... [we]re risky for the environment’.
Additionally, the Paris Agreement and the 2030 SDG Agenda of the UN highlighted other dimensions to these financial institutions. As a result, they have taken steps towards this dimension and are considering the risks associated with the environment and climate change.
Chenet (2019) presented these steps in chronological order: ‘Financial portfolio’s first carbon foot prints (2005), green bonds (World Bank and European Investment Bank, 2007), low-carbon stock indices (2008-9), Financial “carbon bubble and unburnable carbon” buzz, (2011-12), Green credit guidelines (China 2012), fossil fuels divestment campaigns (NGOs 2013), shareholder resolutions on carbon bubble and climate risk (2014), UNEP Inquiry platform (2014), Investors pledges and high-level pre-COP21 policy push at the UN Climate Summit (2014), climate risks for the financial system (Bank of England and FSB 2014), Article 173 of the Energy Transition Act, on financial institutions’ disclosure of climate risks (France 2015), adoption of the Paris Agreement (esp. Art.
2.1(c) on finance flows (FSB 2015), European High-Level Expert Group on Sustainable Finance (2016), climate finance Bill (California Senate 2017), International Network of Central Banks and Supervisors for Greening the Financial System (NGFS 2017), and published the EU Action Plan
‘Financing Sustainable Growth’ (EU 2018)’. Above all, these mentioned steps were taken by the financial world for their long-term activities related to climate change.
13 Islamic Finance
One can see a significant attempt in the literature related to Islamic finance. From the literature, it can be observed that Islamic finance has both commercial and moral aspects. Its commercial actions are for the growth of economies, and its moral values (such as justice, equity and honesty) are for the welfare of humans. It has been empirically proven that risk-sharing financing has a negative impact on poverty and inequalities, whereas debt-based financing fails to do that. As a student of economics, one can realise that the reduction of poverty is the main objective of development planners. In the Muslim world and in the rest of the world, Islamic financial institutions are raising capital according to Islamic law (Shari’ah). The Shari’ah permits only socially responsible projects. These are the unique characteristics of Islamic financial institutions.
As discussed above, Allah (swt) mentioned the blue economy in Surah An Nahl, verse 14. In this verse, Allah (swt) encourages humanity to explore, develop and receive economic benefits from the sea for their economic sustenance. By keeping the above in mind, it is the responsibility of Islamic banks to become involved in developing the blue economy. The Islamic financial industry has much potential to finance the blue economy and its instruments like ijara, musharakah/mudharabah and sukuk. Simultaneously, it is the duty of the governments of Muslim countries to formulate policies and regulations that support the development process of the blue economy. Islamic financial institutions can explore opportunities in different projects related to
‘sea based technology, renewable energy, ship building, ship breaking, fishery, coastal tourism, sea transport, etc.’. These steps will ultimately reduce the level of poverty and will create jobs in the above-mentioned schemes. Most developing countries do not have enough energy sources to move from a green to a blue economy; it would be a big change if these countries, with the financing of Islamic financial institutions, would install windmills. These wind-power generation projects will provide energy at a low cost, and they are also environmentally friendly. Similarly, energy can also be generated through ocean waves and tides.
Therefore, like with green bonds, Islamic financial institutions can issue blue bonds, and as discussed above, they have potential. However, these bonds should be aligned with the SDGs, i.e.
they should be socially responsible investments and follow environmental, social and governance principles. This industry also plays a very important role in building ocean resilience. If we are moving towards a blue economy, then it is necessary for the experts of Islamic financial institutions to innovate more Islamic financial instruments, which will also fulfil the Maqasid Al Shari’ah.
Therefore, it is a great opportunity for the Islamic financial industry to invest in the blue economy through Islamic blue finance.
CONCLUSION
We have learnt from the above discussion that Allah (swt) has created this world with tremendous resources, but we cannot count on them. What man has explored is known, and what is not explored is unlimited. As Allah (swt) mentioned in Surah 14, verse 34: ‘And He gave you of all that you asked for, and if you count the Blessings of Allah, never will you be able to count them’. Allah (swt) guides us about the blue economy, and in Surah An Nahl, he asked us to explore what he has created in the oceans. He pointed out fisheries, economy and transportation. These are the three
14 principal sets of activities, and there are a number of sub-sets of these three sets of activities, as Allah (swt) mentioned in Surah 2, verse 164:
‘[To guide] those who use their reason [to this Truth] there are many Signs in the structure of the heavens and the [E]arth, in the constant alternation of night and day, in the vessels which speed across the sea carrying goods that are of profit to people, in the water which Allah sends down from the sky and thereby quickens Earth after it was dead, and disperse over it all manner of animals, and in the changing courses of the winds and the clouds pressed into service between heaven and [E]arth.’
As we experienced during the financial chaos of 2008, the Islamic financial industry is more resilient and not too affected by financial crises because it has a different structure based on asset- based or backed instruments. As we have observed, the world is moving towards a blue economy, so this is the call for the Islamic financial industry to try to benefit from this opportunity. Its ethical and moral practices will also support SDGs.
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