In recent years, green finance has become a key policy in developed countries. The term refers to the loans and investments that fund the transition to a low-carbon economy. But one of the main challenges in this area is the gap between environmental claims and realities – so-called “greenwashing”.
Because of this, alternative finance models that emphasise a direct link between capital and actual economic activities have been receiving more attention. The Islamic financial system is one such alternative. In this system, financing (in other words, lending) is legitimate when it is linked to real economic activities that benefit people and society.
